In recent years borrowing money in the traditional way, for instancethrough the banks, has become tougher and tougher. As a result, the way has been paved for a boom in alternative unsecured lending institutions that provide borrowing options such payday loans. Due to the fact that they are so easy to obtain, it has become second nature for many individuals to simply borrow money as and when they need it, with the intention that they will re-pay what they owe on their subsequent payday.
The problem can come about when you need to pay back the money because if you have not budgeted correctly it can cause an issue. Often when an individual is unable to pay back what they owe it results in either an unpaid debt and ultimately arrears for the person or alternatively it means that they will turn to further borrowing in order to supplement the re-payments that they are unable to afford. With the APR’s (Annual Percentage Rates) often high on these mediums of loans, the debts accrued can often be overwhelming and have the potential to spiral out of control.
When somebody does find that they have been consumed by their short-term debt it is commonly referred to as the ‘Payday Loan Trap’, which for many people can create a great deal of stress and anxiety. The problem is that there just doesn’t seem to be away out of this type of downward spiral and with the amount that they owe ever increasing it can feel quite claustrophobic.
There are several options available to people who do find themselves struggling with this form of debt, the first is by taking out a consolidation loan. The idea of a consolidation loan is that you take out a single loan in order to cover all of your unsecured debts. This then means that your money becomes easier to manage as you will only be re-paying one loan and you will not be paying out to lots of different lenders. You would also take this loan out for a longer period of time, which means that the re-payment amounts can be lower leaving you with more disposable income at the end of every month.
The only drawback with this is that you might not be offered a great APR, especially if you have missed previous re-payments in the past, so although in the short term you are better off, in the long run you will actually pay more.
A different option that you can utilise is a Debt Management Plan. This is an informal agreement entered into by yourself and your creditors, where you agree that you are going to pay back your debts at a reduced rate and over a longer period of time. This is often arranged through a company who will negotiate with your creditors on your behalf in order to arrange the plan and who will look to reduce or even freeze the interest, whilst you are making re-payments. The idea is that paying back your debts over a longer period of time will benefit both the lenders and yourself, because they get their money back and you have a more manageable repayment plan in place.
There are many forms Payday Loan Consolidation and debt solutions that are available and it is imperative that you research which form best suits your situation. From here you should always talk to experts who will help and guide you to the best option available.