Strategies for Dealing with Multiple Payday loans
22 Mar, 2016 / By Jennifer Hamilton
Payday loans do serve a help to those who are in a difficult situation. When money is needed desperately and no other viable sources are available, a payday loan can aid in overcoming a hurdle. Borrowing, unfortunately, becomes a habit and can get out of hand. Once a borrower has several high-interest payday loan balances owed, the debt can be massive and problematic. Anyone who is in such a situation does need to follow logical advice on how to pay off the various balances.
Cease the Borrowing Cycle
Stop borrowing. This is probably the most important advice a borrower could ever be given. On the surface, it may seem like basic advice and, truthfully, it is. The trouble for so many is they do not adhere to this very simple, straight forward bit of sage financial advice. Instead, they choose to continual move money around. One loan is borrowed to pay off another and the cycle repeats itself.
The Consolidation Loan Exception
The only time anyone should seriously consider taking out another loan is when the borrower is able to consolidate the various payday loans onto a loan that has lower interest rates. Of course, the problem presented here is the credit score might not be all that great. As a result, being approved for a personal loan is not going to be easy. Of course, there exists the option of asking a friend or relative co-sign the loan. If the bank approves the application thanks to the co-signer, pay off the payday loans and be done with payday lending.
The Credit Card Variation
Another option, if the applicant cannot get a personal loan, is to apply for a credit card with a co-signer. If all that is owed on a payday loans is, say, $1,100, a credit card with a relatively low borrowing limit could help the borrower consolidate the debt.
Cutting Down on Leisure Items
Anyone who is dealing with debt is going to have to make major changes in life. Money that goes to unnecessary things simply has to stop. Those funds do have to be directed towards paying down your debt. This might require a bit of sacrifice. At least for the short-term, the sacrifice is going to be worth it. Debts are lowered and this leads to getting a financial house in order.
Pay Off The Highest Interest Rate First
When it is not possible to pay off all the loans at once, it might be best to target the loan with the highest interest rate first. This way, the most costly loan is eliminated first. A high interest rate loan is always going to be a drain on one’s finances. As such, it is prudent to eliminate the costly loan right away.
Payday loans serve their purpose, but they can also become a burden. Rather than see such a problem manifest, do what is best. Tackle the various balances on the loans and work towards achieving better fiscal management without the specter of debt always hanging like a dark cloud.