Dealing with payday loans needs you to follow a very careful consideration. If you do not be careful, you can make your financial even worse. To avoid that, follow these tips.
Know the problem of why you need payday loan
The issues which is always related to payday loan is the high level of interest, which each can mount up. In average, people can end up by paying up to 400% of interest within two weeks loan of just about $100. As the result, this kind or extortionate rate is able to trap unsuspecting borrows in a needles cycle for having repetitive debt. It also often exacerbated if the reason for original loan is just to cover the reduction in cash flow. If this is the case, soon you will find yourself drowned against the rising tides of you costumer debt.
To get yourself safe from kind of situation, you need to assess, what the loan is for. Make sure whether securing a short term loan, which is accompanied by substantial interest, will be the best way to help yourself . Payday loan is effective for making unexpected purchase or provide short term relief for financial crisis. However, it is not suitable to help people who want to settle monthly bills as well as living expenses.
Can you repay the interest?
This second tips need you to consider about payday lenders. One important thing to know is, there is no national guideline to regulate payday loan. As the result, the rate of interest can have far difference between one state and another. It usually starts approximately 237%, while this number still can move upwards. Simply, the interest you will have depends on the lender as well as the duration of the agreement. Therefore, you need to calculate the total amount, which would be repayable, at the end of you agreement. For your information, the typical annual percentage rate, or APR, in a credit card is around 13%. Meanwhile, bank loans often repaid at the average limit of 39%. It may be difficult to count the total sum, as payday loan has vast and variable level of interest. Before dealing with a loan, make sure you get informed of loan agreement and the specific date.
Do not sure multiple lenders
For getting cash loans, some people often deal with multiple lenders. Even though it can give you a moment to breath, in the end it can kill your financial life. Two reasons for avoiding it is, fist, it is against the law. Second, it can leave you with piling debt, which exceeds your monthly salary. On the other hand, you will have renders with repayment that you cannot make in full. Therefore, you need to secure a single loan against any given paycheck. Similar case for it is, when you secure a loan from a new company to pay an existing balance. This is also an unwise thing to do. Even though it is not illegal, it is a very inappropriate thing to do. It may break your debt cycle for a little. However, this kind of multiple loan can end up give you more problems.