How Payday Loans Can Get Us into Debt

February 22, 2017

Payday loans can prove to be advantageous when there is a need to pay for our expenses during times that we come short of the funds we have. What we need to watch out for is getting ourselves caught up having a loan up our sleeves that becomes difficult to manage. Payday loans aren’t any different.

Like any other loan, payday loans require interest payments as “rent” for the money being borrowed from licensed money lenders in singapore and singapore pawn shops. Unfortunately, payday loans are one of the types of loans that has a very high interest rate. Here are three things to watch out for to avoid getting into debt with payday loans.

  1. Getting Payday Loans Every Month

should you get a payday loan

If you are consistently getting payday loans every month, this is a clear indication that your income is not sufficient enough to pay for your monthly expenses. Consistently borrowing every month not only creates a snowball effect on the amount you need to pay but it also diminishes the amount you take home from your salary. This is the right time to think about getting a higher paying job or creating multiple sources of income.

  1. Getting into the Habit of Payday Loans

Sometimes, it becomes a knee jerk reaction to pay your expenses with a payday loan instead of looking for a different source of income to cover on the shortage your salary provides. There may be times that you are able to recover from paying off your payday loans but being dependent on it will sooner or later create a debt that is too big for you to handle.

  1. Payday Loans involve High Interest Rates

Payday loans have unreasonably high fees and interest payments. We should be aware that we know the numbers when taking a payday loan or any other kind of loan. It is important that we have computed and identified how we can close off the loan without digging ourselves deep into debt.

It is very important that we are aware that getting deep into debt is not limited to mismanaging a payday loan but mismanaging your income, expenses and any other loan that you may have obliged to pay for.