What are the Pitfalls of taking out a Pay Day Loan?

Mar 07, 2016
Author: Ean Barnard

Pay Day loans can be a great help and a good tool for easily borrowing smaller amounts of cash during an emergency if you don’t have other financial options. You might use a Pay Day lender for an immediate and temporary need such as paying a medical bill, repairing your car, or other smallish once-off expenses. We all need help sometimes to cover some unexpected costs, especially if we don’t have credit cards or savings lined up. Because Pay Day loans don’t require credit checks, they are an easy option for people with financial problems to obtain quickly and hassle-free.

But first. Let’s Stop… and Think about the possible Negatives.

It is of uttermost importance that you repay a pay day loan as soon as possible. Many individuals get into tight situations with these types of loans when they are unable to make quick repayment of the debt. This is where the trouble starts. If you can’t pay the loan at the end of the term, you’ll be charged costly additional fees. This can drag you into greater financial debt. The reason? Pay Day loans are short-term loans, and, they have very high-interest rates. Thus, if you default on your payment, it’s bad news. Some individuals who’ve defaulted on their pay day loans in the past have even had to take out a secondary loan cover the extensive costs.

 

Here at Fincheck, we want you to be in the most profitable and fitting position to cover your sudden costs. Even if you have a stable fixed income, you never know what can happen, life is uncertain at times. Thus, if you’re a bit unsure of applying for a Pay Day loan, rest assured. You have other options!

The 2 best alternatives:

Asking for an advance from your employer.

If you’re stuck in a financial emergency, consider talking to your employer for an advance on your salary. The benefit of an advance is that it’s not a loan, it’s your money. You’re just getting it sooner than you normally would have. It’s much cheaper than a payday loan because there is no interest, because it’s not a loan. So don’t be shy, ask!

 

Consider Consumer Credit Counseling.

If your financial situation is spiraling out of control, consumer credit counseling can be a great resource. Debt counsellors can work with your creditors on your behalf to negotiate lower interest rates and lower monthly payments. It’s important to make sure you’re working with a legitimate credit counseling service and not a fly-by-night scam operation that preys on financially strapped consumers. Fincheck recommends you look for registered debt counsellors on the NCR website.

 

If you’re in a pickle, don’t rush to get a Pay Day loan, you have many alternatives. If none of them prove to be profitable, you can consider a Pay Day loan... only if you’re confident in your ability to make payment! Feel free to compare various Pay Day lenders here if need be.

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