More than 30% of working Indian who took payday loans in 2017 were unable to pay them off within the agreed time spam- a stunning number. However, more people still apply for them every year. According to a BankBazaar survey, every year, about a third of people who take out payday loans fail to pay them off after the 10-week period in which they can be “rolled over” following an initial two-week term. Critics of the industry say the data prove the companies deliberately entice borrowers into a “debt trap.”
How Payday Loans lead you into a debt trap?Snneha Lukaa April 30, 2019
Payday lenders thrive by luring customers into a cycle of perpetual debt. Payday loans have very small repayment span, usually 1 month or till your next paycheck. But the paychecks of most employees are just about enough to make all the necessary monthly payments and the little money left will go into savings. When there is a debt to be paid off, it causes a huge dent in the monthly budget. And in those difficult times, people end up taking another payday loan, and the vicious circle keeps repeating itself. You will find yourself in a never ending loop, and wind up paying more in fees than the amount they borrowed.
This fact has been apparent for years. A 2015 study from the Ministry of Finance discovered 76% of the payday market is comprised of people taking out new loans to repay old ones. Despite this information, the payday loan industries deny this fact.
So what are some alternatives for fast cash? There’s only one way out: stop taking out more loans. It’s understandably difficult when you can barely make ends meet. If that’s the case, it can be time to consider other alternatives. Bear in mind, you can borrow from family members and friends, and they will be more willing to help you out. Also, they will be considerate of your situation and not exploit your vulnerability.
If you’re unable to borrow from family or friends, then an excellent option is taking a personal loan from financial companies like Upwards-Quick Personal Loans for Salaried Employee. Upwards is India’s quickest personal loan provider for salaried individuals looking for short-term loans between Rs. 15,000 – Rs. 1,00,000, with tenure ranges from 6 months – 3 years. They provide hassle-free personal loans to all job profiles like teachers, software engineers, accountants, retail store employees, nurses and more who draw a minimum salary of Rs.15,000 per month.
Always try to save as much as you can and stay away from getting into more debt than that you can handle. Do not consider taking a loan unless it is really necessary.