Why do people take multiple payday loans?
Getting multiple payday loans can be a quick route to disaster. In the recent few years, the numbers of people who have got themselves trapped into trouble with payday loans have soared. Countless number of people from different countries had to turn to consumer credit counseling services for assistance as they had up to 10 or more payday loans. There are several reasons why people take these loans.
It is true that a payday loan is a helpful solution to consider during short term emergency. But it is important that you do not have more than one payday loan at a time. You need to make sure you understand how much it will cost and you should be able to repay it back as per schedule. Payday loans are short-term credit and it can help you deal with all sort of unplanned expenses.
Payday loans are high cost loans. Lenders offering payday loans can charge up to 400% APR. So, if you have already taken out more than one payday then you are already in trouble. Lenders tend to make it worse by promoting their loans to people who have already taken payday loans. In addition, such lender will lend money to almost anyone regardless of their credit score and without credit checks. This makes it absolutely easy for anyone to get multiple payday loans, putting the borrower in a real danger of debt crisis.
Since payday loan is a short-term loan they are usually offered for just a few weeks. In order to get the loan you need to write out a check for the amount you are borrowing. The lender will keep that check until your next payday and cash it on the due date. Lender will extend the loan and charge you extra fee if you do not have the necessary amount in your account to cover the loan amount you have borrowed.
In addition to high APR, a payday loan can cause other problems. When you sign up for this loan, you will have to give the lender the right to visit your checking account to get the borrowed money withdrawn. This will leave you vulnerable to scam and fraud. The lender may also take legal action against you or send your account to debt collector. All these will have negative effects on your credit score.
Before you apply for a second or third payday loan you should first try to understand if you really need it and if you will be able to repay it back on time. Most people apply for a second payday to repay back the first one. Possibility of getting a second or third payday loans will depend on the lender and your state of residence. There are some stringent criteria that you will have to meet. Lenders will want to ensure about your repayment ability. For that they will review your current financial situation and consider other factors that may include your credit history, past payments made on your current loan, current employment and income.
Just because payday loans are easy to obtain and qualify does not mean you should apply for them multiple times. You may end up getting trapped in a cycle of high cost debt and it may become difficult for you to overcome it. If you are still looking for a second payday loan do not forget to consider your repayment ability, check your budget, be aware of rollover fees and so on.
Compare all the available options ahead of applying and always go through the terms and eligibility criteria carefully. Go through the range of payday loans available and find the deal that is right for you.