There is no doubt that payday loans are extremely helpful in case of unforeseen financial situations. But getting yourself into a debt trap can be just as easy as obtaining a payday loan. Are you unable to keep up with your repayments and the debt keeps adding up? Here are some tips you can consider tackling the vicious cycle of payday loans:
1. Create a Payment Plan
The first step to repay any kind of debt is to create a payment plan. Don’t simply individuate your debt. Take a look at your financial picture as a whole. Once you take into account how much you’re bringing in, how much you have to spend on loans and other bills, you might discover opportunities to save and repay this debt.
2. Negotiate with Your Lender
You can negotiate a payment plan with your lender. The way payday loans are structured makes them expensive and difficult to repay. So once you create your budget, you can ask your lender if they can provide you with an extended payment plan. An EPP will allow you more time to repay your payday loan without any added fees and interest, or without getting turned over to a collection agency. This would be applicable as long as you don’t default on the EPP.
You are most likely to receive a new loan agreement with the terms of the extended payment plan. Make sure that you read it carefully before signing.
3. Sell any Unused Belongings
If you have any unused items lying around, you should consider selling them to make some extra cash. From an old bike to a desktop, you can sell almost anything online. When money is tight, even a small amount earned will make a significant difference.
4. Cut-Down your Expenses
If you are facing difficulty meeting your repayment deadlines, consider cutting down on your day-to-day expenses. From switching to a cheaper mode of transportation to renting out the extra room in your apartment or getting a cheaper phone plan, you can save up to repay your payday loan.
5. Seek Help from Your Employer
Talk to your employer and ask if you can get an advance from your next paycheck. Many employers will allow prepaid funds for the work you’ll do in the coming months. But be prudent with this decision. Ensure that taking these funds now will not impact your ability to pay for future expenses.
If your employer doesn’t agree to a payday advance, try taking up extra shifts to earn more. An understanding supervisor will help you out in a difficult financial situation. So don’t hesitate to ask.
6. Ask Family and Friends
Asking your friends and family for a small loan is a popular option. You can request a small loan from your social group to manage your payday debt. While borrowing from friends and family has its own risk, they can help you make a one-time payment that will end the vicious debt trap. After that you can pay them back in instalments. Typically, your friends and family won’t ask for interest or will charge a nominal amount.
If you are part of a religious community such as a church, you can reach out to them. They might be willing to provide you some sort of financial assistance to clear off your payday loan.
7. Take up Another Job
If your schedule allows it, you can consider getting a part-time job to make some extra money. Even if you dedicate your weekends, you’ll be able to repay your loans at a faster rate. You can take up flexible and easy to qualify jobs such as being a driver for Uber. You can easily work nights and weekends to earn extra cash.
8. Check your Withholding Pay
Are you withholding too much from your paycheck to receive a bigger tax refund? If you are struggling with finances, you can consider lowering your withholding to get a bigger paycheck. Though your tax refund will decrease, you can use the extra amount in your paycheck to repay your payday loan.
Repaying your payday loan as soon as possible should be your priority. If you are starting to struggle with repaying the loan, it is time to take immediate action. Breaking the payday loan cycle will free your finances so that you can work towards building financial security for you and your family.