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January 10 2018

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Avoiding High Interest Short Term Loans

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The best way to avoid taking out Direct Payday Lenders is to get in the habit of saving some money every paycheck. That will not help anyone in a financial emergency now, but saving even a little every pay period can prevent desperate measures moving forward. If the emergency is upon you, there may still be steps to take that will not cost exorbitant rates. Steps depend on the type of emergency experienced.

Overdue Bills

In most cases, utility and credit card companies will work with customers to prevent the cut off of electricity or the collections process for credit cards. Those companies simply want the money owed them. If it is one overdue bill, speaking directly with the company billing department will typically be the fastest way to resolve the problem. If there are several bills overdue, it is time to contact a credit counseling service.

Counseling

Credit counseling companies act as a liaison between the customer and the creditor. Professionals may be able to get late fees waived, interest rates reduced, and even the outstanding balance lowered. Once they have a minimum payment acceptable from each creditor, the customer sends in that total amount every month to the counseling service which distributes the money to the creditors. Some are free of charge, while others may add a fee into the monthly payment.

This process stops telephone calls to home or work, will prevent utilities from being disconnected, and keep customers from being taken to court for nonpayment. This system only works as long as payments are made on time and in full. Failure to make payments as agreed usually results in the total amount of money owed being demanded from creditors and collections efforts will resume.

Borrow the Money

Try a traditional lender or family member before seeking non-traditional lender services. If approved by a bank, the interest rate will be dramatically lower and terms will be more flexible. This recommendation is found on many of the nontraditional lender websites as part of their responsible lending policies. For those with no other alternative, the services are available, but warnings regarding how high the costs are, and what penalties exist for late payments are clearly presented on the first page of the site.

Long-Term Solutions

Review current spending habits to determine where cuts can be made. If the cable bill, for example, is rising constantly, compare the pricing to streaming services as a way to save money. Eating in more than eating out will make a substantial difference in how much money is left over at the end of the month. Keep that smartphone a bit longer before switching to a newer model. Create a reasonable budget based on income to curb overspending.

Don't be the product, buy the product!

Schweinderl