Do you know how to use payday loans responsibly and repay the debt on time?
How to use payday loans so as not to get into debt
Today, there are a lot of microfinance organizations on the market that provide payday loans to the population. In many situations, the services of these companies can become a real lifesaver. A striking example is the need to pay for rented housing in case of a paycheck delay. In addition, getting online loans is very simple. This often requires only an SSN and a government-issued ID; collateral and guarantors are not needed. You can apply online in just a few minutes from any device that has access to the Internet. If approved for a loan, the money is credited very quickly – most often instantly. But before you take a loan, you need to make sure that you do not get into a debt hole.
Make sure you need to apply for a loan
If you urgently need to pay the rent of an apartment tomorrow because otherwise you will be evicted, you can (and should) take a payday loan. But if you do not have enough money to buy a new iPhone, you should think about it. Will you be able to repay the loan within 30 days? Perhaps it is better to wait for your next paycheck or save some cash? Of course, it happens that some products have short-term promotions and discounts. In this case, you should weigh the benefit of an instant purchase and the overpayment on the loan. By the way, if you still decide to save money, then during this time you can find out that a product that seemed necessary may not be so necessary.
Situations where a person does not have a stable source of income deserve special attention. Usually, microfinance organizations do not require proof of income. This has both advantages and disadvantages. On the one hand, the unemployed have a chance of receiving fast financial help. Sometimes this is justified – for example, if you are on a business trip, your wallet has been stolen and you need to find $100-$1,000 for a ticket home. But if you are unemployed and money is needed for entertainment, you’d better abandon this idea. After all, it is worth understanding that the money will need to be repaid soon. If you can’t find a job as soon as possible, there may be problems. All of the above does not apply to people who have an informal but stable income. If you are confident that you will pay off the debt on time, you can take out a payday loan.
Amount, term and conditions
The choice of the loan amount should be approached seriously. If you take more money than you need, you will have to overpay. After all, the amount of interest directly depends on the amount. At the same time, make sure that it will be sufficient. If, in order to save on interest, you take a little less than you need, you will not be able to apply for an additional loan in the same microfinance organization until you repay the previous one. Of course, you can apply to another lender. But then you have to pay interest on this loan.
As for the loan term – here you need to carefully weigh everything too. Let’s say you receive your next paycheck every month on the 11th and decide to take out a loan before that date. Are you sure that the payment will not be delayed? If this happens, it makes sense to play it safe. But it is also not necessary to specifically take a loan for a too long period. After all, interest will accrue every day.
Be sure to read the agreement carefully before e-signing the contract. Pay special attention to information about the loan amount, term and interest rate. Make sure the lender does not charge prepayment penalties. Check out the size of the penalty.
What to do in case of a loan delay
The main advice: do not try to hide from the microfinance organization. If the company wants to collect a debt from you, they will find you (on their own, with the help of collectors or through the courts). If you understand that it is not possible to reap the debt on time, contact the microfinance company a few days before the due date. It is possible that they will offer you to pay only interest, thereby extending the loan term. Some lenders have restructuring and refinancing programs.
If you are interested in payday loans, use our referral service in order to find the right product for your unique needs.
Tags: debt, finance, money, online loans, payday loans