How To Get Out Of Payday Loan Debt

How To Get Out Of Payday Loan Debt?

You might recognize the following situation: You’re running low on money, you credit card is completely maxed out and your family and friends are out of the question when it comes to borrowing cash. A $250 payday loan hence becomes a quick, simple and innocent situation. You tell yourself that such a loan is absolutely harmless – by your next paycheck, you’ll have paid off the loan as well as the additional fee and be back on your debt-free feet.

But all of a sudden – things don’t seem to be going as planned. You quickly run low on cash once again and repaying your loan is out of the question. Instead, you choose to pay an extra charge in order to extend for another 2-week period. In 14 days, you’ll either be capable of paying off the original debt plus fee or, you’ll have to pay a third time in order to extend your payment once again.

Otherwise known as the payday loan debt trap, this vicious cycle can continue for months and months. After a year, you will have paid $975 in additional fees simply to borrow the original $250. Keep reading if you want to learn how to save yourself from a debt and how to stay away from such a trap for good!

Ways To Get Out The Payday Loan Debt Trap!

Getting yourself out of a vicious loan cycle is in fact possible – and there are many different ways to go about doing so. The most important factor in choosing which strategy best fits your needs is your financial situation. Start by creating a budget and looking at your expenses – more particularly, where you can start cutting. In order to free up a little cash to pay back, you’ll have to start setting some money aside. Pay close attention to money spent on restaurants, clothes shopping or various travels for these are the easiest to start cutting back on.

Just cutting in your extra expenses may not be enough in order to cover your debt and quickly, so the next costs you should take a look at are your medium-necessities, including cable, internet, cell phone, car or rental insurance premiums. If one of the above appears less needed at this time, you can cancel the service altogether. Otherwise, don’t hesitate in contacting the concerned company and negotiating a better price for your needs.

The final area to look into are your larger expenses, like car payments and rent. If you’re really dealing with financial issues, you can start thinking about taking more drastic measures. For example, you can sell your car and find a less-costly means of transportation. You can equally move to a location with a lower cost rent or even find a roommate in order to help with the cost of rent.

In the end, the most important part is finding the necessary money to help you get out of debt and catch up as quickly as possible.

Request a Smaller Loan

Prior to actually requesting, make sure you have the necessary income in order to pay the loan back. With a reliable income, you can request a smaller loan from a bank or credit union – keeping in mind that you’ll have to make regular payments in order to pay the loan back. If you go about applying for your loan correctly, you can not only get yourself out of your short term money problems but you can equally improve your credit report if you succeed in making all your payments on time.

Talk to you Family and Friends

We know this option isn’t available to everyone – but it’s worth discussing and equally worth attempting. Requesting money from family or friends is rather a popular suggestion when it comes to financial problems. By asking for one lump sum from someone you are close to and can trust, you can pay back your loan in a single payment, avoid interest fees, and repay your friend or family member in small payments. Generally speaking, friends and family are also interest free making this route the prefered one if you’re struggling to make ends meet.

How Payday Loans Can Lead to Bankruptcy

In general, most payday loans are secured through accessing a borrowers online checking account or by receiving a signed check from the borrower in the amount of the loan plus the lender’s additional fee. In other words, this means that if a borrower doesn’t make their payment on the decided date, the lender can withdraw the amount directly from the borrower’s account or cash the signed check.

If this occurs and the borrower doesn’t have the necessary funds in order to cover the payment, the check or withdrawal will bounce and another additional fee will be incurred, impacting the borrowers credit score. If this happens on a continuous basis, one may see their bank account closed by their bank – making it difficult to reopen a new one.

All in all, the vicious payday loan online debt cycle can be pretty scary and honestly, pretty easy to fall into. If you don’t have any other option than borrowing a loan, then make sure you are requesting a reasonable amount that you will be capable of paying off by the scheduled date!