On Behalf of Steele Law Firm PLLC | Nov 7, 2017 | Blog
As you stare down a considerable amount of consumer debt, you may feel as if you will never get out from under the financial burden. Though you act diligently and try to make payments on your outstanding balances as best as you can, those efforts may not have the desired impact. As a result, you may feel trapped in a never-ending cycle of accumulated interest and additional payments.
At some point, it may have crossed your mind to consider methods for better attending to your outstanding debt. One of those methods may have been a payday loan. You may have heard of this type of option before, but if you do not fully understand it, you could end up with more difficulties than anticipated.
What is a payday loan?
Essentially, a payday loan works similarly to a cash advance on your paycheck. A lender may provide you with a quick loan that you must repay within a limited amount of time after providing collateral. You could think that this option will help you gain enough money to get back on track with certain outstanding balances, but these loans usually also come with high interest rates and significant fees if you do not repay your loan on time.
What are benefits of payday loans?
As mentioned, a payday loan could help you obtain quick cash to put toward an outstanding balance. These loans usually do not require a credit check, and the application process for this type of loan may only take a short amount of time. Additionally, you could potentially obtain the desired funds in as little as an hour after approval. The timeliness of the process could seem attractive to you if you hope to put money toward balances quickly.
What are negative aspects of payday loans?
Though obtaining the funds fast may seem appealing, payday loans may not be your ideal option. Typically, the repayment terms associated with these loans can put a considerable amount of pressure on the recipients, and you may have a difficult time meeting those terms. Furthermore, while traditional loans usually have a relatively reasonable interest rate, payday loans could come with a 300 percent interest rate, which could land you in more financial trouble if you miss a payment.
Because a limited availability of funds likely contributed to your debt issues in the first place, you may not have the ability to attend to your payday loan payments as necessary. Unfortunately, your attempt to better your debt issues with this route may have only made matters worse.
What are more reliable options?
If you would like to take a more reliable approach to addressing your debt issues, you may wish to consider filing Chapter 7 or Chapter 13 bankruptcy. These options are covered under specific laws and often benefit those who choose this relief route.