How You Can Avoid Payday Loans

Payday loans can be a neat way to provide some much needed cash to help you make it to your next payday. These companies basically offer you a cash advance based on your demand. They provide a good service for those who find themselves in a financial pinch and need something quick. A payday loan can be held and used for things like paying a utility to avoid a cutoff, to keep up a timely payment like for a car, for emergency car repairs, or if you have an emergency and need to make an unexpected trip. These are some of the main reasons people take out a payday loan. They can be really useful in certain situations; but there may also be other viable solutions for many individuals.

Payday loans are a solution when someone is in a tight situation with their finances. These are legitimate companies providing a financial service to someone who needs it. But there are a few reasons why you want to attend for other alternatives before you head down to sign on the dotted line. Here are the top three reasons it is advisable to avoid a payday loan and find other solutions when possible:

Payday loans are expensive.

It’s easy for it to turn a cyclical process that is difficult to escape.

You have to move over the payday loan company access to your bank account.

These are just about good reasons to search out alternative means for obtaining extra cash or emergency cash when needed. There are many other choices that do not trap you in a debt cycle and are less expensive than a payday loan.

Even though payday loans are a feasible option when you are in a pinch, there are some other alternatives that are worth your consideration. If you are mindful of the variety of options you have available, then you can make an educated decision about which one to pursue and which one is best for your present situation. You are surely capable of making the best choice when you are armed with the right information. Then if the situation arises and you feel a payday loan is the best choice, just make sure you understand all the terms of the lending facility before you take out the loan. No matter what choice you choose, make it your first priority to pay the loan back as quickly as possible.

Other loan options are available through lending institutions. In some cases, your bank can offer a small loan with a variety of pay back options. Sometimes it’s a lump sum payment or it is paid back in monthly installments. In many cases there is a 90 day repayment period and you don’t have to accept any collateral. There are alternatives if you want to renew the loan a time or two. However, if you bear to renew short term loans too many times they are not really helping you out very much.

In some cases, you may consider taking out a payday loan for a quick fix to make a payment to other creditors. Even though this might look like a good idea, it can cost you more in the long run. As an option to taking out a payday loan and creating more debt, simply talk directly to your creditors about making payment arrangements. Many times they will make negotiations for partial payments or work out an alternative payment plan for consumers. It might be that they can refinance so that the account is paid off, but taking a longer amount of time.

Some employers will allow an advance to their employees in some cases. It is an advance on what you are passing to make but it is not a loan which means there is no interest being charged. You will suffer to make adjustments as you realize your next check is going to be shorter than it would have been had you not taken out the advance funds. But it is cheesier than a loan of any sort, just be sure to make appropriate adjustments so you are not left in a bigger bind.

If you own a retirement plan like an IRA or 401K you may be able to pull some funds from any amount you have accrued. It’s more similar you are borrowing from yourself rather than from an outside lender. You are permitted to borrow from an IRA without penalty one time a year as long as you put the money back into the account within a 60 day period. If you do not make the deadline to pay the funds back, then you have to pay taxes on the money along with a penalty of 10% if you are under 60 years of age.

Not all employers offer 401K loans, only if they do, they you can borrow up to half of your balance and have 5 years to pay it back. The catch is that if you don’t get a payment on it for 90 days it will be considered as income which is taxable and it will have the same penalty as an IRA loan. One note on borrowing from your 401K is that you may be losing out on the interest you would have gained or any returns on investments that the money in your account would have produced.

Most credit cards receive an option of withdrawing cash as long as the account is in good standing. This is a rather expensive option, but it is an option you have available. You’ll pay, somewhere close to 5% for a cash withdrawal fee plus interest that is charged on your credit card balance. Do some math because in most lawsuits this is still a cheaper option than a payday loan – but not always.

Thither are many organizations that provide emergency assistance to help avoid suspension of utilities or deal with a family emergency. Faith based and community programs often provide funds for these specific types of situations. There are also special federally funded plans that help low income families meet their basic needs as well as helping to pay heating or cooling costs in emergency situations. Some of these options have specific stipulations or eligibility criteria that must be met in order to obtain assistance.

There are pawn shops in most urban centers. You can take in items you no longer require such as musical instruments or small electronic devices and exchange them for cash. It’s a means to get money very quickly. It’s technically a collateral based loan and it will cost you more if you decide you want the detail back. You have a specific measure of time to pick up the item and pay the extra fee if you want to get it back. These types of loans are covered differently in each state, so the finance charges can be very different depending on the region you are in.

Most of us have caring friends or family members who we commit and really do not want to see us in a bind. They may be willing to extend you some money to help you get by to payday so you don’t have to pay the extreme interest on a payday loan. It is advisable to obtain the terms of any loan, even from your closest friend or your parents, in writing. When you hold a predefined date the money is due to them it is easier to keep up with so that you don’t forget. This helps you keep the relationship. Be sure to write down whether they require you to pay it all back at once or if making small payments is satisfactory.

If you ask more money coming in and don’t want to continue paying the high interest on payday loans, then you may want to look at taking a second job at least temporarily. This can be very hard for an individual but it can be a better option than getting stuck taking out payday loans repeatedly. If you deliver a skill you can try freelancing, or you might benefit from a weekend job for a short time until you can get ahead with your finances.

If your stay is always running a little bit short, most regions offer debt or credit counseling for free or very little payment. They can aid you determine how to make your finances more manageable. A debt counselor can assist you, learn ways to reduce or get out of debt. They can also provide financial counselling to help you learn how to make ends meet by cutting costs, getting out of debt entirely and how you can save up for emergencies in the future. They can assist you create your personal debt management program.