Repayment Of Payday Loan Debt – Some Crucial Don’ts
There are plenty of things that you must take into account when it comes to repayment of payday loan debt.
Lack of planning and foresight is one of the main reasons why many people are pushed into the viscous cycle of payday debt. Following is a brief rundown on some of the things that you must not do in order to avoid getting into serious debt troubles.
Don’t Be Late On Your Payments
The interest rates on payday loans can be unusually very high. The APR (annual percentage rate) that lenders charge on these loans is usually in three digits; it can be anywhere between 150% and 700% per annum. So, the interest for even a single day can be substantial. If you are late on repayment by a week, you may have to pay hefty penalties (including additional interest for seven more days), which can make the repayment further more difficult to you. Therefore, you must plan everything in advance in order to avoid the possibility of late payment.
Don’t Just Make The Minimum Monthly Payment And Avoid The Actual Debt
Just like credit cards, many payday loan companies these days offer a “minimum payment” option for the repayment of payday loan debt. As per this provision, the borrower is asked to pay a comparatively very small amount of money on the due date and get the repayment period extended for one more month. The same process can be repeated the next month also. But, as any wise man can figure it out that using this option only means that you are avoiding actual debt, which is in reality growing enormously because you have to pay interest for the extended period of time. Considering the sky-high rates payday lenders charge, your outstanding loan balances can become double or even triple within just a couple of months. Therefore, you are strongly recommended not to use this option. Always remember, the best way to solve a problem is to face it, not to avoid it because avoiding it will not solve it; it will only make the problem worse.
Do Not Allow Your Checks To Bounce
When it comes to the repayment of payday loan debt, you must avoid the possibilities of check bouncing at all costs. As part of the process, when you apply for a payday loan, you are asked to submit a post-dated check (principal amount plus interest and other charges) to the lender. On the set due date, the lender sends the check for collection to your bank (where you have your checking account). If the check is bounced because of non-sufficient fund in the account, you will be charged a hefty penalty both by your lender as well as by your bank. Worse, many lenders keep sending the same check for collections again and again, which means you may be charged a high amount of penalty for multiple times. Therefore, before you borrow cash advance, make sure that you will certainly have sufficient fund in your bank account by the set due date and that your check will not bounce.
Overall, if you follow the above don’ts regarding repayment of payday loan debt, you can easily avoid the possibilities of getting trapped into a viscous cycle of payday debt. When it comes to dealing with payday lending, you have to be very careful in your approach.