4 Important rules to remember when it comes to Payday Loans
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According to many, the worst financial nightmare you will ever encounter is the day when you rely upon payday loans. However, this remark can’t stop many people from borrowing money from loan providers offering this service. Perhaps they just need some reminders on some rules to remember when taking this kind of loan. And probably they need to be woken in order to realize that it is just insane to take out a 200% interest bearing loan just to pay out overdue account with penalties and additional surcharges of 25%.
First Things First
Based on the scenario described above, indeed it is crazy and who’s to blame? Of course the borrower as he or she did not take financial planning very seriously; thus, relying on instant loans to take care of short term financial crisis and embarrassment as a result thereof.
The First Rule to Remember: Decide to Avoid Credit
Credit is not bad after all but it is the way people handle credit negatively that makes it bad. For example, some people prefer to be in debt always than making adjustments to their lifestyle. So before anything else, you must decide that enough is enough and you want to regain control of your financial freedom.
The Second Rule to Remember: Do You Really need it?
The 200% interest rate mentioned above is a conservative estimate and as a matter of fact, many instant loan companies charge as high as 400% in terms of interest rate on a two week term loan. Thus, it is important to assess if you really need this kind of loan. You have to remember that such loans are not suitable for paying daily living expenses and utilities as you will end up too dependent with it.
The Third Rule to Remember: Can You afford it?
While there are some states that regulate the ceiling on loan approval, there is no singular law that governs instant loans in general. Thus, you are not protected with regards to interest fluctuation. With this in mind, you have to ask if you can really repay the amount. In addition to matters of affordability, at first glance you might think that you can but read the fine prints first but you will just be amazed to know of hidden clauses that will make the loan more expensive for you.
The Fourth Rule to Remember: Avoid Multiple Loans
If you can’t help but seek financial solution from this kind of loan, you must only limit yourself to a single loan and then follow rule number one. Besides, you may not know it but it is indeed illegal in some states to take out several loans against a single source of income or payroll.
The Bottom Line
It is the responsibility of the borrower to take charge when it comes to payday loans. You should be careful when dealing with such if you cannot help but to secure one to solve a financial problem.