Do you find yourself mired in a payday loan debt cycle? It is possible to get out from under that burden.
No one likes emergencies especially if it involves money. But emergencies happen at the most inopportune times and we are left with no choice but to take out a loan. If it’s fast cash we need, then a payday loan is our most viable option. With the help of the Internet, online payday loans are even quicker to obtain. Payday loan lenders do not require complicated paper works from borrowers as long as you have a steady job and active bank account. Payday loans are also ideal for those with poor credit scores. But keep in mind that payday loans also come with a higher interest rate and shorter payment period. Typically, a payday loan must be paid on your next paycheck.
How the Cycle Begins
Although payday loans can amount to only a portion of our salary, there is still a tendency that we cannot make payments on time. This is how people become a habitual payday loan borrower putting them in danger of being indebted.
So, how do we get out of a payday loan debt cycle? Or what can we do to avoid being in the payday loan debt cycle in the first place? Below are some ways to prevent this from happening.
- When we realize that you are in a payday loan debt cycle, the first thing we should do is to not panic. Instead, we must think clearly as to what steps we should take to reverse our situation. After all, we are not alone in this.
- Most people borrow money to pay off another loan. If this is what we do, we must stop, at once. Being a perennial borrower will keep us in the debt cycle.
- Ensure that when you issue a check it has sufficient funds. We do not want bouncing checks to be an additional burden for us.
- Pay as much as you can even though you have set a fixed amount for every payment period.
- When you talk to your payday loan lender, set up a payment plan that you can stick to. Make sure that you can meet the amount stated on the plan.
- Always answer the payday loan lender’s call. Dodging their call will not diminish the problem. If you wish to be contacted through email or mail, you must inform your lender about this. Make a formal letter of request stating how you wish to be contacted.
- When you apply for a payday loan, you give the lender access to your bank account. This allows them to set up a CPA or continuous payment authority. But if you don’t have sufficient funds in your account, your bank may charge you, so before this happens, cancel the CPA.
- When you have finally paid off your payday loans, refrain from taking out yet another loan. Try to cut down on your monthly expenses so you will not have to resort to taking out payday loans. Make a list of what you should prioritize in your budget.