Payday Loan Debt
The payday loan has long been a controversial method of meeting one’s financial obligations. Most financial experts counsel against taking on payday loan debt while many payday lenders are seen as taking maximum advantage of the most vulnerable among us.
On the other hand, however, when utilized responsibly, they can undoubtedly assist you in extricating yourself from the dangers posed by sudden unexpected expenses.
The Dangers of Payday Loan Debt
Whilst a payday loan can seem like an acceptable quick fix when your payday is just round the corner, any failure to pay on time can cause issues and send your finances into a crippling downward spiral. The principle dangers associated with payday loans are:
● Interest rates – Payday lenders were notorious for charging the highest interest rates possible on these loans. Not only that but failing to repay the loan within the agreed upon time frame would also trigger penalties and fees which quickly overwhelm many borrowers. Fortunately, with new government legislation to regulate out of control payday lenders, the costs have been brought down somewhat. Interest rates on these loans have been capped at 0.8% per day of the amount borrowed and the borrower will now never pay more than double the amount of the loan.
● Short Repayment Periods – Although there are lenders who will give you up to several months to repay payday loan debt these are typically exceptions to the rule. What is more common is that you will be required to repay the loan in full at the end of the month or on your next payday. It’s a simple matter of fact that many people just don’t understand the implications of agreeing to such a short repayment schedule and are unprepared and unable to meet the deadline. Failure to meet the repayment requirements, as touched on above, will then typically trigger an onslaught of fees and penalties that can result in serious problems for the borrower.
● Direct Access to Your Bank Account – In many cases when you apply for a payday loan over the Internet you will be required to provide the lender access to your bank account. Many people discover later that the payday loan company is making unexpected deductions from their account. This may be to cover “fees” you didn’t realize were hidden in the fine print or they may just be cash grabs. In some cases your bank account information may be shared with hundreds of other companies, some of whom may also try to extract obscure fees directly from your account for no good reason.
We strongly advise that if possible, you should always avoid using a payday loan service as they can cause devastating damage to your finances and your credit score if not handled properly.
If, however, you have gotten yourself in over your head with one of these companies and you need payday loan advice or payday loan help there are a plethora of agencies out there today who will be glad to discuss options with you.
Keep in mind, however, if the lender has not in any way violated the agreement your chances of getting relief from the loan are minimal. The best course of action is to avoid the temptation of payday loan debt altogether.