Payday loans use your paycheck as collateral against a small and short term loan. Unfortunately, most people get these loans when they are desperately looking for cash, and they come with exorbitant interest rates. Falling into the cycle of payday loan payments can ruin a person financially.
Getting out of the vicious cycle of payday loan payments is possible, but it will take some hard choices to be free. Following these steps will help.
The first thing to do is to take an assessment on your overall financial situation and resources. Starting with the facts will help you to set goals and look for options on getting out from these loans or avoiding them all together.
Finding ways to pay down the principal are important to eliminate those high interest payments that don’t even cover the principal. Many payday loan places rig their loans so once you are in the cycle, all you are paying is the interest, and nothing else.
There may be a chance that you need to get another job to get the extra money to start paying these loans down. The additional money can quickly get that loan down without throwing away so much money on interest every week.
Ask your lender for an extension as well. If you are using the loan to cover utility bills, consider asking your landlord for an extension so you can have more time to pay them. Feel free to ask all your creditors for payment arrangements which will reduce the size of the payment and free up extra cash.
Instead of taking an additional loan, try reaching out to family or friends. Perhaps they can loan you the money and you won’t have to be stuck with those high interest rates. Also, talk to your employer and see if they may be willing to give you an advance.
Asking the lender for an extension may give you the breathing room you need to get out from under this vicious cycle. They probably won’t eliminate the high interest payments, but all you need is just enough room to break free, and most of them will work on something for you.
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