What is a Payday Loan? They are advertised everywhere – television, radio, the Internet. Just pop into your nearest payday loan center, with your most recent pay stub, and receive an advance loan against your next paycheck. Fast and easy! The details of the loan, however, are pretty harsh.
If you cannot make the payment when due, you must then set up payment arrangements, with penalties and additional interest added. The Fatal Cycle When a true financial emergency occurs, and there is simply no other way to obtain the cash needed, a payday loan may be used as a last resort. Most often, however, these loans are given to individuals who do not budget properly and find themselves out of money for groceries or bills before their next payday. The cycle then begins. When the paycheck comes, the payday loan must be paid off, and then there will not be enough money for the next round of bills. Another payday loan is then taken out. Bad plan! If an individual does not have enough income to meet his/her regular monthly obligations, a payday loan will only make the situation worse. It will be a never-ending process, with the individual securing larger and larger loans each time. Breaking the Cycle The way out of this cycle may be a bit painful and will certainly require some self control. First, commit to no more payday loans. Pay the last one off. Seek debt counseling immediately. There are non-profit organizations that will assist in setting up a budget and contacting current creditors to make arrangements for payments that will fit into the budget, and any late fees and interest will be far less than that from the payday loan. The new plan may require the sacrifice of luxuries or a temporary part-time second job, but these are far better options than the bleeding of money that occurs with payday loans. Another option may be to consolidate current credit card and revolving debt into a consolidation loan, securing a payment that can be afforded with current income. One might also consider using an income tax return to pay off some debt, thus reducing overall monthly obligations. Still another option would be to borrow from a relative, with a strict repayment schedule that will not jeopardize that relationship. Whatever plan is developed and implemented, it will be far better than the destructive run to the payday loan center. Tagged under:Debt You must be logged in to post a comment. |