How to Repay Your Payday Loan Debt?

Sometimes, people go through a lot of financial stress, especially when the unforeseen and crucial expenses start mounting higher than their income. Anyone can fall victim to this situation, and they may turn towards taking out payday loans to cover the expenses temporarily. However, a payday loan is almost like getting stuck in quicksand, and it seems impossible to come out.

Although payday loans help you take care of urgent expenses before you receive your next paycheck, they also come with high-interest rates, which means that you might be stuck with huge monthly payments on a very small loan even. Ideally, you should avoid taking out payday loans, but if it is a last resort, then you should try repaying them as soon as possible.

This article covers all the ways and methods through which you can repay your payday loan debt and be free of the financial and emotional burden.

Ways to Repay Your Payday Loan Debt

Payday loans can be quite tricky and can put you in a debt trap that burdens you, and they can also impact your credit score negatively. However, you can still find different ways to pay off the loan and prevent it from harrowing you.

Extended Payment Plans

In several states, the law requires payday lenders and creditors to provide extended payment plans to borrowers in order to help them repay their loans over a longer period of time. These measures are specifically targeted towards people who can’t pay off their loan on time, and it can also help you from defaulting on your payments.

Through extended payment plans, you will be required to pay a much smaller amount every week or two weeks, which is much more manageable as compared to paying a larger amount every month. You can get in touch with your payday loan provider and find out if they offer such plans or not. Then, you can negotiate the terms of the plan with them, and this would help you repay your payday loan debt in a shorter amount of time without too much hassle.

Debt Consolidation Loans

If you are wondering, how to pay off multiple payday loans debt consolidation is the solution. To gather all of your debt in one place, you can look for a lender that gives you a loan at a much lower interest rate. Once you have secured the loan, you can use it to repay all of the payday loans in full, including any extra charges or debt you may have.

By doing this, you will be able to get rid of all the high-interest loans and only focus on one low-interest loans. Naturally, this one will be much easier to pay off, and you can set a flexible repayment plan that suits your budget and your financial condition. You may have to go through a credit check before any lender offers you a personal loan, but you might find one that offers money to borrowers who have poor credit.

Payday Alternative Loans

Payday alternative loans have been introduced by credit unions as a means to do away with the rigid and inflexible repayment terms and high interests of payday loans. They are short-term loans, up to $1,000, that can be offered to anyone without a credit check. Essentially, they are designed to prevent people from taking out payday loans, but you can also use them to pay off all or some of your existing payday loans.

The best thing about payday alternative loans is that they have a lower annual interest, and you can break up the payments into installments of six months, thus allowing you to pay them back easily. To get this loan, you need to have an account with good standing in the credit union for a minimum of 30 days.

Peer-to-Peer Loans

Another solution for repaying your payday loan debt is to find online lending sites where you can benefit from peer-to-peer lending. These sites don’t verify your credit scores, but they do require evidence of income. Therefore, the loan approval process might take time, but you have the freedom to apply at multiple sites at the same time.

The best thing to do with peer-to-peer loans is to keep the amount as small as possible, ideally under $5,000. This increases your chances of getting a loan, so you can use it to repay your payday loan. The interest rate for this loan would be much lower as compared to the payday loan, so you will be able to pay it off easily.

Debt Management Plan

If all of the above solutions don’t work and you need a last option, you can also turn to a debt management plan, where a professional and experienced credit counselor will evaluate your financial standing and come up with a debt repayment schedule tailored according to your budget.

Once the plan has been agreed upon, the credit counselor will negotiate with the payday lender on your behalf and try to bring down the loan amounts to a number that you can afford to pay. Opting for the debt management plan may also require you to cut off all sources of credit for some time, including your credit cards and any possibility of borrowing for the near future.

This concludes our guide on how to repay your payday loan debt. Other than repaying this debt, it is also important to consider what you need to do in order to avoid falling into the same trap again. One of the best ways to go about this is to cut down on your expenses and try to build an emergency fund. This would also help you build a good credit score in case you need to take out a personal loan in the future.