A man trapped in a payday loan.

Escape From A Terrible Payday Loan

Have you found yourself trapped in a payday loan? You are not alone. In fact, thousands of people find themselves stuck in an expensive payday loan that they must constantly renew. Unable to pay off the full dollar amount they, and probably you, feel trapped. Rest easy because there may be hope. Have a look.

Payday loan traps are a real thing and they can cost you thousands and thousands of dollars. Even worse, they are making the big payday loan companies a fortune. The way out of debt can be unclear however, especially if you are not somebody who manages their finances well. Rest assured that there is a way out and we can help. Here are some tips that can help you finally eliminate your payday loan debt.

The Payday Loan Trap

First, what exactly is the payday loan trap? If you are going through it, you probably already fully understand it, but let’s define it for the rest.

Payday loans are high interest, high fee loans. Because of the cost of the loan, they can be difficult to repay, especially for someone who is already strapped for cash. What happens is that the borrower can not afford to pay back the loan and instead pays the interest/fees and rolls over the principal of the loan. This happens over and over again and many borrowers are unable to escape the cycle.

Escaping The Trap

Now that we have a definition for the payday loan trap, let’s see how you can get out of it.

Assess Your Personal Finances

Before you can determine how to pay back the loan, you need to see where you are spending. This will allow you to make the cuts necessary to pay back your expensive loan.

Sit down and write out your budget. Include all of your fixed items like rent, car payments and other loan payments. Also include variable expenses for things like food, entertainment and gas.

Once you are done, you need to cut as many expenses as you can. Trim the fat all the way to the bone to find the extra money you need. Some ways to do that include cutting entertainment expenses completely, calling creditors and asking to defer payments and putting memberships like the gym on hold.

When you are done, ideally you will have the money you need to take care of your loan. If not, keep reading.

Talk To Your Lender

Your lender would rather you not default on a loan because it would obviously cost them money. If you are unable to find the money to pay off your loan, contact them and try to negotiate an extended payment plan. The threat of defaulting on the loan is a real one and a feather in your cap, especially since there is little the lender can do to further damage your credit.

You should also look up the payday loan rules in your state and investigate any organizations that the lender may be a part of. Some states have strict rules about how many times a loan can be rolled over. Likewise some organizations restrict how much their members can charge.

Consider Debt Consolidation

You might think that debt consolidation is not an option for you, but you could be wrong. Even with bad credit, you may be able to qualify for a debt consolidation loan. You can then use this loan to not only pay off your payday loan debt, but also credit cards and other high interest loans.

Even if your debt consolidation loan interest in high, it could be a good option for several reasons. One, the interest and/or fees that come with the loan will probably be less than those of a payday loan. Second, if you are including credit card debt, the decreased credit utilization could allow bump your credit score. This could allow you toe refinance your consolidation loan at a lower rate.

Boost Your Income

Nobody wants to work a second job, but it might be necessary to get out of debt. Even if the job is less than ideal, you should do whatever it takes to raise the money to escape your payday loan. Wait tables, clean toilets, do whatever earns you a dollar.

Consider other options besides a traditional job as well. This could be anything from selling plasma to walking dogs on Rover. Again, anything that you can do to make a dollar will help.

Summing It Up

It is all too easy to fall into a payday loan trap, but there are solutions. So, roll up your sleeves and get to work. Before you know it, you can have that monkey off your back. Then, you can start getting back to your financially stable place. A place where you never have to use an emergency loan again.

Posted by
James

James Car is a finance, loan and budget expert based in the United States. After attending Brookhaven college, he went on to become a successful entrepreneur. He now enjoys writing articles that help people save and make the most of their money.