How You Can Get Out of a Payday Loans Debt
In this day and age, there are so many people having to take out payday loans to survive and live comfortably and over the last few years, there has been a steady increase in the number of people opting to take one out.
Payday loans are usually for a short period of time and they are unsecured in nature. People tend to borrow a small amount such as a couple of hundred pounds for a short time, to tide them over until their next wage and payday. How much interest depends on the payday company.
Different people choose to take out a payday loan for one main reason. That is because they are finding themselves in some sort of financial difficulty and see no other way around their financial problems other than to take out a loan. This could be because of an unexpected or urgent bill, for example, people might spend a little more out of their means for a birthday or at Christmas time and therefore payday loans become emergency loans. However, when people take out payday loans, they run the risk, as with any other loan, of falling into payday loans debt.
Payday Loans for Bad Credit
There was a time when these payday loans for bad credit never existed, and there were just your standard payday loans, which meant that for those people who have a bad credit history, for example, if they haven’t been making credit card or loan repayments on time, or if they have missed the repayments altogether, it tends to be more difficult for them to secure a loan and borrow money.
The term bad credit refers to financial mistakes in a person’s history that would show up on a credit check when they are applying for a loan. Items that show up which could harm a lending decision might include, defaults on a previous loan or credit payment or County Court Judgements. Sometimes, however, customers who have borrowed very little in the past can also receive a low credit score as the lender has no evidence of the customer paying back credit to base their decision on.
When companies say, therefore that they offer bad credit payday loans they are stating that they will still consider a customer, regardless of their previous financial history, so long as they can prove that they will be in a sound position to re-pay the loan when payday comes around as well as meet other eligibility criteria.
Unfortunately, due to the extra risk involved with lending to customers with a poor financial history, the costs of borrowing using bad credit payday loans will normally be higher. That being said, they can be a good way to get you out of a bind should an unexpected expense arise.
Payday Loans Debt
Even though people take out payday loans or payday loans for bad credit to help with their financial troubles, they’re not always a quick fix and can eventually cause even bigger problems in the form of payday loans debt. With both payday loans and payday loans for bad credit, there is always the risk that you will find yourself in payday loans debt.
Payday Loans Debt can Easily Spiral Out of Control Quickly.
This is mainly because they are only meant to be short-term, unsecured loans and therefore come with high-interest rates and if they are not paid on time, i.e. the following month, then the lender will just add extra charges on top.
If these payday loans aren’t paid within the first few months, and with the high-interest rates, before they know it, the borrowers will find themselves in payday loans debt very quickly. This is why people find themselves getting into debt and then into even greater debt when they can’t pay back these short-term payday loans.
How You Can Get Out of a Payday Loans Debt
Even if you find yourself in payday loans debt, it doesn’t have to be a catastrophe. There are ways to get out of such payday loans debt.
Firstly, if someone has taken out any payday loans for bad credit, they need to get themselves back into the good credit rating category.
The best way to begin is to set up a Debt Management Plan and figure out exactly how much is owed and then how much they can pay back each month.
Some companies will allow the interest to be frozen and charges may be stopped so that the monthly payments will go towards paying off the balance. This way, those debts can be paid off much sooner
Making a budget. This is the best way to avoid debt and indeed to deal with any debts.
Cut your expenses. Certain expenses such as travel costs, meals out, and so on can be easily cut back most of the time, and this way, the money that would be spent on such expenses will now go towards repayments
Payday loans can offer a useful way to borrow a small amount of money for a short period. You might have an unexpected bill to pay with days to go before your next paycheck. In such circumstances, a payday loan could be a simple and affordable option for getting hold of the cash you need and fast.
Unfortunately, payday loans are often taken out for the wrong reasons, such as for paying off existing debts if a payment deadline is approaching fast. People can quickly fall into serious debt if they take out new loans to pay off existing ones or have multiple payday loans at the same time. With each payday loan having its repayment date, it’s easy to see how financial management could quickly fly out the window.
In Uk, citizens are no more strangers to debt. Figures show that the majority of us do not pay off our credit card balance in full each month, while a third of us have at least ten different credit cards. Let’s take a look at some of the major reasons why UK citizens get into debt:
1. Loss of income
Expenses are a fact of life. Everyone has regular payments that they have to make, including mortgage/rent payments, utility bills, phone bills, etc., etc. Unfortunately, if our income falls or we lose our job, these expenses stay the same. It’s little wonder that this is one of the key reasons for people slipping into debt.
Half of the marriages end in divorce. In addition to the emotional fallout from this type of major life event, there are usually financial ramifications, and these can be quite severe. Many marriages involve joint bank accounts and mortgages. And if a couple has children, the financial after-effects of divorce can be sizeable, even if the split itself is amicable and doesn’t incur massive lawyer’s fees.
3. Poor financial management
Some people are simply not good at managing their finances. If a person fails to keep track of their monthly income and outgoings, it’s remarkably easy to fall into debt. And once this has happened, it can be a long hard road back to financial security. A couple of hours spent keeping tabs on your finances each month can prevent years of heartache down the line.
There are different types of underemployment. A person may only be working part-time when they would ideally want to be in full-time employment. Or they may be doing a job that doesn’t make full use of their skills because they are unable to secure their ideal job. While the UK jobs market is slowly improving, many people are still underemployed and are therefore not meeting their full earning potential. This means that they may not be earning enough to cover their usual monthly bills and fall further and further into debt each month.
5. Medical Bills
Medical bills can be very costly, even if you have medical insurance. Research shows that emergency medical expenses are one of the main reasons for bankruptcy applications in the UK.
Debt can be caused by any number of things, causing misery, anxiety, and a sense of desperation. If your debts are starting to overwhelm you and you can’t see a way out, it may be time to seek credit counseling, a debt settlement arrangement, or bankruptcy. You should think about contacting a professional who can give you unbiased advice on how to improve your financial situation.
Fortunately, there is a solution for borrowers who are receiving daily phone calls and letters from frustrated payday loan lenders, in the form of payday debt consolidation. This is becoming increasingly popular in the UK, as it enables people to consolidate their debts into a single monthly repayment. Not only that, but professional negotiators can talk to lenders on your behalf and reduce the overall balance of your debts and bring down your monthly payments.
To Benefit from a Payday Loan Consolidation,
you will typically be asked to open a new savings account and pay money into it each month. There is likely to be a discussion with your payday loan consolidation company about exactly how much you can afford to deposit into this account each month.
The funds will ultimately be used as a basis for negotiating with lenders and to pay off your debts month by month. Once a month, you will make a monthly payment to your payday loan consolidation company, which will then divide the funds between the various lenders according to an agreed schedule.
Payday loan consolidation should be a serious option for consideration if you have multiple payday loans. It could save you money in the long run. And in the short term, it will lead to reduced stress and a feeling of being more in control of your finances. Finally, there will be an endpoint insight as you will be able to pinpoint the exact moment in time when you will, at last, be free from debt.