How to Get Out from Under a Payday Loan
A payday loan is money given by a loan store for those who need money until their next paycheck. The balance is generally due on your next payday and includes a high-interest rate. You can get an online loan or visit an actual storefront. Because the due date for the payday loan is so soon after you get the money you need, it is easy to fall into a debt spiral. Loan stores actually count on you to renew or extend your loans. In fact, 80% of all payday loans are taken out two weeks after the last one was paid in full. Use our tips below to get out from under your payday loan.
Apply for an Extended Payment Plan
Depending on what state you live in, you could have the option to apply for an Extended Payment Plan, or EPP from your loan store. This will give you time to repay your payday loan without any additional interest fees or penalties. In addition to not accruing extra debt, your loan also can’t be sent to collections while you are paying it off under the EPP. In order to qualify, you must turn in the EPP application no later than the last business day before the payday loan is due. You then have to sign a new agreement with the loan store. If it was an actual storefront, return to the store. If it was an online loan, contact them for instructions on how to sign the new agreement.
Friends and Family
If your family or friends are able, ask them for help to pay off your payday loan. It will be much easier to pay a friend or family member back in manageable amounts. Hopefully, they won’t charge you interest or any fees that would accrue if you were still paying off the payday loan.
Cancel a Recurring Payment
When you sign the contract for a payday loan, you are also giving the loan store permission to take money automatically out of your bank account. If you know you don’t have enough money to cover the balance, call your bank to stop the payment. You will still have to eventually pay off the money you borrowed, but you won’t accrue an overdraft fee on top of the interest and other fees you already owe.
Credit counseling agencies are available to help you get out of different kinds of debt. For payday loans, they can help you adjust your budget to help you find the money to pay off the loan. They may also try and negotiate a settlement with the loan store that can resolve the debt altogether.
Alternative Lending Options
An alternative option to a payday loan would be to get an installment loan from a trusted loan store like CreditBox. Installment loans give you the freedom to pay off your loan in a series of fixed monthly payments instead of having to struggle to pay off a payday loan on your next paycheck. CreditBox offers online loans for funding that fits your lifestyle. Apply today!
CreditBox and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.