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  • Avoiding the Payday Loan Trap: Alternatives to Payday Loans

    Payday loans, while alluring options when borrowers need cash quickly, can do more harm than good; therefore, borrowers should consider their alternatives to payday loans.

    Payday loans, while alluring options when borrowers need cash quickly, can do more harm than good; therefore, borrowers should consider alternatives to payday loans.

    Payday loans offer borrowers in need of quick cash a sum of money without having to put up collateral for that money and without having to pass a credit check. As a result, payday loans can be alluring options for individuals with less than stellar credit who may need extra money to fix their car, pay a doctor’s bill or pay for some other unexpected expense that pops up. Although payday loans can help borrowers in need of money out of a financial bind, however, they are associated with excessively high interest rates that can be, in the worst cases, as much as 20 to 25 times higher than credit card interest rates.

    This means that, if borrowers are unable to pay off payday loans when the first payment is due, they will face an extremely high payment the next month, which can quickly snowball into overwhelming debt that may take months or even years to pay off. What can make matters worse if the fact that this snowballing debt created by the initial payday loan can quickly damage a borrower’s credit even further, making it that much more difficult for them to obtain any lower-interest rate loans in the future.

    Payday Loan Alternatives

    To avoid becoming entrapped by the overwhelming debt that can be generated by payday loans, it’s critical that borrowers consider all of their options before taking out a payday loan. Potential alternatives to payday loans can include:

    • Obtaining an advance on one’s paycheck from an employer
    • Borrowing money from a relative
    • Paying for the unexpected expense with an existing credit card or taking out a new credit card to pay for the expense
    • Attempting to secure a loan from a credit union or small financial institution that may not have as strict credit standards
    • Filing for Chapter 7 or Chapter 13 bankruptcy

    If you are struggling with debt and are looking for a financial fresh start, contact the trusted Colorado bankruptcy lawyers at The Law Office of Andrew McKenna. For more than 20 years, we have been successfully overseeing our Clients’ bankruptcy cases so they can resolve their financial issues as beneficially as possible. Our comprehensive legal knowledge coupled with our vast experience allows us to consistently and efficiently help our Clients achieve the best possible resolutions to their financial matters. For an evaluation of your case and expert advice regarding how to move forward, call us at (303) 730-8819.

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    North Metro Denver Office – 11154 Huron
    St. Northglenn, CO 80234

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    E. Florida, Suite 400, Denver, CO 80222

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