As a financial professional, I frequently receive calls from clients seeking an end to their payday loans. Payday loans are available under a variety of names: check advance loans and deferred deposit loans cash advance loans post-dated checks, which are all terms that refer to the short-term, high-interest-rate payday loan. While I still receive calls from people regarding students’ loans and debts, credit card debt, and collections accounts but it’s the high rates of interest, and rollover charges that are related to payday loans that seem to be the cause of the most devastation.
Why Payday Loans
Based on an article by Megan Leonhardt, the typical payday loan comes with an APR of over 400 percent. What is the reason you would apply for a payday loan that has an APR that is more than the average credit card? Like many other clients have taken payday loans to make ends meet their needs. Their low credit can lead them to believe that they won’t be able to obtain funds using any other method. Payday loans do usually not need a credit test and are one of the main reasons why this type of loan is used. Other clients have taken advantage of payday loans because they have no credit. One of my clients, Becky, mentioned she utilized a payday loan due to the fact that she needed money immediately. Becky’s account at the bank was negative, while her rent was in arrears. She mentioned that her payday loan was simple to get for her situation of emergency. There were no obstacles to her getting the money fast. Becky claimed that she required the money to make ends meet and her payday loan of more than 400% APR didn’t deter her. Since you can usually get payday loans quickly using only a valid ID and bank account without a credit check or evidence of income like a payslip and a bank statement. Those who are in an emergency financial situation or who have poor credit or do not have credit could see payday loans as a quick answer to their need to get cash. While “quick solution” lenders have the capability of removing the funds owed directly from savings or checking accounts, customers are pleased to know that Apprisen can aid in the process of payday loans, as many of the lenders offer a variety of options to help customers pay the debt.
Here are My Top 7 Survival Tips to Assist in Breaking the Payday Loan Cycle:
- You can get a cash advance using your credit card with a lower interest rate and with lower fees.
- Ask a family member to loan you money. Check out the Save Money Through Friendships Blog.
- Increase your income to pay off debt.
- Set up a payment plan in conjunction with the payday loan company directly, or with the assistance of an NFCC approved credit counselor.
- The balance of the payday loan on your credit card with significantly lower interest rates as the cash advance.
- Request a loan from a credit union or small local bank to repay the payday loan in the full amount.
- Take a class with an NFCC approved credit counselor.
Active duty military personnel and their dependents are entitled to certain protections for payday loans. For instance, payday lenders aren’t required to have access to the member’s or their dependents’ bank accounts. Furthermore, the payday loan should have an APR not higher than 36 percent. If you are a member on active duty Contact the Department of Defense concerning your payday loan concerns.
It is stressful when paydays require the writing of an amount for the entire amount plus the charges for borrowing the funds. If the rollover charges keep you awake at night, you should consult an NFCC qualified financial counselor. Do you really need to stress the extra charges for payday loans and the ever-growing debt that comes with the rollover of your payday loan? Talk to an NFCC approved financial institution such as Apprisen to get advice on your budget and, more importantly, you can get an action plan for escaping the cycle of payday loans and settling your obligations.