Tips to Save Yourself From the Payday Loan Trap

Payday loans are infamous for the high fees and the controversial practices of collecting money back from the borrowers. That is the main reason why the payday loan lenders have become target of the advocates of consumer protection and the government regulators.

To help the cause, the big banks are limiting the overdraft fees which result from payday lender payments, which is helping the customers to close their accounts and generate a stop payment order on the checks for the payday loans. This was necessary because the big banks were allowing the automatic withdrawal from the bank account of the customers for the payments of payday loans even in those states in which these kinds of loans were illegal. But this has its own limitations as the banks can do only so much and the real borrowers will have to help themselves to stay out of the devastation that these payday loans cause. Here are some ways that can help you steer away from the payday loans and the big setback they can cause to the finances.

The lenders have an image of being tough to negotiate with and hard-hearted but they are sometimes willing to help you out. They would want to get back the amount they have lent to you and in situations where you are unable to pay the hefty fees and interest, they would like to give you a helping hand. Basically, they want their loans repaid as soon as possible. If you negotiate with them well and clearly explain the situation you are in, then they would help you with a short term extension. They would apply some nominal late fee and will be ready to extend your loan period.

Payday loan lenders are the not the only source from whom you can get money from. You can easily get money from other sources as well. Some small banks and local credit unions offer unsecured loans to their customers. The rate of interest for such unsecured loans are not as low as they charge for auto or home loans but they are definitely lower than the rate of interest the payday loan lenders charge you. Even the credit card advances will cost you less in long run, even though they have transaction fees which you need to pay upfront and high interest rates which are applied immediately.

When you are facing a tough time with your cash flow or you find yourself in a financial crunch, it is best to take an expert’s advice. There are some nonprofit organizations like consumer credit counseling that help in improving your credit. They help you with other areas like personal financial planning and budgeting. They work closely with the lenders and credit card companies and can help you with your current loans.

There are a lot of benefits for people who have worked or are working in the military and also their families. There is an added protection for them. They have an interest rate limit of thirty six percent if they take up such loans. Follow these tips and be sure you are smart when it comes to payday loans.

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