Do payday loans work to pay off debts?

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There are economic situations in which we feel drowned and we need to make a “financial rescue”, usually the debts cover us and we don’t think clearly at that time we must ask ourselves: Is it a good idea to ask for a payday loan to pay a previous debt? From Good Finance we advise against performing these operations and then we explain why:

Do you need a loan to pay debts?

Do you need a loan to pay debts?

Fast loans are for punctual use and should not be taken as a source of income as they are not. Mainly, we must bear in mind that sooner or later we will have to face the repayment of the loan that was requested under certain conditions. In addition, you will not only have to return the borrowed money, but you will have to face the management expenses, interest, late payments in case of delay, etc.

Surely if you are thinking of taking a loan to pay debts, it is because your salary is not enough. Therefore, we must stop to think that by taking out a new loan, we are earning a few months of financing but not solving our main problem.

In addition, we must take into account possible inconveniences such as delaying the payment of a payday loan which may mean borrowing more. For this reason, we recommend thinking well about the decision to finance the payment of a debt.

The usual thing is to think about improving your monthly income

The usual thing is to think about improving your monthly income

Before a new loan to escape debts. However, there is another option to have more room for repayment: the reunification of debts. This procedure consists of formalizing a new agreement with the entities that charge money on a monthly basis through a financial one that mediates the process. The agreement consists in increasing the repayment term in exchange for paying the debt in lower installments.

Although this is an interesting alternative to payday loans to pay debts, it is not suitable for all clients or in all institutions. So we must see if we can adapt the tool to our situation.

Avoid loans to settle debts

Avoid loans to settle debts

Here we are not going to tell you any news: The best way to pay off debts is to have the capital to settle them. The main advice is that you resort to your savings or that you see the possibility of increasing your income, perhaps with a freelance job or selling products. What is important is that you have to see how to avoid asking for loans to pay off debts, since it will get you on a tight line by increasing your indebtedness.

Do not make visceral decisions under stress or without consulting with someone. Talk to a close person or a professional, such as your financial advisor, before making a decision of this style that will be a burden on your personal economy during the following months or years. Perhaps, it is better that you work on other fronts: set your monthly income with proven techniques. Practice or learn about diversification, multi-employment, freelancing and other alternatives to earn money.

Loans to cancel debts do not usually provide solutions to clients. It is better that you try to get rid of the dues you have pending on your own to get out of the compromised situation in your personal finances.

In economic matters, it is always advisable to be informed to make safe decisions. So do not hesitate to ask us and remove all doubts you have!


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