Online payday loans may seem like a quick way to come up with the money you need, but in reality, they are a debt trap that will get you stuck in a downward financial spiral. Online payday loans are particularly dangerous to consumers because they are so easy to obtain. You don’t have to drive anywhere, you apply online, then have the money deposited into your bank account. Suddenly you have the funds you need to cover whatever cash shortage you may have had, so all seems right with the world. But, all isn’t right. You haven’t solved your problem, you’ve simply put it off for another week or two.
Payday Loans Are A Temporary Solution
When you have a bill that you have to cover and don’t have the funds it’s easy to panic, especially if it’s a very important bill. What happens if your rent is due and you can’t come up with it? Facing the possibility of eviction it’s perfectly understandable that you’ll panic. The problem here is that when you panic you don’t make sound decisions. You turn to any solution you can find to help you come up with the money you need. For many people that means turning to online payday loans.
While a payday loan may help you to cover your bills today, they’ll simply transfer your hardship to a future date instead of solving it. When you get your next paycheck you’ll have to pay back the loan amount plus what is usually an incredibly high amount of interest. Then, you find yourself short the money you need to cover your bills again. So, what do you do? Well, most people turn around and get another payday loan. Then the next time they get paid and have to pay the loan back, they take out a loan again. It’s a habit that can develop into a never-ending cycle where they have to take out a payday loan every payday just to make ends meet. The interest paid in this type of cycle quickly adds up, trapping people in a state where they can never get ahead and pay off their initial loan.
What Other Options Are Available?
If you find yourself in a financial bind and have fallen into the trap of taking out a payday loan, there is hope. There is a way out, a way to break the cycle so that you can become more financially stable. The first thing you need to do is get rid of the payday loan. Now, you can’t simply stop paying it because there will be ramifications for taking that kind of action. Instead, you should turn to a longer-term loan, with lower interest, that you can use to pay off your online payday loan and catch up on any other bills you are behind on.
A really interesting option you can use to get rid of all your payday loans is Fairstone Financial. They’re a Canadian financial institution that doesn’t solely rely on your credit score to offer you a loan. Which means that even if your credit score is sub par but you have regular employment income and have been employed for at least 6 months, there’s a real chance you can get approved for a low rate loan. As their website says, they provide larger loans, for longer periods, at lower interest rates.
The main problem with a payday loan is the fact that you have to pay off the entire balance on payday. That leaves a void in your income that is virtually impossible to overcome. On the other hand, if you approach a bank about a debt consolidation loan, your payments will be much lower. While you will pay on your loan for a longer period, the lower payments will be easier to afford, and the interest rate will be much lower.
You Need To Address The Underlying Problem
Chances are that if you end up needing a payday loan it’s due to not having your finances under control. You’ve probably spent and borrowed more than you can afford and now you are having trouble paying everything off. This is where a company that specializes in debt consolidation can be extremely helpful. Rather than being forced to file for bankruptcy, debt consolidation lets you pay off what you owe by consolidating your monthly bills into a single, more affordable monthly payment.
Use Secured Credit Cards As A Safety Net
If you were having financial trouble there’s a good chance that credit cards were one of the main contributing factors. Credit cards can be a great tool, but only if you have the ability to use them responsibly. To be able to get a debt consolidation loan means that there’s a probable chance that your credit took a hit due to late payments. This is where secured credit cards should come into the picture for you. With a secured credit card you are required to put down a deposit that will be used to pay off your balance should you be unable to make your payments. This gives you the nice financial safety net of a credit card, without the risk of your debt spiraling out of control again.
If you have any questions or comments, feel free to leave them below and I will be more than happy to continue the conversation with you.
All the best,