As we have reported in past posts, payday loans are hardly ever a good idea. However, sometimes people find themselves turning to payday loans when they have bills that are due and don’t know where else to turn.
The reason payday loans are scary is that they often come with extremely high interest rates. What that means is if you can’t pay back the money you owe when it is due your financial situation goes from bad to worse.
As Bank rate’s Debt Adviser recently pointed out in an article, payday loans often result in a debt cycle that can easily get out of control. People who are desperate for an immediate sum of money ignore the long-term consequences of the loan.
Instead of resorting to a payday loan, the Debt Adviser suggested to first consider the following alternatives:
- Asking a family member or friend for money.
- Taking out a loan from a credit union or another small lender.
- Putting off the expense until you have the money.
- Requesting overtime or finding a part-time job to save up the money.
- Asking the creditor you owe for more time to pay back bills.
- Putting the expense on a credit card if it can’t wait.
The Debt Adviser explained that all of these alternatives, though not perfect, are better than taking out a payday loan.
For people who have already found themselves in over their heads with payday loans and other forms of debt, the Debt Adviser suggested meeting with a bankruptcy attorney to find out if bankruptcy might be an option to have the debts discharged or help you work out a reasonable repayment plan with the payday lenders and other creditors you owe.
Typically, people who turn to payday loans feel like they are backed into a corner and don’t have any other options. However, there are always options for people in dire financial situations and there are also people available to help. Seek out more information today.
Source: Bankrate, “6 alternatives to payday loans,” Steve Bucci, Nov. 3, 2014