Emergencies happen when you least expect it. And too often its at the worst time. Unexpected circumstances can be better handled if your credit was good and you were able to take out a small loan. However, this is not always the situation. Many folks have a credit report that is considered borderline bad. And people, especially college students have no credit at all. Most go with the Payday loan alternative but in the long run, it hurts you more than it helps; Here’s the explanation on how to get out of Payday loan debt.
First, What are Payday Loans and their Cons?
Payday loans are quick and convenient ways to get cash. These are short-term loans, typically under $500. You will to write out a postdated check made out with the entire amount. Once the money is in hand, you will be expected to pay back the loan within 14 days in most cases. If the entire balance is not able to be paid off then at least the interest will need to be paid. Your credit score is not needed. The two things you will need is a bank account and current employment.
Normally the interest on a payday loan is 400%. Compared to personal bank loans, where the interests may only be around 5-10 percent. One reason the interest is so high on payday loans is due to their clientele. Most customers who do business with payday loan companies have failing or no credit. Also, they may have lower paying jobs, which makes them even more of a liability.
And third when it comes to collateral most payday users have little to no assets. Which is why they are utilizing the services of a payday loan office in the first place. A small bank loan can easily be given if borrowers had the assets to put down. Assets can be a home, automobile, boat, retirement fund or even a small business.
Payday loans become a problem when the loan can not be paid on the specified date. In many cases borrowers will find themselves paying the interest on the loan every two weeks. If only the interest continues to be paid, the actual loan will sit unpaid. If the payday loan agreement is extended, that cause even more charges to be applied. This debt is very easy to accumulate, because of the extremely high interest rates, along with the short amount of time given to pay it.
How to End Payday Loan Debt
Due to the nature of payday loans, most states have set up rules and regulations to help borrowers avoid payday loan debt. One way of achieving this is by offering clarity to the situation. Having a financial consultant available to speak to anyone with questions is one way that this is done. Financial consultants are trained to deal with persons who are having financial difficulties. Payday loan debt can be reduced in various ways. To pay off your payday loan debt borrowers can choose consolidation.
To consolidate payday loan debt the you will need to develop an agreement with a payday loan debt relief company. This company will look at your circumstance and try to figure out the best way to go about it. Consolidation will combine all your debt into one payment. This agreement will stop all calls from the payday loan office, however you will have to accept the fees and interests that have already been attached to the total from the payday office.
Another reasonable action would be to sign a payday loan debt settlement. To get out of payday loan debt this agreement is sound and secure. All of the debt will be combined and completely paid off. Similar to the agreement which will consolidate your payday loan debt, this agreement will be less. The bank agent will negotiate with the payday loan office to reduce the payday loan debt significantly. Once both parties have come to an agreement for the settled amount borrowers will then accept it and all payday accounts will be paid.
National Payday Loan Relief
A reliable payday loan debt relief company like National Payday Loan Relief will attempt to come up with the best agreement for clients by working with the payday loan office. The settlement agreement will most likely need collateral in order to set up the agreement. If you do not have the collateral a co-signer may be needed. With this kind of agreement your debt can be in thing of the past very quickly.
You will need to continue to make payments, except now the payments will be monthly. Also the payments will be much less. The payday loan debt company will arrange it this way to make sure borrowers are able to move on with his/her life without the added stress. The goal is to allow you to pay on your other bills, while paying on your payday loan debt.
There will need to be a set time in which the payment is completely paid off. If the payments are made each time on time, then there is no reason why on the term end date everything is not completed. Once the debt is paid off, the property or collateral will be released. If one or two payments are missed, that does not mean that the property will be immediately taken. The account will need to be severely in arrears before the company considers doing that.
Financial consultants can also counsel you when it comes to your spending habits. The reason that causes borrowers to end up in this unpredictable situation in the first place could easily occur again if you do not get a handle on his/her spending habits. Sometimes it only takes a little advice when it comes to what to prioritize and what can wait. Financial consultants can help guide you on how to save and stash away money for a rainy day. Since many of these situations pop up because of an unexpected emergency, saving money specifically because of that situation can be very beneficial. Sometimes saving up a little money can be much easier than expected.