How can a consumer who is unemployed and not receiving a paycheck get a payday loan? Apparently, a growing number of consumers are struggling with payday loan debt while not being employed. Finances are stretched for all classes from the wealthy to the penniless.
The jobless have been a growing concern for years. Payday lenders are out there to offer quick cash solutions but at what cost to the borrower? With high interest rates and the expectation of being paid back with the borrower's next paycheck, there is little room to catch up with bills; much less get ahead.
Payday loans have become common for many people causing an increase in spiraling debt for many. Most people will only borrower a few hundred dollars until their next pay check, but many people have lost their jobs and are still paying on a previous payday loan. This is the same for car title loans where the amount borrowed is much larger and can be more difficult to pay off.
There have been huge increases in the number of people asking charities for financial help. The average in 2011 was about 283 thousand people and rose to 1,243 thousand last year. Unemployment is one the biggest causes of debt problems. Many people who have just lost their job have taken out extremely expensive payday loans or title loans and are struggling to pay them off. These people have turned to charities and churches for help. Payday lenders are recognizing this problem and are trying to work with the consumers to set up an affordable repayment plans for those who borrow in difficult times.
Consumers who think about turning to payday loans for help should think twice before they borrow while questioning their ability to repay these high cost loans. These types of loan can be a tremendous shock to their already downtrodden budget.
The Office of Fair Trading states that is legal for a payday lender to give a loan to someone who is unemployed. However, the lender needs to be absolutely sure that the borrower meets the necessary income requirements for the loan.
For those already struggling with debt, especially those who are unemployed, debt management counselors should work with lenders to educate consumers about preventing unmanageable debt. Some lenders have agreed to freeze charges and interest for borrowers who are having difficulty making repayment. This should be done no later than 60 days after they stop making payments. Borrowers will also have the option to have the charges frozen as soon as they agree to a repayment plan.
The best solution, of course, is to not get into debt in the first place. Consumers need to be honest with themselves about their finances realizing their financial limitations and their spending habits. Are they able to afford a high cost loan and can they be committed to the responsibility of on time payments? That is one of the first questions they should ask themselves before borrowing.
Although the lenders must play their part, the responsibility inevitably rests on the shoulders of the borrower. Don't borrower in haste and be sure to educate yourself as to all terms and conditions of the loan you are considering. Knowledge is key.
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