5 Payday Loan Mistakes You Should Avoid Making – What to Know
November 07, 2019If you need short-term finance, then payday loans are a great option. They help you pay off unexpected bills and expenses when you do not have money to cover them. Unfortunately, payday loans come with high risks as well. Before you apply for one, there are some precautions you have to be aware of.
Here are five mistakes you should do your best to avoid when applying for payday loans:
1. Not Knowing How Payday Loan works
Payday loans vary from country to country and from state to state. Because of this, you’ll need to do a little bit of research on how payday loans are handled in your area. By thoroughly educating yourself with local payday loan procedures, not only will you increase your chances of obtaining a loan, but that the whole process will proceed hassle-free.
2. Having Multiple Lenders
Do not be tempted by borrowing money from more than one lender. It is an irresponsible act that can leave you owing more than what you earn monthly. The repercussions can be severe when you owe a large amount of money to a lender, let alone two. Also, borrowing from more than one lender is illegal, so not only is this act an irresponsible one but one that’s against the law. In other words, it will be in your best interest to stick to one lender only.
3. Ignoring Repayments
Once you have gone through with the loan, you may feel happy to receive the money. With all that feeling of comfort and joy, you may overlook (or completely forget) the fact that the money still needs to be returned with added interest. That said, despite your usual daily spending, a certain amount of money must be kept aside to pay off the loan when it is due.
4. Underestimating the Risks
If you’re in massive debt, you may be tempted to borrow more money to pay off that debt. Although some people do this, it isn’t a long-term solution. Finding yourself with debt upon debt to pay back will get you into severe trouble. Once you do go bankrupt, you’re going to have a lot to deal with. Because of that, do not underestimate the risk you’re getting into. Always have alternatives for backup funds to pay back payday loans.
5. Borrowing More than You Need
When you’re given a loan offer, an easy mistake you can do is borrowing more than what you need. Although that may provide you with plenty of money to work within the beginning, it’s going to be a huge financial burden as time goes by when you find yourself struggling to pay off what you owe. To avoid this from happening, always calculate how much you need to cover any expenses and bills only. Also, think about how you’re going to pay back the loan.
Payday loans are a great help in times of emergencies, but you need to be very responsible and diligent to make sure that you pay back what is due. Focus, plan, think, and avoid all the mistakes above to stay away from any problems.
If you’re in South Africa and would like to take out a payday loan, feel free to contact Hoopla Loans today! We’re happy to help.