Avoid Payday Loans Online for Impulse Borrowing
Impulse borrowing and emergency borrowing are entirely different things, and consumers should avoid payday loans online for impulse buying. Although convenient online payday loans rank as one of the top resources for urgent financial needs, these short-term loans carry higher-than-normal interest rates because of their shortened loan periods, high administrative costs and higher-than-normal default rates. No matter how appealing the new smartphone might be, it’s better to wait until you have a better financing option.
Better options include not buying on impulse but only after carefully weighing the pros and cons. If you come up short, borrowing to buy something just doesn’t make any sense. The misconception that many consumers share is that they deserve to treat themselves when things look bleak. That’s a dangerous attitude that could trap your permanently with high interest charges.
Online Payday Loans Make Poor Choices for Impulse Buying
If you want to buy something, online payday loans are bad choices to use for paying the bills. Consider holding a yard sale or selling unwanted items through an online classified service. Try to arrange an exchange or borrow from friends, relatives or credit unions. In emergency situations, online payday loans can be viable solutions, but you should first explore other financing options such as getting help from religious institutions, social services, banks, finance companies, pawn shops and even employers who might be willing to provide an advance on your pay.
Payday Loans Online: The Psychology of Impulse Buying
Online payday loans receive a lot of criticism because of their high interest rates, and some of the condemnation is justified. Some predatory lenders encourage customers to take out multiple loans at high rates just for impulsive purchases. Targeting customers who can’t afford to repay their online payday loans from their next paychecks traps people in cycles of debt that are hard to escape. These consumers–due to poor impulse control–end up spending their entire disposable incomes paying off interest charges.
Impulse buying, although sounding relatively harmless, triggers behavior that can prove detrimental to most people. According to a report at Psychologytoday.com, impulse buying often comes from status-seeking habits, dissatisfaction with everyday life and addiction to the high of making impulsive purchases.
Impulse buyers have difficulty resisting the urge to buy. According to Acrwebsite.org, this kind of buying behavior has been the subject of many studies and consumer research. Marketing experts use the findings to encourage people to spend beyond their means with innovations such as instant credit, 24-hour access, home shopping networks, clever videos, social media pressure, cash machines and even payday loans online.
Payday loans online make it easy for consumers to buy products impulsively because they can get cash to pay their ordinary household expenses. However, it’s easy to fall into the trap of borrowing from multiple lenders and getting new loans to repay the old obligations. The number of payday lenders has grown more than 90 percent since 2000 according to a report posted at Washingtonlawhelp.org. The high availability of loans won’t help your credit score, but taking out multiple loans–regardless of whether you repay them–can lower your credit score.
Best Practices in Deciding to Get an Online Payday Advance
An online payday advance works well for unexpected emergencies such as paying for an essential repair or covering a higher-than-normal utility bill, but you should never use one of these loans to buy something frivolous and unnecessary. The risks are too great, the greatest of which is that the convenience and accessibility of these loans will foster careless borrowing.
Payday loans online are marketed in different ways, and many lenders suggest that an online payday advance is the answer to any financial problem. That’s patently untrue–as with any type of loan, you need to decide if you really need the loan, whether you can afford to repay it and what other financial options are available to you. A report at Huffingtonpost.com quoted a Pew Charity Trust study that found about 60 percent of online payday advance loans were used to pay for everyday household expenses. That’s not what these loans were meant to cover, and using them this way leads to debt traps.
” She Blinded Me with Science” Is No Excuse
Another interesting post at Psychologytoday.com suggests that marketing messages can hijack your brain. It’s pure science related to the brain’s internal alarm system. During the holidays, people become obsessed with buying gifts for loved ones, friends and co-workers. People happily buy more than their paychecks can cover, and the products often end up sitting in garages or attics with the price tags on them. In the brain, the amygdala usually keeps people alert and safe, but this organ can drive people to behavioral extremes when they are stressed.
People often decide to buy something that they don’t need to make them feel better. Buying temporarily relieves the stresses of routine, but those tend to return when the bills come due. It helps to practice yoga, meditate or reconnect with your core values. Reward yourself for sticking to your budget with something that costs little or nothing but makes you feel better. It’s always wise to pull back from the phone, computer or store displays and think hard about whether you really need a product or service. Payday loans online can be an easy answer, but they’re seldom the right choice.
You can use the extra time to decide if you’re thinking about buying something to relieve anxiety, unhappiness or stress. Understanding your motivations is the first step to controlling your impulsive behavioral patterns, and controlling spending offers many long-term benefits that lead to a better lifestyle and enhanced psychological well-being.
Avoiding Cycles of Debt with Careful Planning
You should always explore other options before applying for online payday loans. Try to stretch your finances if there’s an emergency or unexpected bill. If you can’t pay a bill, contact your creditor and try to make a payment arrangement. If your need for cash requires a loan for a longer term, apply for an alternative peer-to-peer or traditional loan. If you have collateral, you can put up property to guarantee a low-interest bank loan.
If online payday loans are your last option, do some research to know exactly what the terms are and how much you’ll pay in interest and fees. Make sure that you can afford to repay the loan from your next paycheck. Read all the related paperwork to ensure that the deal is reputable, transparent and legal in your state. Avoid casino and tribal lenders who aren’t regulated by federal and state laws. Above all, avoid overdrafting your bank account. If checks are presented without enough money in the account to cover them, you’ll be charged an overdraft fee that could accumulate multiple times.
There are no quick fixes, but online payday advances can prevent unpleasant consequences such as bounced checks, service disconnections and late fees and penalties. Payday loans are useful only in limited circumstances where borrowers understand the risks and consequences and determine that they can handle them.