How to Avoid the Payday Loan Debt Trap

Payday loans have been receiving a lot of negative reviews in the past years and rightly so. Advertised with the promise of quick cash, the personal loan offered mainly for people with bad credit come with hefty interest rates.

Most borrowers who are left with little to no option because of bad credit resort to payday loans despite knowing the dangers of the financial product. Making it worse for the borrowers are the controversial and sometimes harassing collection practices. Then there’s the problem of getting stuck with the payday loan debt trap.

Despite the dangers and if you still opt for a payday loan, we can’t blame you but we can help you avoid the debt trap. Below are four tips to keep in mind when taking out a logbook loan:

Consider it as the last resort

One of the lures of payday loans is the promise of quick cash. By quick, it means you can get the cash as soon as you get approved for the loan. This is good news for most people who are struggling to pay overdue bills or to take care of other financial emergencies. While easily accessible, payday loans work best if you consider it only as your last resort. Check all other affordable alternatives first before applying for a payday loan.

Make it a one-time option

If you are left with no choice but apply for a payday loan, it’s also worth keeping in mind that payday loans come with hefty fees. You can apply for a payday loan just this once. Make sure the next time you’ll need quick cash for any financial need, you never to turn to payday loans again. Otherwise, you’re only putting yourself in a kind of debt trap that is not only costly but also hard to get out from.

Seek for recommendations

To make sure that your payday loan is one of the most affordable offers in the market, seeking recommendations from other borrowers. If you know a family member, a friend or a colleague who have taken out a payday loan before, make sure to ask for their recommendations, tips and tricks if they have any.

Shop Around

When looking for the best payday loan deal, it’s also best to shop around and compare your options. Like with any important purchases, take your time to investigate your options as thoroughly as you can. You can use top comparison sites to compare the best payday loan lender in the market. Focus on key factors such as interest rate, loan terms and lender reputation. While you’re at it, make sure to read the small print for more info on hidden fees and charges.

Negotiate with your lender

Not all lenders are strict and hard-nosed. That may be hard to believe but there are actually online lenders who are willing to be more flexible with their loan terms. Your job is to find them. Once you’ve found the right lender, you can put your negotiation skills to good use. Don’t hesitate to speak with your lender if necessary. If you can’t make the payment by end of your payday, for instance, you can negotiate a new term with your lender.

Seek for professional help

When overwhelmed with your debt, there is really one way to go. You need to enlist the help of a professional to help you tread the complicated waters of debt particularly that of a high cost payday loan. Don’t worry because there are no fees involved when you seek help from the right nonprofit organizations.

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The Horrors of Debt Collection Practices in the UK

When you borrow money to meet a personal need or an unexpected expense, it’s not just the interest rate you have to worry about. With the increasing number of reported harassments by debt collectors, poor and controversial debt collection practices are another thing to be wary of. This is especially true for high interest personal loans such as payday loans.

In the event that you are unable to pay your debts, your lenders are allowed as per your loan terms and conditions to keep asking and reminding you to pay your bills on time. At some point, your lender will send out a debt collector who is tasked to collect your monthly repayment. Some collectors, unfortunately, are unprofessional and very rude to a point that you can cite harassment if they get out of line.

I, myself, have dealt with a few debt collectors over the years. Fortunately, my debt collectors were pleasant and fairly approachable. I have a couple of friends, however, who weren’t as lucky. Other than rude language, they dealt with collectors who threatened to be physically violent.

Despite laws against harassment by debt collectors, borrowers are not entirely protected. We can complain and report controversial practices but that’s about what we can do. We report then we wait. Sometimes it takes a long time before the harassment complaints are taken care of.

This continued dilemma in the lending industry sadly continues to thrive. Not all harassment complaints are given enough attention leaving borrowers unprotected. As borrowers, we can count on no one but ourselves to know our rights. To avoid being harassed, it is imperative to know what are considered unfair and improper when talking about debt collection practices in the UK. Your job is to stay vigilant all the time. If you are being treated wrongfully, do something by connecting with the right agencies. You may also want to strive to pay your debt on time every month to steer clear from rude debt collectors.