Payday Loans: They May Not Be the Answer

Financial stress is the worst stress that people can have. It’s hard trying to pay bills and maintain a specific lifestyle. There are times that some people want to get out of debt quickly and think payday loans are the way to do it. What’s hard for many to realize is that a payday loan may not be the best option for them and it may not be the only way to get out of debt quickly and easily.

Payday loans are loans that allow people to borrow against their paychecks. Most loan companies don’t require good credit, only a verifiable income, bank account and access to a checking or savings account. Many of the loan amounts are determined by the amount of money being made each month but not always. While the process seems simple, it can be scary when it’s time to repay the loan.

Payday Loan Reality

For those that think a payday loan is their only option, their reality is something they should know. When getting a payday loan, the lender must have direct access to the applicant’s bank account. Once access has been granted to the bank account and the loan has been approved and issued, payments will be expected in return. Many payday lenders will issue a small period of time where payments aren’t expected but once they are in the system, the payments will be automatically withdrawn from the given bank account.

The payments from the payday lender will be disclosed by the payday lender when the loan has been approved. The payments will have interest attached as well as a specific amount of money that will go towards the principal of the loan. Once the loan is in repayment status, the payments will be drafted from the given bank account without care for any other bills that have to be paid. It can be a punishing amount, depending on the terms of the loan and the financial status of the person that applied for the loan.

If the payments can’t be collected from the bank account, the lender may take legal actions against the applicant or the account can go to collections. This is something that most people want to avoid because they can’t afford to hire an attorney. Others don’t want another collection account on their credit report.

Options without Payday Loans

Instead of looking at payday loans as the only options out of a financial bind, people can look at other income or money making solutions.

·         Get a second job

·         Sell items on eBay/online

·         Have a yard sale

·         Negotiate lower payments

There are many different ways for people to find their way out of financial binds. Not every solution is an option for everyone but there are solutions for everyone.

Once the immediate financial crisis has been addressed, it’s time to look at long term options. Many people that opt for payday loans are those that have bad credit and don’t qualify for traditional loans. Instead of maintaining bad credit, it’s time to start repairing credit. Many people find success with debt management or credit counselors. This will help those with a lot of debt pay down their debts, clear their credit report and begin to repair the damage they have accumulated.

Payday loans seem like a saving grace of millions of people. Many of these people don’t realize how much of a financial mess these loans can turn into if they can’t really afford to repay the loans. Instead of depending on payday loans to get by, people should look to other options before applying.

Jun. 24 14'

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