Why are payday loans a top choice for many people? The need for immediate extra cash to cater for expenditure until the next payday is often the prime reason. The credit is a means of meeting unexpected cash emergencies. Some of the instances when people are likely to seek a payday loan include:
- Fixing the car so that they have a means of transport until they get paid.
- Repairing or replacing a vital household appliance such as the dishwasher or fridge
- Transport expenses that they will incur when traveling to see an ill family member or attend their funeral.
- To make upfront payments for medical bills of a child or family member.
The above are just a few examples of the rational reasons why people will opt for payday loans. The reasons withstanding, borrowing credit comes with the burden of settling the debt. For payday loans, the repayment is at the next payday and often due in full. Nevertheless, some creditor will grant repayment extensions to their customers who may not be able to settle the loan in full within the agreed period. It is wise to bear in mind that the amount owed will be deducted from your next pay, and thus you need to make adequate financial plans in advance to avoid facing a “money crisis.” Below are several tips that can help ensure you honor the payday loan in full
Negotiate With The Lender
Always strive to speak directly with the creditor to find out if you may get a hardship program for extenuating situations. For instance, you have to honor a payday loan you took that’s due when you get your next paycheck, but you were laid off from work the day after getting the loan. Such a circumstance renders you incapable of making the loan repayments on time.
With the hardship program, your repayment period is extended so that you have ample time to pay back the money owed. Keep in mind that the payday lender is out to make money from the credit services and thus are keen on getting their money back plus some interest. At times, the creditor may obtain alternative repayment arrangements that will allow their customers to pay back the loan. But if that is not the case, you still can look for other ways of honoring the debt.
Payday Loan Consolidation
Consolidating payday loans may not be easy, but neither is it impossible. You can manage to do this in two ways:
i). Using another financing source
You can take out a personal loan with the aim of using it to consolidate your payday loans. It is an option worth considering if things are not terribly off to avoid getting yourself into a financial quagmire. The personal loan will not save you from the payday loan interest, but you will enjoy the ease of making timely payments and be left with only one single debt stretched over a more extended period compared to that of the payday loans. You can get a personal loan through options such as:
- A personal loan from a credit union or your bank
- Home equity loan
- Borrowing money from close or trusted family or friend
Remember that in all the above options, you will have to pay back the money borrowed within the designated time frame.
ii). Through a debt consolidation program
Few debt consolidation programs exist that offer effective assistance to see you unload the burden of the money owed when things are not so rosy for you financially. Most of these programs work closely with the credit institutions to make payments a bit bearable by lowering the interest rates. However, some payday lenders and agencies do not work with consolidation programs hence the need to always inquire about the program before taking the payday loan.
Sometimes the creditors will work with the programs with the aim of ensuring they get their money back in full rather than not get it at all. The benefit of opting to borrow the money through a loan consolidation agency is the payday lender will accept monthly repayments which you agreed to when applying for the loan. Some debt consolidation agencies will have programs that see their clients may receive a monthly payment, and they distribute the payments to all the client’s creditors including the payday financiers.
Charge It To Your Credit Card
Using your credit card to pay off your payday loan may not be the brightest of ideas, but it may have to suffice if you are struggling to ensure you honor your debt. Credit cards may charge high-interest rates, but that will seem insignificant compared to what payday loans charge. You can use the credit card as means of breaking the sum total into small and manageable amounts that you can pay.
A cash advance is yet another option availed to you when using your credit card, that is if you the money is available. In most cases, the cash advance will be at a fee so you should be aware of and understand the Terms of Service and FAQs to make sure that such an option is best given your current situation.
Avoiding Payday Loans
Payday loans are a dependable resource when faced with immediate and dire money emergencies. The only issue is paying back the money in full and on time, which is an issue evident in every other type of loan. Avoid siphoning some money from the next paycheck before you honor your payday debt or else you will find yourself in a financial bind. Given such weighty issues, it is prudent to consider the risks of taking a payday loan before you apply. Look at any other open options of getting the money you need and allow the payday credit be a last resort. Most importantly, be sure that you will be able to make timely payments as per the agreements with the lender when applying and accepting the payday loan. Keep in mind, that other issues can arise that may influence your capacity to honor your debt.
Payday loans can help you get out of a “cash jam” when faced with an emergency. You will have the money you need to settle your expense until you get your next check. But the one question many people battle with is whether a payday loan a wise option. Yes, it is; but it is an option that will do more harm than good if you are in an uncertain financial situation.