CAN PAYDAY LOANS MAKE YOU FALL INTO A DEBT TRAP

Payday loans are nowadays easily accessible and the lenders are also flooded in the market. No one wishes to take a loan and most people only take loans because of troubles and probably debts. Well as much as getting a loan can help you to get out of the fix that you are in at the moment, you should look at the bigger picture. Say for example you take a loan that is huge from the payday loan lenders, you would have the stress of repaying the money plus the interest that is on top of it.

Can payday loans make you fall into a debt trap? That is the real question that you should be asking yourself in case you are planning to take a payday loan. According to Payday Pixie, for some individuals, taking payday loans is a matter of convenience as they would have the money they need anyway but not just at that current time. This is when one takes a loan maybe to buy a luxury item knowing very well at the back of the mind that he or she would be able to pay the loan using the salary.

In case you would be taking a loan to buy something that you would probably do without, then you can be classified under the above group. This way you wouldn’t be plunging yourself into any debt as the money that you get from the loan would easily be repaid using your earnings. In such a case, we can rule out the hypothesis of whether payday loans make you fall into a debt trap. However there are some exceptions for this group as there are those who do not have a definite plan of paying a loan when they take it. This becomes risky as you may take a loan and end up being unable to repay it thus going into serious debt.

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The other group of individuals are those that take loans out of emergencies and financial breakdowns. These are the ones that are quite prone to be affected with the debt factor. Especially when they don’t have a definite plan of repayment, this creates a bigger problem than there is. Most emergencies and financial breakdowns are unexpected and come when they are not wanted at all. This therefore leads to individuals making irrational decisions of taking immediate loans that have no clear payment plan.

For the above situation, we can acknowledge the fact that payday loans can actually plunge one into greater debt. This is because some lenders usually have quite higher interest rates on their loans as compared to conventional lenders due to the risk that is involved. It is indeed risky to give out a loan without the long proper procedure as sometimes the payment can be a problem to some individuals. In fact this is the reason why most people fail to pay the loans, the high interest rates.

The acquisition of payday loans should therefore be well calculated as there is a possibility that they can lead to more debt and there is also a possibility that they can help one efficiently without leading to debt. The former is however more common than the latter.