Can you avoid taking out a payday loan?
Yes, you can. It is pretty easy to fall into a vicious cycle of payday loan debt, for which you need to look for repayment options like payday loan consolidation or settlement. However, you can avoid the payday loan debt trap by not opting for payday loans at all.
The Consumer Finance Protection Bureau data reveals that over 80% of payday loans are rolled over within 14 days. The reason is the high-interest rates of payday loans, thus making it difficult for the borrowers to repay them.
Well, payday loans often seem to be the easiest solution when you require urgent money. However, there are alternatives to taking out payday loans discussed below.
Take out a personal loan
A personal loan is always a better option than payday loans. If your credit score is good, you will be able to obtain a personal loan with suitable terms and conditions. If your credit score is not good, you can approach a credit union. If you are not a credit union member, look for local credit unions and check out whether or not you qualify. You can apply for a loan once you become a member.
However, if you’re not able to take out an unsecured loan at suitable terms and conditions, you can also opt for a secured loan. That is, you pledge collateral to take out a personal loan. The interest rate on such loans is relatively lower than the unsecured loans. But, by doing so, you risk losing the collateral if you can’t repay the loan on time. So, while applying for a secured personal loan, make sure you can make timely payments.
Go for a home equity loan
This option is quite similar to a secured personal loan. If you have equity on your home, you can take out a home equity loan by pledging that equity. The interest rate on a home equity loan is relatively lower than unsecured loans. However, for a home equity loan, make sure you can make the required monthly payments and repay the loan on time. Otherwise, you will risk your home.
Look for local lending institutions
Often local and nonprofit organisations help people overcome their short-term financial concerns. Therefore, if you need to meet your daily necessities before the next paycheck date, you can call 311 to look for local services. Also, search for financial assistance programs if you need help.
Ask for help from your family and friends
It is always better to ask your close friends or family members if you need a smaller amount before your next paycheck date. I know it’s a bit uncomfortable situation. But isn’t it better to ask for help from near ones instead of entering the payday loan trap? However, while taking out a loan from your family or friends, make sure you have a written contract and repay the loan as per the agreement.
Look for a part-time earning opportunity
You can browse the internet to look for an excellent part-time earning opportunity. You can use your leisure time to earn extra cash to meet your financial necessities.
Talk to your office
You can talk to the HR department of your office if they can help you with short-term funding. Organisations often lend short-term loans to their employees, especially if you’re a loyal and valuable employee.
Opt for credit card cash advance
Though it is not a very good option, it is better than opting for payday loans. If you have credit available on your credit card, you can opt for a cash advance. However, before doing so, make sure you know how much interest rate the credit card company will charge on the cash advance. Also, make sure you repay the loan asap to pay as much less interest as possible.
Sell items you do not require
If you look carefully around your house, you will find several items you no longer require. Arrange a garage sale to sell these items and earn some cash. You can help others buy items needed at a relatively lower price by doing so.
So far, we have discussed how you can avoid taking out a payday loan. But what if you already have payday loans and are struggling to get out of debt? In such a situation, you can opt for payday loan consolidation to repay your high-interest loans through affordable single monthly payments. You can also opt for a payday loan settlement if you can’t repay the payday loans in full. You can approach a reputable payday loan consolidation and settlement company and find a suitable solution to repay your payday loans and be debt-free.
Author Bio: Catherine Burke is a financial writer for online payday loan consolidation. She provides information on successful cash loans and payday loan consolidation to help people get over a difficult patch. She lives in Kansas and has earned a frame in the matter of payday loans.