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You may be considering a longer term 3 month payday loan. Let’s dig into what you need to know to determine whether a payday loan is right for you including some alternatives.

Understanding 3 Month Payday Loans:

How a 3 Month payday loan can help you in cash-crisis? How to get rid of it being trapped in the debt cycle?

You never know when an emergency will knock at your door. You are also uncertain about your preparedness to tackle the financial emergency and how to keep it under your control till the next paycheck comes. 

So, what option do you have to tackle the financial emergency till your next paycheck comes?

For many people, who are caught in an emergency, they first prefer to take out a payday loan. You may think why Americans are so fancied about taking out a payday loan in a crisis? 

There are some certain merits of a payday loan / 3 Month payday loan

  • It is a form of easy cash. You can get it with barely any credit checking or scrutinizing your credit history. The only criteria many payday lenders ask for is you should be above 18 years of age and you must be employed to a certain employer for at least 90 consecutive days. That’s all!
  • It is said about payday loans that more than the borrower is eager to take out the loan; the lender is more eager to lend it out!
  • According to Compacom, there are 300 direct payday lenders available in the market. So, getting a 3 Months payday loan is the easiest option available in America and you can get it without stepping outside of your home by simple online application.
  • In difficulties, when you need fast cash, the payday loan will provide you with the ideal solution. Though the loan amount is variable from state to state, the average range is $100 to $1,000. You can later pay back the 3 Months payday loan with 3 equal monthly installments.

A valid phone number, email address and an active bank account are all you need. The loan amount will be directly deposited to your bank account.  

Now, let see the options available for a payday borrower to borrow a payday loan.

You may take out the 3 months payday loan from the direct lender

Direct lending means you are taking out the payday loan directly from the lender without involving any third party or intermediary. Usually, when you will take a 3 months payday loan from the direct lender, the firm will stipulate you to pay back the loan amount in 3 easy and equal monthly installments. 

The lender may collect the amount directly from your bank account every month. So, you are free from the headache of remembering the loan repayment date for the consecutive 3 months.   

You may get the 3 months payday loan through online

The online payday loan structure is the fastest way of getting the loan. You just have to fill out the form online and submit some documents like:

  • Your state identity card
  • Your active bank account
  • A recent proof of salary

The online payday loan firm may deliver you the loan amount on the same day of your application. Just make sure from the online lending company you are taking out the payday loan, is licensed in your state to run the online lending business.

You are often able to get a payday loan with a low FICO score as well in an urgent situation

Yes! You deserve to get a payday loan with a low FICO score as well. According to US loan news, the minimum requirement of getting a personal loan from a bank in the US is 620 FICO points. So, what should you do if your FICO score is lower than 620 points and you need some cash urgently?

You may apply for the payday loan because:

  • A payday lender may take the risk of offering you a loan without having any concern about your poor credit score.
  • You may get a payday loan if you are unemployed.
  • A payday lender may give you a loan without an active bank account in an emergency.

If you have applied for the payday loan, 1 or 2 days are enough for the amount to enter in your bank account. That is why, for fast cash in emergencies, 12 million Americans depend on payday loans. Though you may get instant relief after getting the fast cash and by solving the financial crisis of your life with the money. A new problem may emerge in your life regarding how to pay off the loan amount?

Take a look at why some financial experts compare payday lenders to ‘Loan Sharks’

1) The interest rate of a payday loan is beyond your imagination

The average APR of the payday loan is beyond your imagination. You have  to pay back the payday amount with a 300% to 400% interest rate.

2) The loan repayment period is too short for arranging the money for so high-interest rate     

The payday lender may offer you the facility of paying back the balance on a 3 months installment. But paying $1000 with a 400% interest rate may not seem too easy when you are already suffering from a financial crisis. The possibility of entangling into the payday debt cycle starts here.

 An example may help you to understand how the payday loan cycle works

Suppose, the payday lender has handed over to you $1000 as the loan amount with the fee is $50 and the interest rate is 400%.  You have written a post-dated check to the payday lender. By the time of the installment payment if you do not have enough money in your bank account then the payday lender will start creating problems with you.

The majority of payday loan borrowers have never succeeded in paying off the debt with the astronomical 400% interest rate. They go to the payday lender again with a request to give them some more time to repay the debt. Usually, the payday lender waits for the situation.

They will offer you a rollover in some cases. It means you will get more time to repay the loan amount but the condition is you will have to pay some additional fee as a penalty for being unable to repay the loan amount completely on time. Many people cannot pay off the debt even in the second time. They again  ask the lender to give him/her more time.

The lender agrees again to give the borrower some more time with the same trick that the borrower has to pay some penalty for making a delay in the full loan payment. In this way, the payday debt cycle starts. 

Are there any actual ways to escape from these ‘Loan Sharks’?

You may check out the payday loan consolidation option. It is an effective option against payday loan sharks. The payday loan consolidation will help you to reduce the astronomical interest rate charged on your loan amount. Thus you will be able to save some dollars for sure.

The payday loan consolidation specialists will negotiate with your payday lenders. They will calculate your debts as well as will try to reduce the high APR to a modest interest rate.  Ultimately, with payday loan consolidation your monthly payment will be an affordable one and it will put your finance on track again.  

Other than the payday loan consolidation option can I have other choices?

You have other choices available as well other than payday loan consolidation. You may opt for:  

·        Debt settlement program:

Under the debt settlement program, you have to pay a lump sum to your payday lenders. The lump sum will be a reduced amount than the amount you owed to the payday lender.

·        Debt management plan:

You have to pay off your payday loan debt with one single monthly payment If you adopt the debt management plan or DMP. Under the debt management plan, you are going to pay the single monthly payment with an affordable interest rate to your unpaid debt.  

·        Pursuing Bankruptcy

If you file for bankruptcy it means the payday lender can no longer chase after you because of the unpaid debt amount. After filing the bankruptcy, an automatic stay will be effective on your unpaid debt amount. 

So, what should you do now? 

Well, now you may be a confused person for sure. Are you thinking about what will be the right option for you to get rid of the payday debt? You may use the debt relief comparison calculator to get the correct guidance.

It will make calculations before you whether payday loan consolidation, or debt management plan, or debt settlement program or filling for the bankruptcy is correct for you.

Author biography: This article is written by Catherine K. Burke and she loves to write about the financial problems of life. She motivates people to face the difficult situation positively to get a better outcome. She faced a financial hardship in her earlier days with her payday loan debts. It made her life full of stress. After recovering from that situation, she decided to create a site online payday loan consolidation to help people to get out of debt stress.

Post Author: Guest Author

Ascend's guest authors are experts in personal finance and debt relief topics such as debt settlement, bankruptcy, payday loans, debt management and debt payoff.

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