Tuesday, April 2, 2013

Payday Loan Alternatives - Other Ways to Solve Your Money Problems


Most people do realize that payday loans can be a great tool in providing quick financial relief. However, there are cases when borrowers are not aware of the considerations and consequences of getting cash advance payday loan. Consequently, they may find themselves owing more than what their salaries and other income resources can provide. When this happens, it may be quite difficult to get back on track and deal with cash liabilities. This can eventually lead to falling into an even greater debt trap.

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To prevent getting caught in a payday loan trouble, it is best to know what other options you can use to solve your money problems. All it takes is that you become familiarized with each alternative, so that you do not have to worry whether or not you are making the right choice. Remember, careful thought and planning is required when making decisions, and matters concerning your hard-earned finances are no exception.

One of the things that you can do is to apply for a credit card. However, most people tend to disregard this option. This is mainly because most credit cards have high interest rate and oftentimes, one must have an exceptional credit history before the application is approved. Most especially now that there are instant approval payday loans that do not involve the hassle of paperwork, individuals overlook the advantages of credit cards in the long run.

For one, credit cards have a lower Annual Percentage Rate (APR) which is usually just 9% to 15% at most. This rate is significantly lower than that of an actual payday loan, which has an annual finance rate of around 250-900%. Unless you intend the cash for short-term purposes, like paying a medical bill or making an urgent expensive purchase, you are better off with using a credit card.

You may also want to apply for a standard personal loan instead of a cash payday loan. For one, regular creditors allow negotiation and will even help you modify your payment terms. This is not the case with a payday loan company. In fact, they can even immediately file cases against borrowers who give bounced checks. Besides, even if you quickly pay off your payday loan, there will still be additional charges that you have to pay, for instance you will be charged an extra $50 for a $400 payday loan that covers a period of two weeks. Also, the interest rates of personal loans are considerably lower, regardless of your credit standing. Personal loan interest rates can be anywhere from 20 to 28%.

Alternatively, you may also opt for a debt consolidation payday loan. This is most helpful if you are unable to pay back a payday loan or you simply can't manage to constantly apply for new payday loans. There can be several reasons why you may need a debt consolidation loan, but more often than not, it is because you have inadequate income to cover all your expenses. This is when you might need a long-term solution that can significantly reduce your expenses. If you only have one loan, you have to pay a much lower interest rate than all the new payday loan interest rates combined. Moreover, you can properly secure and handle your finances if you focus on paying just one creditor.

Whatever method you choose to deal with your financial needs, make sure that you proceed with caution and of course, spend the money wisely.


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