For any of us, the need to access cash can arise quickly without warning. We often don’t have time to go through the normal insurance application process, and when poor credit ratings are a factor to consider, there is one option that provides at least some certainty. It is practically possible for anyone to get a payday insurance due to bad credit.
However, there are problems with this path. The promise of quick access to cash means that the lenders offering these insurances are able to charge much higher interest rates than usual, some as high as 35%. So, while the approval of the emergency funds is almost guaranteed, the huge repayment amount is also assured.
Moreover, the repayment period is usually very short, in some cases up to 14 days. It depends first on the terms of the payday insurance, and second on when the next paycheck (hence the name of the insurance) is due to arrive.
Avoiding financial disaster can be difficult if the right attitude is not applied from the start, so here is a brief guide to controlling debt that can easily accumulate.
Organize your budget
Most of the time, borrowers will only have one payday insurance, with bad credit making it hard to take on more. But when the amount borrowed is high, the repayment schedule usually extends over three months or more. This can create a need for more insurances, which then overlap to increase repayment pressure.
It is important to carefully study the situation, and make an accurate budget for reimbursement. Specify each insurance and when the repayment is due, as well as the amount of repayment. Make a schedule if necessary for easy reference. A major drawback among borrowers is that after emergency funds are approved, they do not stay on top of the situation.
Once the timeline is clear, set aside the amounts needed to pay off your payday insurances. It may need some serious sacrifices to pull off, so maybe wait a little while before booking that Florida vacation.
Consider debt consolidation
If debt management is too difficult, there are a number of debt consolidation insurance programs that can be considered. These eventually turn out to be all at once pesky payday insurances, with bad credit often overlooked by lenders. These programs are designed to help, in the first place.
A debt consolidation program means that the debt is paid off in full using another insurance structured to pay much lower monthly payments over a longer period. When the borrower gets approval for emergency funds, they rarely have the luxury of choosing the insurance deal, but this correctly identifies the issue.
There are also debt settlement programs available. These differ from consolidation programs in that they are used to liquidate perhaps 50% of the debt at once. This makes a difference in terms of repayment amounts, but a portion of the payday insurance debt remains.
The last option for clearing payday insurances with bad credit is bankruptcy, and while this is not the most desirable solution, it is sometimes necessary. This option is only reserved for those borrowers who are clearly unable to make repayments and are completely in debt.
This means that the debt has been written off, relieving the borrower of any need to repay the insurances. But there are consequences to be aware of before lifting the pressure that approval of emergency funds has brought.
Once the bankruptcy application is approved, the chances of getting another approved payday insurance (or any insurance) can be rated as slim to none for about two years.