In simple, layperson terms, a payday loan is also referred to as a salary loan or payday advance. It is usually a small amount loaned out for a short period of time and may be connected with the payday of the person borrowing the loan. This type of loan is linked with the borrower having some form of documentation of being employed or on payrolls, somewhere.
To prevent wrong doings, the governments of countries have some control over the annual percentage rate (APR) that lenders charge. In most events, the primary loan revolves around the lender giving an unsecured loan to be paid back at the time of the next paycheck. Also, this may involve some amount of checking on the source of income and the salary amount, beforehand. Mostly, the borrower is asked to write out a post dated check to the lender of an amount equivalent to the full loan along with the surcharge. At the time of maturity, the borrower comes to the lender and gives back the pre-designated amount himself or herself. If this does not happen, the lender is fully in his rights to redeem the check.
It is a fact that a person is likely to use the payday loan method if he or she does not have a bank account. Pay loan lenders usually charge higher interest rates than traditional banks. It is basically the lower income group of people or those who come from the uneducated class who seem to utilise this route of borrowing money more often than those who are educated and with a steady, high and secure income. As per the laws of the United States, a payday lender is allowed to make use of the same industry standard collection practices which are used to collect other debts. These are even enlisted in the Fair Debt Collection Practices Act (FDCPA). This authority places strictures on debt collectors from using unlawful tactics to collect debts. These methods include not called debtors at their workplaces or calling them before 8 a.m. or after 9 p.m.
Actually, payday lenders tend to get off easily because they, smartly enough, do not even call your loan, a loan. It is cleverly termed an ‘advance given for a fee.’ However, if you are unable to pay back within the given time, the fee often gets doubled. For example, if you borrowed $150 at a rate of 60 per cent interest, your monthly installment will be $30. In a span of six months, you would have paid back $180, in place of the $150 you have borrowed. Try to take the following three steps to save yourself from a financial goof-up. Make it a point to make your payments on time each month with a secured credit card. Try to make borrowings from your local credit union. These have several, less expensive ways to lend money. When your credit score builds up, go in for a low rate credit card or low rate personal loans. When you have the time and energy, go to the National Foundation for Credit Counseling to get reliable information on this subject.
If you do not have a credit score, first create a budget. Cut out on unnecessary expenses to get there. Concentrate on getting a credit score of above 700. One of the first steps one can take to be in a financially safe situation is to have living expenses for at least two to three months as your savings. The next could be a low interest credit card like the 9.99 per cent PenFed Promise.The good news is that there are several units like PayDay Escape available today for services like payday loan consolidation, offering power of attorney for real time service, and also for stopping automatic debits from payday lenders et al. Such companies have payday loan consolidation experts who can work out a deal to connect with the payday lenders, also assimilate the payday loans into a simple monthly installment, even re-negotiate the payment plan and create a get-out-of-debt plan which will really assist you in clearing your debts and take good charge of all your finances.
Actually speaking, the whole idea of getting a quick buck causes many a people to opt for payday loans. However, little do they realize that this is the beginning of a vicious cycle. Even if one can pay off the loan, another one may need to be taken for the next pay cycle. Then comes the addition of the origination fees and rollover fees, making the whole deal very difficult to be rid of. Debt consolidation companies like PayDay Escape offer a payday loan consolidation program to end this ordeal. With this, one can put a stop to the 500 to 600 per cent interest rates levied by lenders, consolidate into one less-amount monthly payment and even do away with interest fees. Also, the added harassment of lenders chasing you all over the place or calling you at odd times and places to seek their payment is done away with.
Opting for debt consolidation schemes really is a simple and straight way out of clearing old debts and that too in a manner and means which is accommodating. Dealing with lenders is not easy. Especially when one is unable to meet with their requirements and want to be rid of their constant barraging and threatening calls and letters. It is not a simple life to lead with lenders at one’s back and trying to get the borrowers to meet with their multifarious demands. At a time like this, it is best to opt for an agency which will get the borrower out of the spot of trouble and into a plan which will rid them of unwanted irritants. This will smoothen out the financial contingencies in a manner which will really help the borrower out of the financial mess they are in and into times where they are able to handle their monies in a better and more comfortable manner.