Approaching payday loans can be easy, but paying back the debt can turn out to be a damn costly affair. Many experts say that it can put you in a debt trap due to high-interest rates. The process, though, is easy but later on, it can cost you a lot more, especially if you delay paying it back.
Although the payday loan process is quite easy and quick later on you will realize that it’s actually expensive. The maintenance of the loan is quite high. It can also prevent you from getting financially stabilized.
Worried about your payday debts? Wondering how you can get rid of it fast? Well, there are several ways to get rid of payday loan debt. Given below are the strategies to prevent the problem of getting into a payday debt.
Well, there are several ways to get rid of payday loan debt. Given below are strategies to prevent the problem of getting into a payday debt.
- Make the payment by taking off a new, less-expensive loan.
- Use your savings to pay off the loan.
- Discuss with your lender and arrange for an Extended Payment Plan (EPP).
- If possible, try increasing your income to pay off existing debt.
Alternate ways to get out of payday loan debt
a. Work Hard
It may sound like a professor professing you to score better marks but if you are debt-ridden the only possible situation is to make more money than before. How can you do that? By working for an extra number of hours than before. Or you can think of taking a part-time job.
b. Rent out your garage
Have you thought about cleaning your garage and making the space available for other purposes? One of the best things to derive money out of the available space is to rent it out to make more money. Once you have collected money from the rent, you can easily repay your payday loan debt.
c. Start a new business
How about turning this opportunity into something you didn’t think of before? There are lots of business opportunities which require small or little investment like selling a beauty product or becoming a dealer. The best thing would be if you materialize your passion into a business activity and make some extra money to get out of payday loans.
d. Make money online
People have made careers out of selling things online on websites like eBay. If you are planning to make some extra dollars online, research and grab a part-time job or a lucrative deal that involves the exchange of goods in return for a good amount of money.
e. Decrease your expenses
When your expenses decrease, all that extra money you would be spending can go directly to pay off the payday loans. Once your non-essential spending is eliminated from a typical monthly budget, it clears up a huge portion of your income to help pay off the payday loans.
What may happen if you don’t repay your payday loan
Defaulting on a payday loan can mean your bank account will become drained and it can trigger collection calls, wage garnishment, and lawsuits.
Since many payday loan lenders use automatic debit payments to take funds directly from a bank account, you may end up with overdraft fees to top everything else. This can leave you broke without having the funds to pay for essentials like food, childcare, and other utilities.
In addition to that, you can also get mentally harassed over the phone and can get constant threats from debt collectors.
How can you escape your payday loan debt?
As a debtor, it is important to know that the laws governing payday loans vary from state to state. Some states like Colorado, for instance, are currently working to change the way payday loans are managed to make it smoother for customers to pay back loans with the given time.
There are many options available to get the borrower out of the vicious cycle of payday debt.
a. Extended Payment Plans (EPPs)
You may turn out to be lucky if you borrow money from a lender who happens to be a member of the CFSA (Community Financial Services Association of America). CFSA Best Practices permits a payday loan customer the option of allowing an EPP. This means you will have the luxury of more time to repay the loan without any additional fees or interest added to the service. Here are the few steps you can follow to apply for an EPP:
Apply on time: You must apply for EPP on the last business day before the loan is due.
Sign a new agreement: If you have taken out a loan through a storefront location, you may have to go back to that location to modify the terms of the loan. Once the loan is taken out online, you will have to contact your lender for instructions on how to sign your new agreement.
b. Credit counseling
If the EPP option doesn’t fit you, then you can try consulting a credit counseling agency. These agencies are well-versed with the various kinds of loans that the person is involved in and their job is to offer the easy way out from debts. Not only do they counsel customers in solving debt queries, but they also help them in strategizing their debt repayment plans.
Restructure of payback is observed when payday lenders, who are a part of the CFSA, are more sincere and apt in working with people. If you become a part of such a program, the lenders will often restructure to pay back in a span of six to twelve months but, this generally applies to nearly 40% – 50% of the payday debt situation clients are dealing with.
c. Payday loan debt consolidation program:
Consulting counselors are not the only way out. Companies offering payday debt consolidation programs can help in achieving the financial freedom needed in life. The program assists consumers in lowering the monthly payments, makes efforts towards debt consolidation, reduces the interest rate, and stops the painful calls made by the collectors. It has many benefits. You can subscribe to the top-notch payday debt consolidation program, which is designed to eliminate debt from your life.
It is obviously the final option to opt-out of this kind of debt. There is a myth out there that you can’t include payday loans in a bankruptcy. However, that’s not true. According to experts, payday loans are not treated any differently in bankruptcy than any other unsecured loan.
Nobody likes to invite debt into life, but sometimes there’s no way out.
According to the report, there are about 12 million Americans who use payday loans every year. But there’s still hope – you can follow these solutions to get out of the cycle of payday loan debt.