Payday loans are quick and easy to get but if you are not careful, you can easily end up in debt on account of them. Cashco Financial presents six tips for how to avoid debt when you take a payday loan.
Six tips for dealing with payday loan debt effectively
Don’t panic – First of all, don’t panic. Many companies advertise payday loans as a way to finance a ‘one off expense’. But payday loans are more common than you think. Many people use payday loans to pay for essential items like petrol, food and utilities. Some people take a payday loan to pay off another loan. So you are not alone if you’ve taken a payday loan. Speak to your payday loan company if you are having problems. They want you to pay the loan, so they may help you.
Pay off debt proactively – Don’t delay making debt payments when you have the money. High interest loans should be paid off first. On the rest of your loans, keep making timely payments. Do not delay payments on payday loans. These loans are given with the assumption that they will be paid off when you get your next pay. If you are not sure you can spare that money, do not take a payday loan.
Research loan consolidation companies – Many people sign up with loan consolidation companies when they have difficulties paying back their loans. These companies can help you lower your payment. But be careful. Some payday lenders will report this to credit companies, denting your credit. However, most payday lenders don’t pull credit reports when vetting customers for payday loans. So it won’t be a problem.
Don’t perpetuate the borrowing cycle – Many people can’t actually afford payday loans but they take them anyway. It comes to a stage that they have to keep taking loans, just to pay off the earlier loan. You have to stop this cycle. Taking one loan after another is not a solution to your problems. If you don’t draw a line somewhere, you will only fall deeper into debt.
Don’t give the payday loan company a CPA – Here, CPA stands for Continuous Payment Authority. Payday loans are not a priority debt. Groceries, utility bills, fuel, rent, mortgage, and other household bills must have first right on your pay. So if you have given the payday lender a continuous payment authority, stop it. If you don’t, the lender will keep trying to take money from your account until the money is collected in full. Note that we are not saying that you should not pay the company. Read the next tip about what to do in such cases.
Repay only the money you can afford to give – Sometimes, your circumstances may change and you may be unable to pay the payday lender in full when you get your pay. If it is so, call up the company and tell them your problem. The company wants to make it as easy for you to pay. If it is a legit company, they will be ready to discuss the best way to make the payments.
Payday loans can ward off your short term financial troubles. If you follow these tips faithfully, your payday loans won’t give you trouble.