There are more than 13 million Americans who go for payday loans each year! But, one need not get stuck in the payday loan debt cycle forever. There is hope.
Payday loans are unsecured personal loans that are targeted at people who require fast money always! There is no requirement for any collateral like a traditional loan. The qualifier is one has to have an active bank account and a secure job. There are companies like Malend, RISE Credit, and CashMax that provide high-interest loans to the desperate and needy. The structure of payday loans is set up to keep people on the hook.
The Loan Structure:
It’s not a short term loan:
payday loan help now are being advertised as quick, fast short-term loans. The loan borrow is in debt for a full five months every year.
Loan fees are huge and heavy:
The average loan fees are $55 every week and the borrower ends up paying $520 per year for multiple loans of $ 375.
Instances of people borrowing loans for the wrong reasons:
Most of the payday borrowers around 80% spend the loan amount on everyday expenses, say groceries, gas, rent, and other expense rather than emergencies!
Cycle becomes vicious:
The average borrower needs to pay over $ 435 when the next payday arrives after obtaining the loan amount! Most of them invariably end up renewing or extending the loan. More than 85% of payday loan borrowers again obtain a loan after the previous one is paid in full!
The consequences of not paying back payday loan:
If a borrower defaults on a payday loan, it may result in ever-growing fees, penalties, and chances of legal action! The reason being payday loans use automatic debit payments to take funds directly out from a bank or prepaid account.
There are chances of ending up with overdraft fees! This may cause problems in not being able to pay for necessities like food, daily expenses, child care, and other utilities! There are also threats coming in from debt collectors on a regular basis. It becomes a very unpleasant experience. One should opt for ways to get help in paying back payday loans!
The methods of getting out from payday loan debt:
The laws governing payday loans vary from state to state. Some states like Colorado, are now working to change the way payday loans are administered in order to make it easier for customers to pay back loans and void the snowball effect of constant loan renewal. Other states require payday lenders to offer borrowers an Extended Payment Plan (EPP) which stops the accrual of fees and interest!
The options of paying back of payday loan and debt:
Extended Payment Plans:
If one borrows from lender who happens from the community Financial Services association of America (CFSA), then there is extra luck. That means one maybe one will have more time to repay the loan without any additional fees. There could be interest added for the same service. The person will not be added for the same service