Payday loans can get you into a debt hole. The ease of getting them often creates a habit-forming desire to take out more loans, which can make it hard to get back on your feet financially later.
There are several ways to get rid of credit debt. We will discuss these methods in detail in this article and talk about ways to prevent this problem from recurring.
Ways to Getting Rid of a Payday Loan
- Repay the loan with a new, less expensive loan
- Repay the loan with your savings
- Negotiate an extension of the repayment period with your current lender
- Temporarily increase your available funds for debt repayment
Get Another Loan
If you are unable to repay your loan, you can use another loan to get rid of your debt.
Almost any other loan is more favorable than a payday loan, so it’s worth trying other sources of financing. Small banks and credit unions are the best options for getting a loan, especially if you don’t have a good credit history or have never taken out credit. Also, sometimes online lenders work with borrowers who don’t have a good credit history. However, keep in mind that if you decide to engage the services of such lenders, you are at risk of encountering predatory lenders.
An alternative to renewing existing payday loans could be a consolidation of those loans with a more affordable loan and then repayment of the consolidation loan. Borrow the sum enough to pay off your existing debt (and probably enough to avoid taking out another payday loan), but no more. In this case, you are borrowing on much more favorable terms. The point is to finally abandon payday loans. Then you’ll have more time to repay, and you’ll pay less interest.
Getting Help With Approval
If you can’t get approved, consider asking someone with a good credit history to co-sign for you. This person will guarantee that you will repay the loan on time. If you don’t, your guarantor will be 100% responsible for repaying the loan, which is a big risk for that person.
Got the Money?
If you decide not to take out a loan you recently applied for, or you got money and your situation has changed, try to pay the money back. In some cases, payday loan lenders allow a free cancellation within one business day after receiving the loan.
Extending the Repayment Period
If you currently are unable to repay your debt, contact your lender and ask what can be done about it. Some lenders provide extended repayment plan options and other forms of short-term help.
Increase Your Budget
Sometimes finding more money is the only option to solve a problem. There are two options: start earning more or cut expenses. Both ways are difficult but very effective.
Increase Your Income
If possible, find an additional part-time job to hurry up getting rid of your existing loan debt. An extra income can help you avoid spending on multiple payday loan fees. This income can help you get back on your feet financially.
You can also make up the needed money by selling your assets.
If you’re not satisfied with the option of making more money, try cutting back on expenses until your financial situation normalizes. Reduce your budget for entertainment, restaurants, cabs, and other unnecessary expenses.
Think About the Future
Once you’re back in a stable financial position, it’s worth thinking about how to avoid borrowing in the future.
Build up a cash reserve for possible future emergencies. Begin with a small amount and gradually save enough to cover your living expenses for three to nine months. This way, you’re protected in case things get uncomfortable in the future.
Take Care of Your Credit History
To get affordable loans in the future, you need a good credit history. If your credit history is bad or you don’t have it, start to gradually fix it or build it up. If you have a good credit history, it will be much easier to cover large expenses in the future.
We hope our article was helpful to you.