10 Payday Loan Mistakes to Always Avoid
Applying for a payday loan can be a great way to solve your financial problems, but there are certain conditions: you borrow a small amount for a short period and repay the debt without delay. For everything to be exactly like this, you need to follow some rules and avoid mistakes, which we will tell you about below.
Mistake #1: Not repaying online loans
Some borrowers believe that it is not necessary to pay off online loans that have been issued remotely. However, in reality this is not the case. The borrow e-sign an agreement electronically. Electronic signatures, or eSignatures, are the electronic equivalent of a handwritten signature. Late loan payment threatens with problems with collectors or even courts.
You can be called at any time of the day or night with the demand to repay the loan. Collectors or the lender itself will notify relatives and colleagues about your debts. If you are sued, the case may end with an inventory of property and withholding 50% of the funds from all accounts until the entire debt is returned.
Mistake #2: Borrowing more than you need
A payday loan is taken for a few days or weeks and for very specific purposes: to buy medicines, pay for rent, educate children, repair a car, etc. But sometimes people borrow more money than they really need, “just in case”. Of course, you can do this, but in this case there is a great chance to go beyond your monthly income with all the consequences – you will not be able to repay the loan on time. And you will have to resort to either loan extension or debt restructuring.
Mistake #2: Not using loan referral services
The loan can be taken directly on the lender’s website. Many people neglect the possibility of applying for online loans on loan referral websites. In this case, the borrower’s personal data is sent to multiple financial institutions at once. Because of this, you will be able to compare offers and select the one that suits you most.
But it is important to use only well-known and trusted online lender matching services.
Mistake #4: Repaying a loan on the last day
According to the signed agreement, the client repays the loan on a specific day or earlier. If it falls on a weekend, the payment may not go through – the lender will count the delay, charge penalties and fines. To prevent this from happening, always repay your loan at least 2-3 days earlier than stated in the contract. So you will be sure that the bank will process the payment and the lender will receive the money on time.
Mistake #5: Hiding from the lender
Some borrowers who find themselves in a difficult life situation try to hide from the lender and completely forget about their financial obligations. They change their home address and even SIM card, stop answering calls from unknown numbers. However, this does not save: lenders still find negligent borrowers and force them to fulfill the terms of the contract.
Let’s assume that the scammer was caught tech-savvy and changed not only the SIM card but also the phone itself. But that won’t help him either. Sooner or later, the scammer will call his relatives and friends. No one has been able to remain incognito for an infinitely long time.
Microfinance organizations are not interested in you going into jail. Rather than hiding from lenders, it is better to try to negotiate with them.
The debt can be restructured. You will be offered a new payment schedule, and in some cases, you may not even be charged penalties and fines. Another option is a loan extension. The service is not free. You will only need to pay interest.
Mistake #6: Choosing a wrong lender
Another common mistake that is made mainly by those borrowers who take loans of this type for the first time. As a rule, this happens because of haste, and therefore not everyone is puzzled by the benefits of the conditions. In the future, this attitude may cause difficulties with loan repayment.
When applying for the first time, make sure you know these important things. It is worthwhile to first study several offers at once. Pay attention to additional payments. For example, our loan referral service helps consumers find online loans without hidden fees and insurance. Participating lenders don’t have any additional payments. You pay only the interest for using the online loan specified in your agreement.
Mistake #7: Choosing a wrong repayment period
Not all borrowers take into account the amount that will need to be repaid in the future, although it can be calculated very simply using a special online calculator for this purpose. At the same time, be careful: check if the lender has commissions and insurance. Some companies hide their presence, and then it turns out that you still have to pay for additional services
Mistake #8: Not planning your budget
Some borrowers do not think about the future at all, and therefore they do not have any specific plan for repaying the debt. As a result, they miss payments, and lenders charge fines. Payday loans are typically due within 1-3 weeks. When you take out such a loan, you must plan your budget. Do not forget that the loan can be often extended.
Mistake #9: Choosing a wrong way to repay a loan
When choosing a loan repayment method, one should take into account the speed of crediting money to the lender’s account. It is better to choose those methods that allow you to transfer funds instantly. For example, repaying a loan online on the lender’s website using a bank card occurs instantly. But do not delay the repayment until midnight. It is possible that the payment made by you at 11.55 pm will go through the next day. It is better to take care of repaying the loan online in advance and make it, for example, before 11 pm..
Mistake #10: Not checking if the loan is closed
As soon as you repay the entire loan amount, it is necessary to contact the microfinance organization in order to check whether the online loan is really closed. Not doing this is a gross mistake since different situations arise. As a result, it may turn out that the loan is not fully closed. You can also order a zero debt certificate online. This opportunity is now provided by many online loan services.
Another common mistake of negligent borrowers is that they often resort to the services of anti-collectors. The name of these services is misleading.
But in fact, no anti-collectors will help you get rid of your debt. You will still have to paying the debt, sooner or later. The only possible option is to go through the bankruptcy procedure. But this procedure is quite cumbersome and expensive – you will need to pay not only a lawyer but also a financial manager appointed for you.
Let’s summarize the above. The main mistakes borrowers make are:
- optional attitude to taken loans;
- borrowing more than necessary;
- not comparing offers;
- loan repaying on the last day;
- attempts to “hide” from the lender.
With the right approach, a payday loan can be a good way to solve your short-term financial problems. With us, you can always find the right lender. We cooperate only with licensed lenders, which means it is safe and reliable to take out a loan online.
Tags: finance, loans online, money, payday loans