What do you do when you need money immediately?
When there seems to be no money available, it is pretty easy to turn to payday loans. Payday loans are fixed period, high-interest loans that are usually taken out by people who need cash immediately.
While it may seem like a great buffer, it may not be a suitable solution to your monetary problems.
Why are payday loans dangerous?
It’s quite easy for a lot of people to qualify for a payday loan, even those who don’t have very good credit histories. Once someone is granted a payday loan, they are charged very high-interest rates. Plus, they are charged an initiation fee and a service fee.
To take out a loan, you will have to sign a direct debit order for the repayment of the original loan amount plus the interest and fees – these amounts are transferred from your account to the lenders account on your next payday. If you decide to extend the term of the loan, interest as well as other additional fees will continue to accumulate, making the loan more and more difficult to repay.
Payday loans can lead to a lot of debt, especially if you’re trying to cover high expenses with a low income. Unfortunately, this can damage your credit record, which can cause banks to reject any formal loan applications and set you up for harassment from debt collectors.
What can I do instead of getting a payday loan?
- Start an emergency savings fund.
- Opt for building good credit so that if you need a loan, you will quality for a less expensive, traditional loan from a bank.
- Take up more work or an additional job part time. Although this may be very difficult, it’s better than getting into more and more debt every month.
- Apply for debt counselling. Debt counselling is designed to provide over-indebted consumers with guidance and assistance in paying off their debt.
Contact Debt Rescue if you’re battling to pay off debt.