How to Get Out of Payday Loans

Maya Pillai Jan 8, 2019
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Payday loan, also known as paycheck loan or pay advance loan, is issued to anyone who is in need of immediate cash. There are various ways which if practiced effectively, can help you get out of such loans.
There are times when you are in need of extra cash for an unexpected expense or an emergency. If you need it urgently to solve your immediate financial problems, approach a financial institution that grant payday loans. Payday loans provide cash up-front to tide over your short-term financial needs, such as settling your medical bill or repairing your car.
The minimum amount that is lent is around $100 and the maximum amount is around $1000. Here are some of the reasons why people prefer these loans:
  • It is easy to apply for them. You can apply over the phone or online by filling an application form.
  • A financial institution will not check your credit rating or credit history.
  • You do not have to provide documents such as a bank statement or your latest salary slip.
  • Once it is approved, the cash would be deposited in your account within an hour or two.
  • You can apply from the privacy of your home or office.

Getting Out of Payday Loans

As stated earlier, you do not have to submit documents such as salary slip and other details that are usually required for standard loans. As they are easily available, many of the middle-income families are trapped in debts. The rate of interest on these loans is always high and often, people opt for them to repay another payday loan.
This leads to a vicious cycle of borrowing, and it can become difficult to get out of it. You can put an end to this kind of borrowing by considering other alternatives before availing such a loan. Here are a few ways to get out of these loans.
  • You can start by breaking the cycle of borrowing money to clear off another debt. If you have many payday loans over your head, stop applying for new ones. Meet a financial advisor or debt counselor to come out of it.
  • When you need to borrow money, consider approaching your local Credit Union or a reputed financial institution for credit.
  • Ensure to check out the rates of interest offered by the various offline and online financial institutions, before applying for a loan.
  • Approach a financial institution or bank that is willing to lend you the money with a low rate of annual interest. Use this amount to clear off all your payday loans.
  • Debt consolidation is also an option you can consider.
  • If you are neck-deep in debt, you need to make substantial changes to your lifestyle. Instead of having food in a fast-food joint or restaurant, cook at home.
  • Make a monthly budget plan; this will give you an idea about your spending habits.
  • Buy only what is really essential and avoid all the luxury purchases, until you have cleared off all your debts.
  • Do not hesitate to approach your local Credit Union for a low-cost credit counseling program.
Be organized and maintain an account book to write your daily expenses and understand where you need to budget. Keep aside a small amount of money as savings each month. You can use the savings as an emergency fund, instead of applying for loans again.
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