Debt is something that plenty of people find themselves with. The thing about debt is that a small amount of debt is easy to manage, whereas a large amount of debt could be more difficult.
Debt comes in a variety of forms, store cards, catalogues and mail orders, credit cards and loans. Loans can be taken out from the bank and paid over a long term with low interest. But that isn’t the only form they come in.
The rise of payday loans
One form of lending that seems to have become more and more popular is the payday loan. These are short-term high interest loans that are known to offer quick pay outs and acceptance of people with low credit scores.
Whilst the idea may seem great, particularly if it is to tide you over until your next pay day, they may not be all that they seem. They have a high interest rate which means that the amount you are paying back far surpasses the amount that you have borrowed.
Not only this, but there has also been an increase in people who have taken out multiple payday loans over a period of time. This particular approach to borrowing can build up and lead to a much larger debt problem in the long term. Often, payments are missed and these loans are then passed to debt collection agencies. If you find yourself in this situation then the simplest thing to do is to stop your payday loan payment, which will stop any more money being taken out of your bank account. John at MoneyNerd.co.uk offers tips on how best to manage payday loans and debt collectors.
Try and stay calm
A common reaction to large amounts of payday loan debt is to panic, but this is the worst thing that you can do. Try to stay calm, you would be surprised by the amount of people who have had to use payday loans, not only for a one-off expense but even to buy food or pay out for bills.
Stop the cycle
You need to stop the borrowing cycle, else you will never get yourself out of debt. It may seem that each and every month you need to borrow in order to have money, but this is just increasing your problem. Draw a clear line under your borrowing and stop taking out any more loans. This will help keep the levels of debt down.
Cancel the payments
As we have already said, you need to make sure that you cancel the payments coming out of your bank for the payday loan(s) that you have taken out. They are non-priority debt and should be paid back after you have covered your essential bills and living expenses. You should never be short of money to pay your rent or food in order to pay off your payday loan.
Only pay back what you can afford
A common complaint that people have with payday loans is the way that they collect their payments. They can push for large repayments to be made back to them. But in truth they cannot make you pay back more than you can afford. However, you need to make sure that you understand what you can afford to pay. This is something that a money expert can help you to work out.
Being in debt isn’t the end of the world, but payday loans can be a difficult hole to climb out of. The important thing to remember is that there is a light at the end of the tunnel and all you need to do is keep focusing on that in order to get back out of debt. We can also recommend StepChange Debt Charity