Personal Debt Consolidation

Payday Loans

Many of us will find ourselves in personal debt at some time in our lives and it is nothing to be ashamed of – it really can happen to anyone. Perhaps your credit card repayments have got away with you or you're a little behind on the installments on a car loan, but either way, once you've realized you have a debt problem, the next step is to do something constructive about it. If your personal debt problem really is a very temporary hiccup, perhaps a payday loan could be the cash advance that gets your over that sticky period.

Why apply for a payday loan?

• Payday loans act as a cash advance on your next paycheck. Many of us know that we have money coming at the end of the month from our employer, but we need some cash before then to clear repayments on some of our outstanding personal debts. A payday loan is one way of getting that cash advance and keeping yourself out of financial difficulties.

• Payday loans can be approved quickly and simply through an online application process. These days, you don't need to make appointments, be interviewed or produce copies of dozens of documents – it can all be done via a computer.

• This is one of the fastest loans you can get. A payday loan is usually processed, with the money you need put into your bank account, within 24 hours.

• Having a bad credit rating does not automatically mean that you will be denied a payday loan. The loan lender will look at your future pay packet and the amount of cash that you wish to borrow from them and decide on a case–by–case basis whether or not you are likely to repay the loan on time.

Reasons to be cautious

• Payday loans come at high interest rates. If you already have personal debts and possibly even credit problems, a payday loan might just add to your financial burden, rather than alleviate it. It is common for payday loans to expect a repayment of up to $26 per $100, which is pretty steep. Be sure you can make such payments before you agree to them.

• If you fail to pay off the payday loan on the agreed date, you could be sucked into a circle of increasing costs and so, even more debt. You usually have to repay the loan within 30 days, as your next paycheck should have cleared in that time. If you realize that you won't be able to make the loan repayment, get in touch with the loan lender immediately. There will almost definitely be added charges, but trying to ignore the outstanding debt will only make matters worse.

• With a payday loan you are borrowing against your future, short–term income – the next paycheck – so such loans are generally only for a limited amount of cash. If you only need a small loan of $500 or $600 to get you over a financial hump, a payday loan could be the perfect solution. However, if your personal debts require more cash flow than that, you may need to look into other loan options.

• You can only apply for one payday loan at a time. If you pay off the first loan on the specified date, there is no reason why you couldn't apply for another payday loan straight away, but running more than one such loan simultaneously is not allowed.

Payday loans are not the answer for everyone who has personal debts issues, however, for some they provide just enough short-term financial support to get them through a tough time and onto financial independence. If you feel that a payday loan may help with your money problems, make sure you do your research and check all the details of the loan thoroughly before you agree to anything. The last thing you need is to add to any debts that you already have.