Things You May Not Know About Payday Loans
Saturday, March 9, 2019, 6:00 PM | Leave Comment
Have you ever been going through such a rough patch where your savings account was just about empty?
Perhaps you were desperate and looked into available loan options for someone with as bad a credit score as you, and maybe your findings led you to payday loans.
You applied for one, had some money in your wallet but, now you regret ever having come across the loan, and you have promised yourself to never go near a payday loan again.
Payday loans are not exactly the worst but, most times, people who get into them are already bad debtors and of course, they incur even more debt to pay off some of their debts, and nothing gets better.
What are Payday Loans?
Payday loans are offered to get borrowers out of tight spots. The loans are fashioned as short-term, and although the main purpose of the loan is to get oneself out of a rough patch, the loans hardly ever end up being useful and, usually end up causing an even larger problem.
Payday loans are basically short-term loans people take out with the intention of paying back at the arrival of their pay check. Here is what payday loans in details are: https://www.elitepersonalfinance.com/payday-loans-vs-installment-loans/
Cons of Payday Loans
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Expensive Loans
Lending institutions of course attach some truly alarming interest rates to their loans but, payday loans are really the most expensive. The loan being short term should allow room for some cuts on interest rates but, it is actually sometimes up to 300%. This astonishing interest rate accumulates as you delay in your repayment. Analyze your finances if at all you must apply for a payday loan and understand your possibility of a comfortable repayment.
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Limited Repayment Period
The loans are only available for short term periods, and this is another inconvenience they bring. Most of the payday loans come with a maximum one-month repayment schedule, with the interest accumulating either on a daily basis or, weekly basis.
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Auctioning
Here is something you’ve probably never heard about payday loans; sometimes, the company makes moves to auction your assets if you are unable to pay off the loan. There have been actual instances where payday loan companies have taken some extreme measures to reclaim their money. When the client is unable to pay up a big loan, the loan company decides to get their money back by auctioning some of the client’s assets. Consider this risk before applying for a payday loan.
Things to Consider before Taking out a Payday Loan
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Full Understanding
It is very important that you fully understand and accept all the terms of a payday loan, including interest rates, repayment plans and, consequences facing you if you are unable to pay back the loan.
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Are there Better Forms of Credit?
There could be cheaper and better options for you to get a loan from, all you have to do is fully research and explore some other options. You could get some type of loan from your bank or, a credit card advance.
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Do you Really Need This Loan?
If you can get your money from another source or organisation, it is best to avoid these kinds of loans. Even if it means pushing back paying up your expenses or cutting back on a lot of expenditure, you could find that taking a payday loan is not actually your last hope.
