I will not go into explanations on process behind payday loans. We all know that they are high interest rate short term loans, and in general they are very expensive. But, people are still willing to repay high interest rates even though there are better alternatives to these loans. Major issue is the lack of knowledge about those alternatives, issue which I will try to partially solve with this article.
Making realistic personal budget and sticking to it is a good way to avoid any form of lending and going into debt. Payday loan might sound good at the first glance, but when it comes to paying it back it shows its real face. Many legal payday lenders will take up to 30 dollars on a loan that was originally 100 dollars. That means that if you take a payday loan worth 1 000 dollars you will have to pay back 1 300 dollars in 14 days. That is bad business.
If you create your own personal budget (which you should do) you should be able to avoid lending money by careful and smart distribution of your income. Cancelling some more expensive investments will help in keeping your budget realistic and that will save you some money.
If you are unable to pay off a credit rate this month taking payday loan will only increase your expenses for the next month. You should contact your credit provider and discuss possible extension. Many loan providers will give you such extension you have shown good faith in repayment of previous rates of that loan.
There is an increasing number of small loan companies that will give you small and short term loans with better repayment conditions than payday loans. Some banks also offer short term loans ( in this case those loans are repaid in up to 1 year time frame ). All of these loans have a lot better interest rates and other conditions than payday loans, especially short term loans that are offered by banks.
Research for lenders
If you have to take payday loan then don’t jump on first payday loan lender you see. DO a bit of research and look for lenders that offer lower APR and better terms of the loan. You might have some privileges you are unaware of, privileges that will make APR, on all loans you take, lower. For example you have military personnel in USA. They are protected from high interest rates on loans, but you don’t know about your privilege then it doesn’t matter, because you will get regular interest rate.
A lot of banks will help customers that fulfill their obligations on regular basis. If you make a mistake in allocation of your resources then you can contact your bank and negotiate overdraft protection with them.
As you can see payday loans are not the only solution once bank refuses to give you another loan. Only fools will jump straight on payday loans, smart people will explore all other alternatives before making this move.