Payday Loan Alternatives


At one time or another everybody of has encountered this situation , not having enough money to make it to our next payday. A common solution to this problem that seems to becoming more popular is a payday loan. While a payday loan may be fast and convenient, it might not be the best solution. A payday loan company offers to loan you money based upon repaying it and a service fee on your next payday. This frequently seems like a perfect solution until you look closer.

There is a easy reason why we are seeing more payday loan firms opening up and advertising so much. Payday loans are very profitable for those doing the lending thanks to the high rates and regularly end up being virtually addictive for those borrowing the money. A recent national survey of payday loan firms discovered that only 37% of companies exactingly reflected their interest rate. At most places the IRs varied from 390% to 851% yearly with the average being 474%. Once you get into a payday loan agreement it is usually tough to get out of it because of the amount that must be paid back at once . In truth 77% of people that borrow money from a payday loan company can not afford to pay it back in full so they roll the loan. When your loan is rolled a part of the whole amount owed is paid and the remaining amount of the old balance, including the old service fees, plus the new service charges and interest rates are added on to a new loan.

Obviously it is awfully difficult to pay down the loan when so much more is being added on to what is owed. If you can not afford to repay any of your loan then you’ll receive an even bigger surprise than the interest rates. It’s common practice for you to sign a wage agreement that permits the payday loan company to garnish the maximum amount of your pay as they wish without having to apply to the courts. An alternative choice available to most companies is charging you with fraud. In numerous areas it is fraud to scribble a check if you do not have the money in your account to cover the check and you can receive court order fines or even some jail time. If you find yourself in a situation where you must borrow from a payday loan company then maybe it is time to stop and reflect on how you’ve got to this point. Infrequently scenarios arise that you haven’t any power over but more frequently it is a fault of bad monetary planning. Now would be an excellent time to study your monthly budget and try to see what went wrong and what you can do to prevent the problem from happening again. Depending upon your present position, there may be better options for you than a payday loan.

For example, if you have got a little time to attend, you may be able to use funds in your 401K plan. Funds withdrawn from your 401K you are only taxed at 10% and if you make agreements with your payroll office to repay the withdrawal from your 401K then it isn’t taxable at all. Before getting a payday loan ensure you have inspected all of your options. Do you really need this loan? Is there a mistake on your credit report preventing you from getting a normal loan or credit card? Can you change your monthly budget to circumvent the monetary problem you are experiencing? Payday Loans could appear like a convenient option but a steep price includes that convenience.

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