Payday Loans

5 Very Useful Tips To Pay Off Cash Advances Payday Loans

Cash advances payday loans are small amount of short-term loans. The majority of borrowers who take this type of loan are the ones who earn a very limited monthly income and have a strict budget to follow, and that is the reason why they often fail to repay the loan on its scheduled due date. As per latest reports, over 80% of all payday loan borrowers end up making default and eventually get trapped into a vicious cycle of debt. The short repayment period is not the only risk factor associated with these types of loans. There is an array of other major risk factors as well that include extremely high cost of lending, automatic renewals and rollovers, unfair collection practices and the chances of fraud. The main reason why these loans are still in high demand is because they claim to offer plenty of attractive features, such as easy application process, simple eligibility criteria, no credit checking, paperless process, no faxing required, no teletracking, fast approval and instant access to the borrowed money. These attractive features often succeed in hiding the serious risk factors. If you are struggling with payday debts, you can consider taking the following steps to get rid of the same.

Is Your Lender Doing A Legal Business?

There are hundreds of payday loan companies that are running their businesses illegally; they are even issuing loans to consumers residing in states where payday lending is banned. Therefore, if you are having trouble in paying off cash advances payday loans, you must first get detailed information about the company you have borrowed from. Whether it is a local payday loan store or an internet-based lender, it must be duly licensed to issue such loans in your state. You can do a thorough background check of your lenders by checking their records maintained by the Better Business Bureau (BBB). Though the membership to the BBB is not legally mandatory, it gives a sense of guarantee that the lender is genuine one.

Every state these days has enacted specific laws to regulate cash advances payday loans. Get yourself educated about the legal rights provided to you and the kind of options you have. Look at the maximum interest rate and other fees that lenders are legally allowed to charge. Is your lender following the laws thoroughly? If they are charging you more than the allowed limit, you must talk to them and let them know that you are aware of the laws. If they still do not reduce the rates under the legal limit, you can file complaints against them. What is more, if payday lending is banned in your state and you have still been issued a payday cash advance, you are not legally obligated to pay off the loan. You can simple go ahead and file a complaint with the Federal Trade Commission or with your state authority.

Stop Taking New Payday Loans

Even if your lender encourages you to borrow another payday loan to pay off the existing dues, do not go for it. Always remember, payday loans are problems, not solutions. So, learn from your mistakes and break the cycle of payday debt.

Get A Practical Idea About How Much The Loan Is Costing You

The next thing you have to do is to calculate how much exactly cash advances payday loans are costing you. You must have a very practical idea about how fast the outstanding debt balances on your multiple payday loan accounts are growing. In general, you are charged additional interest and other fees at an extremely high rate for every single day of delay in payment. If you wait for one more month, the current balance may grow to just double or triple of it.

Liquidate Some Of Your Assets

One thing is very clear – you need to get rid of payday debts as soon as possible. The longer they stay outstanding in your name, the faster the debts will grow. An easy way to get that extra money to pay off cash advances payday loans is by liquidating some of your assets. It is obviously a tough decision, but if you do not want to borrow another loan, this is probably the best way to deal with your debt problems. You can start by organizing a garage or yard sale. You can then choose some of your assets that you can live without; sell off those assets and pay off your rapidly growing payday debts with the proceeds thus received. Once you become debt free, you can start saving money to purchase that asset again. The beauty of this strategy is that it does not require you to take any new financial liability.

Borrow A Conventional Loan

If you are not comfortable with the idea of selling off an asset to get the money needed to pay off cash advances payday loans, another alternative is to borrow a conventional loan, such as personal loan or a home equity loan. These conventional loans charge very low rate of interest as compared to the expensive payday loans. Besides that, the conventional loans also provide you the convenience of making the repayment through easy monthly installments. You have two options – you can either obtain an unsecured loan (such as, a personal loan) or a secured loan (such as, a home equity loan). Secured loans require you to put an asset as collateral against the money borrowed, but they offer a much lower rate of interest as compared to unsecured loans (where no security is required). The idea is to pay off all your payday debts using the money thus borrowed. This way, you can easily manage your debts and take control of your finances, as you will end up switching the multiple high cost payday loans with a single low rate conventional loan.

If you the outstanding balances on cash advances payday loans are overwhelming and you just do not have an idea on how to handle things on your own, you can consider hiring a credit counselor. The counselor will review your specific debt and financial situation and then will suggest you the options you can try to pay off your debts.

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