Risk Of Borrowing Payday Loan And The Escape Plan

by / Thursday, 07 July 2016 / Published in Payday Loans

Short term finances like payday loans seem lucrative loan option to many who are stuck in financial crisis. These loans can be a useful loan alternative but there are occasions when getting a payday loan is not a good idea. It is because payday loan is a high interest borrowing option. Here in this column, we will discuss about payday loan pitfalls and their solutions.

Problems you might face when you opt for payday loan and their possible solutions?

You may have pending bills like hospital charges, urgent car repairing expenses, credit card dues, bank overdrafts etc to disburse off but your next payday is not near. In this situation, getting payday loan can be your escape plan but there are things which you must keep in mind while choosing such a loan option:

Fees and interest charges:

Payday loans are short term loan option with high interest rates. Online loan calculators will help you to figure out the total cost of borrowing. So, you can exactly know how much you should borrow considering the interest rate charged by lenders. You must remember that the more you borrow, the more interest you will have to pay at the end. Borrow that much amount of loan which you can pay back on specified time. When you borrow more than you can afford, you face problem in making payment of loans due to hefty interest fees.

How you should plan the next month budget:

When you borrow payday loan to manage unforeseen expenses you know that you will have to pay back borrowed funds with your next month salary. You need to plan the next month budget in such manner so that you can cope with losing a substantial amount of money from your salary. Surely, there will be usual expenses which are maintained with your monthly salary. Work out ways to deal with these expenses. Spend carefully and wisely so that you can avoid requiring another loan.

What you should do if you are unable to pay back loans:

It may happen that for some reason you are not able to repay the loan amount within time. If the loan amount is not repaid within time then lender will charge you with additional penalty fees. Non repayment or late repayment can be an expensive affair. Find a way out of the problem by timely communicating with the lender.

Borrowing payday loan is not that risky if you are confident about your repayment capability. For short term financial commitments these loans are an ideal choice provided that you should use them sensibly.