Can You Get a Payday Loan If You Already Have One? A Helpful Guide
When you’re in a financial bind, sometimes the only way out is to borrow from a lender, regardless of the terms or the interest. About 12 million Americans take out a Payday loan every year and make an average income of $30,000.
Most Americans who take out a payday loan remain in debt to that lender for at least 5 months. What happens if you run into another situation where you need money? Can you get a payday loan if you already have one?
Keep reading to find out if it’s possible and learn what options you have.
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Can You Get a Payday Loan If You Already Have One?
If you want to know how payday loans work, they work like any other lending service. The main difference is they have high-interest fees, and it is best to pay off the short-term loan as much as possible.
The idea is that you are to pay back in full on your next paycheck, hence the name “payday loan.” The service offers loan amounts between $500-1,000. This limit may not be much for people who require more money.
During bleak times, especially those affected by the COVID-19 pandemic, people find they have no choice but to rely on loans to survive. Millions are unable to pay for essentials bills, groceries, and face eviction. There are rules in place by the Consumer Financial Protection Bureau (CFPB) to protect and prevent people from taking out more than one loan.
In July of this year, the Trump Administration started working with the CFPB to find more ways to ensure borrowers can actually afford to pay loans. However, even with these discussions in place, these rules are not yet in place, so you can borrow more money with Payday loans if you meet their requirements.
Customers who sign up with Payday loans often have more than one loan. You can have more than two as well. About 15-20% of people take out 2-6 loans from Payday without any problem.
Tips to Follow If You Get Another Payday Loan
Payday loan regulations vary from state to state. The service is legal in 35 states, but illegal in the rest.
If you live in a state where Payday loans are legal, you can get an additional loan or two if you decide to get it. If you live in Canada, there are also instant loans you can qualify for to do the same.
You will have to go through the same credit check application. It is during this process Payday lenders find what other loans you have and if it is with them. This allows lenders to calculate your debt and decide whether or not to give it to you.
If you qualify for another loan, you should know the terms for that second or third loan will be worse than the original. These lenders see this act as a risk and will charge customers with even more interest.
Reasons You Shouldn’t Get Multiple Payday Loans
It’s best to refrain from getting another Payday loan if you already have an existing one so you can avoid the crazy debt loophole. This will only make you feel more trapped. The struggles you try to get out of will likely leave for with more troubles after you get it.
You shouldn’t consider getting another payday loan if you cannot afford it. When you don’t repay it, you also hurt your credit score and will have more interest fees pile up. Avoiding the debt or pretending it doesn’t exist won’t work in your benefit, especially when you need more money in the future.
Instead of getting another payday loan, you should consider a few alternatives first. It’s best to ask friends or family members first who are willing to help you out of a rough spot. When you need to borrow money, try applying at credit unions first as they offer lower interest rates.
You may be in a better position using a credit card balance transfer for the same reason. There are many other financial institutes that offer better rates and you should research them first. Don’t let the stress get to you where you believe Payday Loans are your only option.
Consider Your Debt and Financial Stability
In a literal but not so literal sense, you are putting your life on a platter every time you pull out another loan when you can’t afford it, especially with Payday loans. You know your financial stability better than anyone else and should create a plan on how to resolve debt before applying for anything.
Credit counseling is helpful for those who need legal advice to get on a debt management plan. You can learn how to budget, raise your credit score, or get help negotiating better terms with lenders even after an account is closed after payment default.
If you cannot afford to repay a Payday loan, you should consider loan consolidation programs as well. At this point, Payday lenders are left with the choice to sue you, ruin your credit score for up to 7 years, or take the loss and move on to gain profit with other customers.
Paying off debt when you can or settling are your best options if you want to keep your credit score in check or prevent it from dropping too low.
To Get a Payday Loan or to Not Get a Payday Loan?
Payday loans may suck you dry in interest fees, but sometimes they do save the day for Americans who are in a bind. If you’re wondering “can you get a payday loan if you already have one,” the answer is yes. If you are able and have the funds or can get it, the interest you pay is nothing if it means the loan can put you back on track.
However, you must also think about the opposite situation. Will the temporary fix hurt you in the long run? Only you can decide this.
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