Payday Loan

The Five Gateways of Getting Out of Payday Loan Debt

Payday loans are debt-traps that can spiral out of control. Often, borrowers can find themselves in a cyclical process of taking out multiple loans, which eventually become impossible to pay back. Despite the problems that these types of loans can cause, they are often an option for those who see no other financial alternative due to the fact that they are easy to avail. It is because of these tricky situations that the lender makes the interest rates very high for these loans, causing borrowers to suffer big financial grievances.

Fortunately, there are a number of ‘gates’ that one can go through to get out of payday loan debt. Below are some steps for how to get through those gates and hopefully then shutting them forever.

Gate number one: Understanding the loan

Payday loans are constantly advertised everywhere, but this doesn’t stop them from being any less confusing. In theory, the loan should do what it says in the name: give someone a loan to help them through to their next payday. Really, the loan should be used only in an emergency.

Gate number two: Considering alternative sources

It’s always embarrassing to ask for money from a friend or a pay advance from employers, but this is going to be much simpler and less of an awkward situation to be in in the long-term because of the difficult situations that payday loan companies put the borrower in. This leads into gate number three.

Gate number three: Investigating the loan

The high interest rates that come with the payday loan often aren’t reasonable. Therefore, it’s a good idea to compare the rates of different lenders. Because of the high interest rates, really think about how much needs to be borrowed. The less money borrowed, the less interest charged and the easier it is to pay back the loan.

Gate number four: Advice

Needing to take out a payday loan suggests an unfavourable financial situation. There are a number of tips out there to help alleviate the problem. Don’t be put off by the word ‘debt counselling’ because most people could probably do with some money management tips, which is all it is, and there is some good impartial advice to be found on a number of online communities and over the phone.

Gate number five: Breaking the cycle

A big issue with payday loans is that money is taken from the borrower’s account through continuous payment authorities. However, if the borrower is unable to cover the payment, they have the right to cancel it. Calling the bank to do this, making a note of the date, time of call, the name of who’s speaking and asking them to record the instructions to cancel the payment will take care of this.

Because direct payday loans are difficult to get rid of once taken on, it’s good to try and avoid them in the first place or deciding not to go back to them. Switching to Direct Debit is a more convenient way to pay bills and it makes payments much easier to cancel. Similarly, paying manually means that there is direct control over what is going out of a bank account. Having a prepaid card prevents going into overdraft and is useful when in the situation of having bad credit.

Using these five gates before, during and after taking out a payday loan will help stop the debt mounting or even accumulating in the first place, hopefully shutting the payday loan gate once and for all.

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