Out of the Frying Pan, Into the Fire. When funds get tight, making life difficult taking a Payday Advance Loan can seem like a good idea; sometimes it seems like the only answer to surviving. However, the reality is that while a payday loan might be the only answer on an extreme occasion, they usually make matters worse and money all the tighter.
Borrowing money from the next paycheck coming in means less money to work with in the long run…because not only do you have to pay back the loan but a large amount of interest as well. It then becomes a vicious cycle leading one who just needed some extra money to get by into having to borrow repeatedly to survive. Another disadvantage to using a payday advance loan is the fact that there is no link to any credit-reporting agency. Many who have poor credit are sucked into this trap.
While it seems like a positive attempt to pay bills, it actually may lead more readily into bankruptcy. Only you are not able to file bankruptcy on a payday advance load…and because they do not check or report to credit agencies, you get no positive marks on your credit when it is paid off in a timely manner.
There are many ways to work around having to take a payday loan. Utility companies and other businesses will often work with a customer who calls needing a little extra time. Food pantries and social service agencies exist to help those in need. If using a payday advance loan cannot be avoided it is important not to use it often—check into a personal loan with better interest rates or ask a family member or friend for a small loan if possible.
If you are already stuck in the trap, evaluate your finances and see if there are places you can cut back or renegotiate pay schedules or miscellaneous expenses in order to circumvent the cycle. Finally, be aware of the terms of the loan agreement. It is a legal document that many just sign and go—remaining unaware that even within the payday loan there are options such as choosing an extended pay schedule or paying small portions back early…allowing the debt to be paid over time rather than all at once out of the next paycheck. Remain vigilant with your money and borrow wisely.