How to not to Get into a Payday Loan Trap?

Nowadays, popular payday loans that are great in multiple essential situations are often considered to be not really beneficial. They are restricted or completely prohibited in multiple US states. The rules and regulations were issued and implemented due to extremely high annual interest rates.

12 million existing payday borrowers throughout America complain about unaffordable fees and the payday lending market that is not price-competitive. Having got a small loan amount due to an emergency such as an injury, household equipment breakdown, car accident, and being unable to pay back the credit very soon, borrowers are forced to apply for the additional credits or ask the friends or relatives to lend them some money.

What is the Payday Loan Danger?

Actually, it’s easy to get buried in the debts, as the fast loans are targeted to the people that need the money urgently, due to emergencies. These borrowers are commonly low-income or part-time workers that have no collateral to get a cheaper type of credit.

Payday loans are generally:

The loans that are designed to be short-time and emergency, are often taken for the false reasons, such as rent, gas and meal expenses. The problem is sensationalized due to some borrowers that are not forward-looking, taking out the short-time credits repeatedly, several times per year, and being forced to pay pretty high interest rates that make up to 300-400% annually.

Thus, the households that fail to pay the loans back in time, are commonly on the tight budgets. They have to pay the primary loans, the interest and, in several months of delay, the penalties. Additionally, the consequent legal actions are possible. As a result, they may have no funds for the essentials like childcare, food and utilities. Finally, the borrowers get very unpleasant calls from debt collectors.

How to Negotiate the Best Loan Conditions?

The debt cycle is to be stopped on time. The payday loans are administered in different ways in various states. For example, in Colorado, the lenders are required to offer an EPP (Extended Payment Plan) to the borrowers. This option is great as in gives you extra time to repay the debt without the additional interest or fees. To get it, you just need to:

The lenders will offer you the new, better credit conditions. But they are to be the CFSA (Credit Financial Services Association of America) members and follow the best business practices.

Alternatively, you can use the other options such as credit counseling or bankruptcy procedure. The counseling agents will advise you how to:

The credit industry professionals know for sure how to restructure the debt, determining the best possible settlement amounts and find the additional money sources.

Bankruptcy is an undesirable, but still an acceptable option that allows you to get out of the loan without any unpleasant consequences such as imprisonment or default charges. Any threats like these are illegal, and the people that make them are scammers.

Thus, sometimes, you need to get a payday loan for an emergency reason. However, it is to be paid back asap. As soon as you get out of it, ask for the credit report, and clean it up by signing the document. Finally, try to earn more and have some life savings to avoid repeated loan renewal. Maintain your family budget reasonably and let’s hope that you avoid any car accidents, injuries or unexpected illnesses.

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