The payday loan industry has sparked a lot of debate. There are many who see these services as outright usury, or the act of charging unfairly high interest rates. These critics believe that lenders target groups with a history of bad or no credit and by offering a short repayment term, push these borrowers into a vicious cycle of debt wherein the borrower must continually take out a new loan in order to repay a previous one. On the other side of this debate are those who believe that payday loans are beneficial precisely because of the fact that they are available to people with no or bad credit who do not have access to traditional loan services. So the question is: who is right? This debate has been going on for some time, and it is doubtful that a definitive answer can be given in just a few words. What can be done is to enlighten borrowers on how to manage their loans responsibly so as to never encounter the very issue that critics raise - the payday loan cycle. Proper loan management can help guarantee that you enjoy the benefits of this assistance without falling victim to possible negative consequences.
There are several things that you can do to avoid falling into a payday loan cycle. The first is to borrow only when absolutely necessary. While these services can be a life saver in emergencies, not everything that you may initially think actually counts. It is important to consider several factors in each situation. First, can the situation be resolved without any financial consequence on your part? For example, perhaps you have suffered a medical emergency. Rather than going directly to a payday loan office to get assistance, you will want to find out if you qualify for any government assistance. Or, say you encounter some car trouble. You may still be under warranty and not even know it. By not jumping the gun and doing a little research, you may be able to keep yourself debt free and stress free.
Another question you will want to ask yourself in order to figure out whether you should withdraw a loan or not is if the situation absolutely must be corrected immediately. A broken down car may fall under this category if it is used to get to work or other important destinations. In this case, a loan may be just the thing to help you get by. However, a broken television set should never be considered an imperative, even on Super Bowl weekend. This is a frivolous expense, and it would not be worth it to get into a debt cycle over such an unimportant item.
If you find that you must take out a loan, be sure to take out only what you can payback. Most people should have a general idea of this number, and by keeping within it you can pay your debt immediately. When you have withdrawn a loan, make the appropriate budget changes and sacrifices. Perhaps your monthly date night may have to be forgone in order be able to pay your loan off as soon as possible. Unfortunately these things happen and when they do, you will have to prioritize. By keeping these tips in mind, you can enjoy a payday loan without falling into a cycle of debt.
