As you’re probably already aware of, payday loans can sometimes be dangerous to the individual in need of help that enlists their aid. Because of these dangers, payday loans are widely viewed as being insecure or damaging to a country’s economy and public officials tend to frown upon them. And sometimes, that’s all done so with good reason. Let’s take a look at the main dangers of payday loans and see how you can avoid them for a safer financial status.
1. Multiple payday loan borrowing.
Studies show that many people who use a payday loan to solve their urgent financial problems don’t limit themselves to just one such loan, but instead tend to go and obtain loans from other sources to pay off existing debts and so on. This is also known as a spiral of debt, or a vicious circle, and it’s one of the most insidious dangers of payday loans. While blame can’t be put on the people that find themselves in that situation, it’s best if you take heed and make sure you prevent finding yourself in similar circumstances. Fast cash loans should indeed be used to cope with the current financial crisis, but also for preventing the next. It may sound hard, especially during economic hardships, but a little planning can help your finances go a long way, so give it a try.
2. Rogue payday lenders that don’t follow the strict rules
The authorities in Britain and USA seem to be on a rampage lately to carefully watch over payday lenders and make sure they respect the stricter and stricter new rules. Unfortunately, while the authorities specializing in these issues make it harder for the rogue lenders to avoid the rules, the demand for payday loans still isn’t going anywhere. That means that while getting a loan from a slightly dubious but still legal lender may pose somewhat of a threat, the real risk here is that people might turn to even more questionable sources of credit since their need for one remains constant and the authorities may block their access to legal credit from official payday lenders.
3. Illegal payday lenders that “prey” on vulnerable targets
There have been a few undercover operations that exposed how illegal traders and lenders often prey on vulnerable targets (like poor and chronically drunk people or homeless persons) by getting them to sign up for a loan without understanding all the contract terms or while being intoxicated and therefore not in their right minds. Such dubious networks then proceed to take away money from their victims from any means possible, and the bad news is that not even responsible and sober people might not be sheltered from these sharks. Make sure you avoid becoming the target of such businesses by checking out the establishment’s credentials, carefully reading anything you sign and so on. If you’re having doubts for any reason, or if the dealer seems unprofessional or threatening or a little too eager to sign the deal, better back off. Follow your gut and trust your instincts if the feeling is strong enough, in order to avoid the illegally-posed dangers of payday loans.
The bottom line advice is that, if you do decide to contract a payday loan, make sure your source is reliable and trustworthy and officially approved. Have a good plan sketched out on the topic of what to do with the money once obtained; and try to avoid contracting multiple payday loans and entering that dreaded spiral of debt. Also, don’t forget that there are some alternatives to payday loans as well which you can consider before deciding what the best option would be for your particular situation, in order to avoid the dangers of payday loans.