Payday lenders have been known to take advantage of the borrower’s situation. Borrowers who need a short-term fix on cash often get deeper into long term debt when they go for a payday loan.
These payday loans are generally rolled over and accumulate more debt that cause the borrower to lose control of their debt. Payday loans, due to the short-term repayment, often gets the borrower into more financial trouble in the future just to satisfy the short-term needs. Currently, some countries are trying to implement policies to improve payday lending and prevent borrowers from going deeper into debt.
One of the policies being reviewed for implementation is to allow a check if a borrower can pay the full amount without sacrificing other payment obligations and without having the need to make a new loan. The loan cycle becomes endless creating higher debt repayment.
While payday loans are one of the most controversial ways of acquiring finances, it is highly recommended to check alternatives prior to applying for a payday loan.
1. Apply a small personal loan from a credit union or company
There are cases where the union or the company provides loan benefits to its members and employees. Considering a loan from them may be more lenient on repayment as long as you are a member or employed in the organization. Interests may be minimal and affordable where the term that is provided will help you manage your debts and eliminate them through a better way.
2. Family and Friends
Family and friends often help as long as getting yourself deep in debt is not a habit. It is an alternative that you can check before considering to get a payday loan from a lender who would charge high interest rates and slowly bring you into more debt. Relatives and friends often don’t ask for interest payments but would be wise to offer them such upon repaying the loan.
3. Talk to your creditors
Instead of quickly applying for a payday loan to pay for your current debts which are immediately due, try talking to your creditors to give you an extension. They may charge you additional fees or interest rates but will gladly help by extending the payment date. This will be beneficial as they can help give you more time to create a budget and find alternative sources of income.