When you’re in dire financial need, it’s easy to think that a payday loan is your only solution to your problems. This may be true in some cases, but if you’re not careful you could be making your financial situation even worse. Payday loans are expensive; the fee for the loan usually amounts to between $10 and $30 for every $100 you borrow, and that will increase if you cannot pay it all back on time. Before you take out a payday loan, consider some of these other options first.
Contact Your Creditors
As frightening as it may seem, contacting your creditors is always a good idea if you cannot pay what you owe. You will still have a debt to pay off, but many creditors will be willing to work with you to come up with a new payment plan or a reduced rate. Some will even be willing to give you more time to pay back a loan. In any event, the worst thing you can do is nothing at all, so take the time to call and at least explain your situation.
Consider Other Loan Options
You may have other options available to you that are a lot cheaper than taking out a payday loan. You can ask your employer for an advance on your next paycheck, overdraft protection on a bank account, a small emergency loan from a credit union or even a loan from a family member or friend. None of these are ideal situations, but they are usually less expensive than a payday loan.
Contact Social Services
Many people are unaware that they qualify for social services that can help them with food, housing or utility bills so that they can better manage their debt. There should be a Department of Human Services center near you, so give them a call and see if any help is available. You might be pleasantly surprised.
Consider the Long-Term Consequences of Payday Loans
If you take out a payday loan, you will want to make sure you’re making the right decision. This goes beyond just making sure you can pay off a debt, however. Since you will be taking money out of your next paycheck to cover the loan, this will mean that you’ll have less money when your next payday comes around. If you aren’t careful, you could find yourself unable to pay your bills. You will have to take out another loan after that, and pretty soon most of what you make will go towards payday loans instead of your own expenses.
When you decide to take out a payday loan, make sure that you can pay it off on time and still have some financial breathing room. Make sure that no other payments are due at the same time as the loan and that you will have some money left over from your paycheck. Read the loan agreement carefully before you make any decisions, and keep a copy with you in a safe place. If a lender won’t give you that copy, don’t agree to the loan.
Being unable to pay your bills is a scary prospect, but there are always options available to you. Sometimes those options are limited to a high-interest loan, but there is almost always help available somewhere for those who seek it out.