Payday Loans and Debt Management
Posted on Tuesday, July 13th, 2010 at 12:47 pm in Financial Planning
If you’re one of the many Americans hit by recession, you may be looking for fast cash to help with monthly expenses and debt. Payday loans offer a quick financial fix for cash emergencies and can help maintain financial health when used responsibly. Here are some tips for using your payday loan wisely and staying out of debt:
1. Don’t borrow more than you need. If you need a $500 cash loan for car repairs, don’t borrow an extra $50 to go shopping just because you can. Keep your borrowing in check to maintain financial health and only borrow what you need and can afford to pay back right away.
2. Don’t roll over your payday loan. Many payday lenders provide this tempting option for customers who cannot afford to make a full payment. To roll over a payday loan, the customer pays the service charge on the due date and renews the loan for another 14- or 30-day period. However, a new service charge is included when the customer rolls over the payday loan. If you don’t think you can afford a full payment with your next paycheck, either borrow a smaller cash amount or look for online payday loans with payment plans that can work with your budget and pay schedule.
3. Don’t use your payday loan to pay off other debt. The secret to getting out of debt is to avoid creating more debt. If you’re having difficulty paying your creditors, more credit is not the solution. Borrowing payday loans to pay off existing debt will only trap you further in an unhealthy cycle. Seek a more permanent solution by consolidating your payments or contacting a credit counselor if you need extra help with your financial obligations.
4. Do use your payday loan for one-time purchases or emergencies. Payday loans are best suited for short-term emergencies or single large purchases. If you need extra cash to fix your car, visit the dentist, or replace a home appliance, advance payday cash loans can provide the extra funding you need for expenses that are just beyond the reach of your monthly paycheck.
5. Do pay back your cash advance right away. Every time you delay payment by rolling over a payday loan, you add a new service charge for financing. To keep the cose of your loan as low as possible, pay it back in full on its due date.
6. Do ask about payment plans. If you need to borrow more cash than you can afford and have no other credit options, look for online payday loans with payment plans. Your payday loan lender may offer several smaller monthly installments arranged around your bi-weekly or monthly pay schedule to make your payments more manageable. Always discuss payment options with your lender and make sure you fully understand all of your borrowing rights and requirements before signing your application.
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