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For any of us, the need to access cash quickly can arise without warning. Often we don’t have time to go through the normal loan application process, and when a bad credit rating is a factor to be considered, there is an option that provides at least some certainty. It is possible for practically anyone with bad credit to get payday loans.
However, there are problems with this route. The promise of fast access to cash means that lenders providing these loans are able to charge much higher interest rates than normal, some as high as 35%. So, while approval for emergency funds is almost certain, a hefty repayment amount is equally certain.
What’s more, the repayment period is usually very short, in some cases as little as 14 days. It depends first on the terms of the payday loan, and second on when the next paycheck is due (thus the name of the loan).
Avoiding a financial disaster can be difficult if the right attitude is not implemented from the start, so here is a brief guide to take control of the debt that can so easily build up.
manage your budget
Most of the time, borrowers will only have one payday loan, with bad credit making it difficult to take out more. But when the amount borrowed is high, the repayment schedule usually stretches to three or more months. This can create the need for further loans, which then overlap to increase repayment pressure.
It is important to study the situation carefully and budget the repayment correctly. Identify each loan and when repayments are due, as well as how much the repayment is. Prepare a timetable, if necessary, for easy reference. A major drawback among borrowers is that once they get approved for emergency funds, they don’t stay on top of the situation.
Once the timetable is clear, allocate the amount needed to pay off the payday loan. Pulling it off can require some serious sacrifices, so maybe wait a while before booking that vacation to Florida.
Consider Debt Consolidation
If the debt is too difficult to manage, there are several debt consolidation loan programs that can be considered. These finally clear up all the pesky payday loans in one go, with bad credit often being overlooked by lenders. These programs are primarily designed to help.
A debt consolidation program means that the loan is fully repaid by using another loan that is structured for very low monthly payments over a long period of time. When a borrower is approved for emergency funds, they rarely have the luxury of choosing the loan deal, but this corrects the problem.
Debt settlement programs are also available. These differ from consolidation programs in that they are used to pay off perhaps 50% of the debt at once. It makes a difference in terms of repayment amounts, but payday loans remain part of the loan.
consider bankruptcy
Bankruptcy is the last option for eliminating payday loans with bad credit, and while it is not the most desirable solution, sometimes it is necessary. This option is reserved only for those borrowers who are clearly unable to meet the repayments and are completely burdened with debt.
This means that the loan is written off, relieving the borrower of any need to repay the loan. But there are consequences to be aware of before ultimately exerting the pressure that approval for emergency funds brings.
Once an application for bankruptcy is approved, the chances of getting another payday loan (or any loan) approved can be rated as low as possible for about 2 years.
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