You are laid but still need to pay the rent. You don’t have a payment to pay for the car and need some help. The electricity is shut and needs some solution to pay the overdue amount so you get it back.
Sometimes, all you need is a little amount to get rid of these issues. This is where the payday loan comes in. But what if you are unable to pay it back?
How can payday loans be defined?
It is considered as a loan for a shorter period that comprises a little amount, usually $600 or less than that. Depending upon different state laws, payday loans can be obtained online or in person.
Lenders with payday loans can charge a heavy amount. It can be challenging to pay your loan and bills on time with a higher interest rate.
What happens if you are unable to repay the loan?
Most of the population spends $40 billion a year while borrowing from payday and other lenders.
So if you are the one with this loan and cannot pay it back, you are not the only one. Payday loans affect underserved communities, where individuals are unable to take help from traditional financial institutions like credit unions and banks.
People who consider going with payday loans are the ones with bad credit who are unable to get the money for urgent needs like gas, food, or rent. Often, they don’t have any other option for borrowing.
Defaulting takes place when you are unable to pay your amount on time. This leads to poor credit scores, higher interest rates on future loans, and wages getting garnished. Net pay advance helps in getting the best deals on payday loans and suggests avoiding defaulting on loans.
If you are struggling hard to come out of this cycle, these are the ways to get yourself out.
Increase the repayment plan
Ask a lender if the plan can be extended. Ask to extend before the last day of the loan due date. You’ll also have to sign the formalities to your agreement. Read the document and ensure to understand the interest rate and terms.
Go through your debt
Take a look at all your debts including loans and bills. Focus on the ones with higher interest rates. It is because, the longer time you take to clear it, the more money you might have to pay.
Try a credit union
There are chances of finding them near you offering loans of small installments where you can make essential payments.
Consider applying for a personal loan
You don’t need to be afraid of big banks, especially while applying for personal loans. Personal and payday sounds same, but nothing is common. With a personal loan, you can clear the debts. The interest rates are low and have longer terms while repaying if compared to payday loans.
You might consider taking a payday loan without any need. When you are unable to pay it, various alternatives are there to know. If you already own one, take caution and know your rights. Explore ways to pay it back so that you don’t get stuck in debt.