When you’re short on cash, a payday loan appears to be an ideal option, and once you have dealt with the emergency, you’re trapped with a loan that must be paid off. You suddenly need a second payday loan to pay off your initial payday loan; here’s where the cycle begins.
Renewing a new loan to pay the old loan back with fees and interest, forces you to keep getting fresh payday loans to cover off old ones. The payday loan loop is a tough situation to find yourself in. Hundreds of Canadians are trapped every year with no viable remedy in sight.
Do not be afraid, you are not alone. In this article, we will discuss what a payday loan is and how to pay it off quickly.
What Is a Payday Loan?
A payday loan, also known as “Cash Advance Loans,” “Payday Advance Loans,” or “Payday Cash Loans,” is a relatively short-term loan with high interest and costs of up to $1,500. The loan must be repaid when your next paycheck arrives. If you don’t pay back the loan on time, you’ll be charged additional fees and interest.
What Happens When You Default?
- Interest will accrue on the amount you borrowed, including the fees.
- The payday loan company has been given access to your bank account information and can withdraw the payment in which you owe
- You will be contacted by the payday lender to collect payment if the payment goes NSF. If you ignore them, they may try other methods to contact you, such as reaching your employer.
- Your income may be garnished or a lien put on your property and/or assets by a payday lender.
- The payday loan company can transfer the debt to a collection agency, which will appear on your credit report and negatively impact your credit score.
None of this appears to be really pleasant. So, here’s how to get rid of those payday loans once and for all!
Make a Budget For Yourself
The first step is to create a realistic spending plan that includes all your monthly costs as well as any other financial responsibilities you may have. Setting up a realistic budget will allow you to see how much you can afford to repay. Rushing to pay off the loan sooner without plans could lead to further financial difficulties in the future.
Inquire About a Payment Plan That is More Flexible
If you need help paying off a payday loan, start with the source. Your payday lender may offer you an EPP (Extended Payment Plan) that allows you to pay off your debt over a longer period of time. An EPP typically gives four additional pay periods to repay the loan without incurring additional fees or interest.
Sell Any Items You Don’t Use or Need
Could you get by for a while on public transit if you sold your vehicle for some quick cash if you needed a few thousand dollars? What about outdated equipment, interiors, or electronics? Or perhaps jewelry you don’t wear and have stashed away? Sure, giving up certain stuff can be unpleasant, but it’s preferable to receiving debt collectors’ calls and facing possible legal action! Furthermore, getting rid of stuff you don’t need or use frees up space for other stuff. And any pain you experience will be short-lived once you’re stress-free and debt-free!
Seek Assistance From Relatives and Friends
Relationships have been known to be damaged by money, so proceed with caution. First, figure out what you can raise through your own effort, so you may ask for the smallest amount possible. Then enlist the help of family and friends to cover the rest.
Get a Side Job
A side hustle can make you money and get rid of your debts faster, depending on your calendar and family commitments. Doing the new norm, driving for Uber, UberEats, Skip the Dishes and DoorDash in your spare time or on weekends. If you have a new hobby in mind, dog walking, or marketing your handyman items on websites such as AskforTask or Jiffy.
Apply For a Debt Consolidation
You can profit from consolidation if you’re locked in a loop of payday loans. There are many options when it comes to debt consolidation. Speak with a debt expert that helps customers with unsecured credit and debt issues. You’ll normally only need to show that you have adequate income to cover your monthly payments.
You can use debt consolidation to set off your payday loan and maybe other debts that you have accrued. You’ll be able to bring the amount forward at a reduced interest rate and for a longer period of time. This means you won’t be forced to pay lots of money in interest charges every two weeks, and you’ll be capable of making modest monthly payments that meet your budget.
Consider A Free Consultation from Debt Experts
If you’re drowning in debt, and you need some advice from an expert on how to get out of debt and get rid of the payday loans for good, know your options with a strong plan in place that gets you back in control of your finances. You’ll receive advice on how to settle payday loans quickly and get out of debt with strategies tailored to your situation.
We provide free consultations at EmpireOne Credit Solutions. Our consultation is completely friendly, private and confidential. With just one consultation with us, you can start living a stress-free life and have the financial freedom you deserve.