USA payday loans come in handy when you require quick cash. They are easy to process and don’t require much except a guarantee that you will pay back the loan with interest once your paycheck comes through. However, it is easy to find yourself in a situation where you are not able to fulfill the commitment of paying your loan. Perhaps because your financial demands are greater than your paycheck or maybe unexpected expenses need your immediate attention. For this reason, USA Payday concerns do keep many awake at night should they default on their payment.
Consequences of Defaulting
When you apply for a USA payday loan, your lender gets access to your bank account through which your salary comes through. When the deadline for making the payment reaches, your lender automatically withdraws the amount owned from your account. If the account does not have enough money, the lender may choose to break up the loan in small parts and this means you’ll end up paying more as there is interest charged to each payment. Also, you could get in trouble with your bank because of overdraft fees charged when there are insufficient funds in your account.
One of the greatest USA payday loans concerns is the fear of getting into a debt spiral. A debt spiral occurs when an individual takes multiple payday loans to pay existing payday loans. This however only makes the situation worse because you end up with a bigger debt and unless you win the jackpot or get a huge payment over and above your salary, you will most likely end up in a vicious cycle of earning to pay debts.
What are your options if you default?
If you default on a USA Payday loan, you can take certain steps to remedy the issue before things get out of hand. First, you should inform your lender as soon as possible and request a renegotiation on payment terms. Most lenders are reasonable and they will agree to a new payment plan but not without a cost. Making smaller multiple payments will eventually translate into you paying way more than the original amount.
If you have multiple loans, consider consolidating them so that you focus on paying one big loan as opposed to paying multiple lenders. Some lenders buy out loans and help with consolidation.
USA Payday loans’ concerns have made many individuals shy away from taking payday loans and opt for other alternatives. Payday loans are not bad as long as you put a lot of thought into how you will pay back without defaulting.
Before taking that payday loan, think through why you need it, consider if other options are favorable and ensure that you will be in a position to pay back once your paycheck comes through loans till payday