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Avoiding Payday Loans

Avoiding Payday Loans

By Mohit ChawlaPublished 3 years ago 5 min read
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Avoiding Payday Loans
Photo by Amy Hirschi on Unsplash

Avoiding Payday Loans

Individuals develop their good and bad habits at an early age. If you want to become a responsible person, you have to practice the right things now. Handling money is a very important task because if you make it a habit to spend more than what you actually earn, that is really bad and it can cause problems in the future. Opting for payday loans is not a very good option because this is considered one of the risky solutions available to over-spenders.

Payday loans can be a good solution for those who terribly need money because of an urgent situation. However, if you apply for payday loans without weighing the risks, you can be caught in some sort of debt trap that can only worsen your current situation.

There are certain disadvantages in applying for payday loans. One very evident reason is the high cost. The annual interests can reach 400 to 800%. With this rate, it would be even much better to invest in high-risk stocks because you can enjoy investment returns from 20 to 30%.

Because of inappropriate financial planning, you will often resort to borrowing. At the start of the month, you should set a realistic monthly budget so that you can already balance out your earnings and expenditures. Donít makes unnecessary purchases. Make sure that you keep a certain portion of your salary for savings so that when something comes up unexpectedly, you will have money to spend. There are counseling bureaus that can help you out in preparing monthly budgets.

Suppose you ended up borrowing money and now you have a creditor. Some individuals will tend to borrow again from someone else or probably apply for payday loans to pay the creditors. This is not good and it would be best to talk to your creditors and ask if they can wait until your next paycheck. You can save a lot of interest if you follow this advice.

Urgent payments can be made through credit cards. The interest charges of credit cards are much lower than the payday loans. If youíre a member of a credit union, you can borrow a loan because the interest there is also lower. If you have the guts to talk to your employer, then you can ask him to give you a cash advance especially in the case of a medical emergency. Your employer will surely understand the situation that you are in if you just nicely talk to him.

If you canít fight the urge of borrowing, donít go for payday loans yet. Ask your friends or relatives if they can lend you money and tell them that youíre going to pay them back in two weeks or even a month. This will only work if you donít have any bad credit record or if you paid your previous debts to them.

There are also community social services that give urgent financial assistance to the needy. You can ask if youíre qualified to receive such assistance.

So there you have it; you just have to know your other options before you plunge into applying for a payday loan. Payday loans have good sides too but the disadvantages are so obvious and as long as you can avoid it, try to do so. Just apply for it when you have exhausted all the other options.

By Beth Hope on Unsplash

Guidelines on Starting a Payday Business Loan

With the intense need of the community for someone to help them with their financial needs, a lot of payday loan business owners are taking quite an advantage. If youíre an entrepreneur who wanted to start a business, try payday loans. It is one of the most profitable yet most risky businesses ever to hit the scene. But with the increasing demand of financial assistance, payday loans are becoming more popular to the masses.

What do you need? Ethics and legitimacy. Without these two, no one will want to make business with you. In due time, more and more people will be connected with your payday loan business if they have discovered that your standards are reachable. Satisfaction in exchange of risks that people may conceive. Payday loans are the kinds of loans that offer a short-term loan that will usually last for two weeks and the amount that are usually asked is less than a thousand bucks.

This endeavor is moderately challenging but is rewarding once you have establish a good working condition between you store and your clients.

Business Funding

You must have a clear picture on what your business loan must turn out. Since you are suppose to provide small loan amounts, sufficient capital must be provided to support customer requests. The capital must not depend on the return just to make ends meet. Buying a franchise of payday loans that are already existing can also be an option which might cost you about $20,000-$25,000.

Loss Tolerance

There must be a certain tolerance to the loss factor that your company will be experiencing. Efforts like these will keep your payday loan business afloat. Think of certain consequences like, if the clients suddenly defaulted, are you stable enough to sustain the loss without permanently closing your business door or even asking other establishments for business funding? You have to know these important details to determine how far can you accept clientís deals and requests.

Storefront

An area for business is most appropriate for a lending business. It must be accessible to anyone. Your store must not require wider space for as long it has certain necessities like a room for admission of clients, chairs, desks, storage areas and counters.

Know the Laws

It is of importance to know the laws and regulations that is attached to your business. The government has certain laws regarding the payday loan industry that concerns a highly regulated form of business. Failing to follow guidelines can result to serious fines.

Contracts

With the help of your attorney, write a contract regarding loans. The contract must contain terms and conditions of the entire loan, interest rates and fees, due date of the loan requested which concerns the time when it should be repaid, and consequences for late or non-payment. Contract language is a very powerful tool against your clients who refuse to pay the amount that they have requested.

Advertise

To widen your customer status, you can advertise your company in business newspapers, in the Internet or through media resources like radio and television. You have to make a budget for this base on the advertising policy that you have chosen.

Amend Qualifications

How can your applicants become qualified to apply for a loan? This you must strictly decide upon. Numerous payday loan stores have their own process of screening candidates therefore, you must have your own too.

how to
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About the Creator

Mohit Chawla

About me

I personally believe self made is not 100 % true.

Every person has got help by certain people.. They may be mentor, friends and team members but they surely are a part of their successful career.

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