Payday loans can at times become a dreadful experience for the burrowers. What's a payday loan? It is typically a loan granted against your salary check. The amount depends on your salary, monthly liabilities including any existing loan and credit score. Eligible applicants enter into an agreement. The re-payments are made by equated monthly installments (EMI). The payment date is negotiable. But it must be made within the due date to avoid all hidden hazards.
No one can deny need of emergency fund. The best practice is to strengthen your savings when you could afford little bit more for luxuries. Do not ever spend a single bulk from this emergency reserve fund. A little bit of savings each month can create a dependable reserve fund. Trust me. It may sound too good to be true. But this force saving has helped many people during the time of adversities. So, start it from today.
And what if you need the cash now?
There are situations that demand so. You can not defer payments for children's education, you have to pay all the bills for healthcare, plus, there are social occasions, in which everybody expects your contribution. This is how life has been going in this satellite age. And I or you are not any different creature. We cannot break the social norms. So, payday loans can help you. The procedure of approval is fast. Faster than any traditional bank loan. The process gets completed with minimal paper work. From application to verification - the entire process is carried out mostly online. So, you really do not have to worry to much about processing time. Subject to approval, you can expect the loan amount directly deposited to your bank within 24 hours of approval. That's a SWEET deal at the moment of crying needs.
The fear factors of payday loans:
#1. Rate of interest.
Interest rate on payday loan is higher. It can actually cost you $15 - $20 (avg. $17.5) per month for each $100 dollars. So, you actually re-pay the loan amount itself within 6 - 7 months.
#2. Service & Processing Charge
Each company imposes some kind of service and processing charge. This is be added to your loan total. So, accumulated dues may even increase. Plus, interest is calculated on a flat rate instead of reducing balance method. So, until and unless, you repay the whole amount, you will continue to pay the interest on the total loan amount.
#3. Early repayment option
Fine prints may include a few extra bulk penalty for making early repayments. So, even if you have cash, you might get confused whether to repay the loan early or not.
#4. The trap & repeat loans
A fragile 2% of the burrowers do not entertain any repeat loan. For others, it just work like a deadly trap. They prefer to top up the existing loan or can even consider a new loan. This makes it impossible for them to repay the loans completely. So, they continue to pay the fat interest amount each month. Since, it is easier to apply and get approved for a payday loan, this just works like an addiction. I have seen people burrowing money just to purchase a new prestigious iPad.
Respite from Payday loan
Each thing in life has a good side and an evil effect. You define your emergencies. Education, healthcare, and a few domestic supplies. Nothing more. Take a payday loan if you do not have any other option. Make regular repayment. Within a few months, apply for a regular personal loan from a bank or a financial agency. Be ready to go though the long processing. But if your application is approved, you repay the outstanding payday loan amount. You will finally get a respite from paying huge interest rate each month. Just do not let payday loan become a part of your monthly recurring expenditure. Make every effort to save every single cent towards your reserve fund.
Hope it helps. Thanks for reading. Subscribe to your RSS feed for instant updates and offers.
