How to Avoid Debt from Payday Loans

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Payday loans have seen their fair share of controversy over the years and you can’t deny that the industry has come a long way in shaping its regulations and financial criteria for payday loans. However, there are many people turning to short-term loans like these every day and end up spiraling out of control and struggling with debt.

An important thing to keep in mind about payday loaners is that the interest which they can charge a customer is not regulated or fixed so they can basically charge you as little or as much as they choose to. This means that if you do default on your payment you can end up paying a huge amount in interest and make your repayment even harder to achieve. Still, there are ways of cleverly using payday loans and avoid being in debt if you’re careful about how, when and where you are applying.

What Are Payday Loans And How Do They Work?


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Payday loans were designed especially as short-term loans for emergency situations. They are small personal loans that you can obtain virtually immediately in order to solve a pressing financial problem and that you replay in one bulk payment. The total amount that you pay back consists of the sum you have borrowed plus an additional fee per every $100 borrowed and interest.They’re usually taken out over limited periods of time, 2-3 weeks in most cases and can be extended if the customer’s payment is due but he cannot afford to pay back the entire sum. In this case, the customer can choose to only pay the interest accrued in order to extend the loan.

Avoiding Debt

Problems can appear if the borrower is unable to pay back the amount they owe and start accruing more interest. But there are methods to avoid debt if you decide to use payday loans for emergency situations as long as you are well informed and plan ahead. The issues many people are facing when trying to repay their debts is that they cannot pay back the lump sum that they had borrowed. An often times that happens because customers fail to appropriately calculate their income and figure out if they are able to repay what they owe at the proper moment.

Payday loaners must check the income every applicant has before allowing them to receive a payday loan in order to establish whether the person being credited will be able to pay off the loan or not. However, the system cannot take into account how much of your personal income is actually available to you after having paid all of your bills and covered all of your living expenses so try to do that yourself before applying.

Think about how much money you are actually left with at the end of the month and make a budget for yourself. If you have enough to cover the essentials, everything paying your bills to buying groceries and other important expenses and are still left with enough to pay back the money you have borrowed, you shouldn’t have any problems with being in debt. However, if you find that you won’t be able to pay out your debt while still covering all of your expenses your risk of failing to pay off the loan increases so be careful.

Don’t Let It Get Out Of Hand

Payday loans were designed for emergency situations which require quick and easily accessible cash to pay for an unexpected expense. The best thing to do is to try and use them wisely. Every financial decision made in your household should only be the result of careful consideration. Many people choose to get several payday credits at the same time but if left unchecked, this can lead to higher payments at the end of the month.

Don’t let your debt get out of hand by stacking up more loans on top of one another, which will only be worse in the long run. Try to use such loaning opportunities wisely by keeping up with your payments. You should be able to avoid debt by simply planning your finances properly.

Author: Richard Casteel

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Richard is the chief author of this blog. He worked as a financial advisor in money market form last 10 yrs. His financial sense in Share trading and any other trading is just outstanding. He just shares his knowledge and experience through this blog. You can contact him directly though

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