Have you used enough direct payday loans in the past to consider yourself addicted to them? You may not have the urge to apply for them every day, but when the going gets tough, is it programmed in you to automatically apply for a short-term loan? When people have poor credit scores and have received enough rejection letters from creditors, they tend to find an alternative source of help. Payday loans have helped millions of customers get out of a money crunch. If your budget is consistently short on cash, these loans must be used sparingly in order to avoid more problems.
Payday loan help is fast and convenient but comes at a price.
Every time a customer uses an online payday loan to help their finances, they are charged a fee. Interest is charged toward all borrowed money – some more so and others less. Payday loan online lenders process loans quickly and expect a full payment just as fast. Borrowers love the first part but struggle with the last. Coming up with a full payoff plus fees is easier said than done.
Full payoff is the exact reason why some borrowers became addicted to them. The expense of interest makes the loans tough to pay off. There are many people who use different payday loan lenders in order to pay off the old. It may take care of the problem for now, but in just a few short weeks you will be experiencing the same problems inflated.
First loan at a 25% interest rate – $ 300 loan with $ 75 in fees equals a full payoff of $ 375.
Second loan equates to $ 375 (to pay the first one off in full) with new fees $ 93.75 for a new payoff amount of $ 468.75.
At some point a lender will reject you loan application because your income does not support your request or because you need to have a break between loans. Some people may try to split the cost between two other lender and get charged double fees while others struggle to pay it off paying fees over and over again until the loan is paid off. What you have just read is a perfect reason to not use payday loans to resolve all money problems.
Smart borrowers will use a high interest loan when there is a payoff plan in place. Even if the loan has to be extended a few times the risk of default is minimal. What is paid in dollars towards fees for an online payday direct loan buys credit history relief from additional problems. It all balances out when done correctly. One of the best payment opportunities is a buy down. It beats taking out a new loan any day.
An initial loan for $ 300 with 25% interest demands a $ 375 payoff. Interest must be paid if nothing else which makes your next loan once again $ 375. If you are able to make a payment towards your principle, next term's fees will be less. Pay $ 75 in fees plus $ 50 toward the balance. The new payment will be $ 250 plus $ 62.50 in fees for a full balance of $ 312.50. You can at least see your debt shrinking with a light at the end of the trouble.
Be careful when choosing lenders! There are some predatory companies that will charge extra for extending, rolling over or buying down initial loans. You may see this cost in additional charges or even higher interest rates. Make sure you find out all terms and conditions before you sign with a lender. Smart financial decisions may deter you from using payday loans online because of convenience but rather a need to protect credit scores from getting out of control.