Today, one of the most popular financial resources is an online payday installment loan. They provide a way of getting instant cash in the easiest way in times of urgent financial need. Online payday installment loans are helpful in times when your car suddenly brakes down and you don’t have extra cash for repairs. These loans are also timely when you need to pay for a medical bill but your paycheck is a couple of weeks away. These unexpected urgent needs are best handled with payday installment loans.
However, most online payday installment loans are unsecured. Since people often tend to overlook the negative aspects of such loans, they may end up getting trapped in a dreadful cycle of debt and finding a way out is never easy. Consumers feel overwhelmed by their debts. This often results in the worst things that a consumer can imagine.
Worst Things about Online Payday Installment Loans
1. Lenders charge extremely high rates and fees.
This is one of the worst things associated with online payday installment loans that puts consumers in continual debt. For instance, if you borrowed $100 due after 2 weeks, you have to pay $130 to pay the debt in full. Also, some lenders charge processing fees and charge late fees for late payments. The hefty fees associated with online payday installment loans makes these loans controversial and they cause government authorities to investigate them.
2. Debts accumulate when not paid on time.
Most lenders of online payday installment loans don’t just charge processing fees, but also charge late fees when payments are not made on time. The worst thing is that if you are unable to make your payments, they automatically roll over the loan which marks the beginning of dragging you into deeper debt. Within a month after skipping payments, the outstanding balance may double. The longer time you take to make your payments, the faster the debt balance multiplies.
3. Automatic Withdrawals from Bank Accounts
This is one of the worst things when getting online payday installment loans. You will be required to provide direct debit authorization to your lender for the withdrawal of your repayment. However, this provision is often abused by lenders by withdrawing money even when the balance in your account fails to provide the sufficient amount for payment. When this happens, the borrower pays bank fees and also pays the lender late payment fees.
4. Short repayment time
This is probably the number one worst thing about online payday installment loans. In many cases, borrowers is required to pay back the entire outstanding balance plus all of the associated fees as soon as they get their paycheck. The problem with this is that this will leave borrowers short of cash for the next couple of weeks. Inevitably, many people end up taking out another loan to cope until their next payday. This puts them into a cycle where they are constantly depending on payday installment loans and they never get out of debt.
Online payday installment loans have taken a lot of bad press over the last few years. In many cases, this negative attention is well deserved because of some serious issues with regard to these financial resources. However, it is also important to keep in mind that online payday installment loans are not necessarily bad. Borrowers just need to know how to use them properly.