Financial and debt problems force people to turn to payday lenders. Some of the financial problems that people have are household bills, utilities, rent or mortgage and sometimes repayment for the money you owe to other people.
However, there are times that people use payday loans to cover up emergencies just like if someone is being hospitalized and the insurance is not enough, quick cash from payday lenders are good enough. People should be aware that choosing payday loans have its disadvantages such as paying more instead of getting something worth the money. Expenses are shooting up as well because of this. Also, payday lending industry becomes more tightly regulated these days.
Consumers should have an alternative options instead of just relying to payday lenders. Below are other options they might consider when finance situation is turning its table:
Cash advances on credit cards
It offers about 30% APR, which is much cheaper compared to payday loans. There are credit card companies that offer help to people with financial problems and poor credit histories. People can also choose secured credit cards, which is tied up with savings accounts. The money from the account secure the amount charged on the card. If the consumer successfully used the secured card on a certain period of time, they can be a regular unsecured credit card user.
Credit counseling help
A finance counselor is needed so a consumer will be able to avoid the need to payday loan in the future. There are credit counseling services connected with the National Foundation for Credit Counseling that offer free money management help like debt management planning and budget counseling. Finance counselors help people to develop a budget that they will be able to manage and help them to work out a debt repayment plan with creditors.
Borrowing from family or friends
You can also consider borrowing money from family members or close friends. In times of emergencies, they are the first people you can lean on and can help you avoid the possibility of going with payday loans. if they were able to lend you the money you need, talk to them about budget and the repayment plan. You can also discuss what will happen if the repayment is late. Another thing to talk about is about the written agreement, if both parties agree to it for clearer discussion and future reference.
Some employers grant advance payroll to its employees, especially in times of emergencies. This is not actually a form of loan, there is not interest. Employees only take an advance money from their payroll. Some companies also offer low-cost loans to workers during emergency situations, helping employees with spare cash.
There are churches who help their members with financial problems that offer small loans at very low rates. This move is to help the members to avoid turning to payday loans. Consumers can inquire their church if it is offering small emergency loans.
Remember, proper lifestyle could be the best solution to avoid borrowing money from someone or financial institutions. Learn how to assess and budget the money.