Watch out!!! If its Payday loans
Payday loans are popular in western countries especially because of the relief it gives in the last minute. Payday loans are specifically meant for emergency cash and hence come with high interest rates with a complex name called APR. Calculating APR will probably take more time than the bank’s time to process the entire loan. So, in layman words simply high interest rate.
While payday loans are much better than credit cards, in many ways it is still an evil but in popular terms, a necessary evil. If prudently used, payday loans can actually be the ‘good shepherd’ during ill days.
But people often tend to overlook the flip side of payday loans which later turn out to be night mares. One such overlooked nightmare is the situation where a person is under DMP [Debt Management Plan]. When the money doors crush each other and let you with little or no money to pay back creditors, you can go for a DMP, where a third party negotiates with the creditors to reduce the interest rates or re-talk the payment rules. This happens only in extremely tight financial situations.
What harm can payday loans do while in a DMP? Well, if you have not informed the payday loan company simultaneously while you register for DMP, chances are that they might draw the money out of your bank account and still hold it legal, as you have given them the right to do it.
Also, remember to open up a new bank account and transfer your salary into it as soon as you apply for a DMP, as this would technically eliminate the payday lenders from making a “mistake.” Even though the payday loan company might reimburse the money back [after a long long time of-course, why lose the luxury of time and energy. Better be safe than sorry.
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