Ads encourage us to take quick loans, without BIK. However, not everyone is aware that by deciding to take another payday loan you risk falling into the so-called debt spiral. What are the characteristics of quick loans and do you always need help to pay them back?
What is payday pay?
In law, look for a definition of a short-term loan, commonly known as payday loan, for free. However, it is generally accepted that payday loans are short-term loans, which are usually repaid within 30 days of the conclusion of the contract.
The contract can be concluded directly, for example at a credit bureau or remotely by completing the application on the website, by phone contact or even sending an SMS. Regarding these loans, the provisions of the Act of May 12, 2011 on consumer credit shall apply.
Experience shows that short-term loans are mainly a domain called parabanków. Banks and credit unions provide financial resources for a period of up to 30 days via products such as a credit card or overdraft.
Who is the payday loan for?
Short-term loans are available to everyone. However, they are primarily interested in people having trouble obtaining a traditional loan due to limited creditworthiness or people who do not want to be bound by a long-term contract.
The quick possibility of receiving cash brings, unfortunately, a high price for this type of loan. Fast money is expensive money you need to be aware of that. We wrote here about how to choose a favorable payday offer. The most common loan costs include interest, commissions, collateral costs and late repayment fees.
When paying the payday loan, we should first of all stick to deadlines, otherwise the creditor may charge us with the costs of recovery. Another “catch” is the so-called “Extension of the loan repayment period”.
How to pay back payday loans?
The extension fee ranges from a dozen to several dozen percent of the value of the capital borrowed. So if you have already taken a short-term loan, it is best to tighten your belt and repay it as soon as possible. If financial problems happen to us and we need help paying back payday pay, we should try to contact the bank.
If we have creditworthiness, it is worth to pay the payday payday with a cheaper bank loan. In a situation where we have no creditworthiness and cannot count on the help of the family, we should negotiate with the creditor. This is not an easy task, because it requires a lot of commitment and specialist knowledge. However, it should be remembered that each day means new interest and an increase in the value of debt.