There are many lenders out there who are all too happy to quickly and easily approve a loan for you while tying you into an unfavourable debt cycle you can’t get out of.
Desperation often leads to poor choices because it forces a person to focus on satisfying immediate needs at the expense of their future freedom. After all, when you’re facing a crisis in the present, it’s hard to consider how a quick fix to the problem is going to impact you in the distant future.
Let’s take a look at two common types of loans that promise immediate satisfaction but leave you saddled with bad debt.
Payday Loans
Payday loans are easily and widely available online. These loans forward you an advance on your monthly income with the expectation that you will repay the loan with interest upon receiving your next paycheck.
They’re attractive because they’re quick and easy to apply for, and approvals are typically granted within 24 hours. What’s even more tempting is that payday loans usually don’t require a credit check.
The problem with these loans is that the interest rates are often exorbitantly high. Moreover, payday lenders are well aware that many borrowers can’t actually repay the loan upon their next paycheck, and so they’re forced to take out another payday loan to pay off the last one, quickly transitioning into a never-ending debt spiral.
Retail Loans
Almost every furniture and appliance store offers in-store credit that allows you to buy a couch or television that you actually can’t afford. Getting involved with this kind of credit is dangerous because the interest rates and loan origination fees are usually extremely high, leading to you paying far more for the item than it’s worth.
A couch, for example, might be advertised for R9,999 in store. But that’s the cash price. When you factor in the loan interest and all of the associated fees, that same couch could end up costing you R17,000 (this is a real-world example). That’s not far off double!
Let our experts help you overcome debt and become financially free today! Contact Zero Debt now.
