Payday is a short term borrowing of money for some immediate cash crunch. It is designed to be paid off quickly when you receive your next paycheck. They usually have a $15 – $20 interest fee. Unfortunately, many lenders get into a problem where they continuously keep lending money, and they fall into a vigorous cycle of taking multiple payday loans. First, a $10 – $15 as interest may not be a big issue, but over time as the lender keeps on taking a loan, this interest piles up, and suddenly you find yourself paying $60 – $70 on top of your principal amount.
If you find yourself in an emotional cycle of taking a loan to pay off the interest of another loan, fear not; we are here with the exact tips and tricks to help you out.
Take a personal loan.
Now, this may sound counterintuitive; how can taking another loan help you out? Hear me out, the reason you were not able to repay your Payday loan because your financial situation is not in a strong position. You missed the plot; payday loans are meant for short term solutions for your problem, not long term one. You do not have time to get your things together; you need to consolidate and pay off your loan, which personal loans are perfect for. You have 2 – 5 years to pay back a personal loan. Although you have a poor credit score, you may have to pay a higher APR; failing to pay your personal loans on time will put you in muddy water, putting you into much bigger trouble.
So if you are sure that your financial situation will get back on its feet soon, take a personal loan.
Borrow from friends/families
This is an option you probably discarded when you opted for a loan in the first place. But asking for help from your near and dear ones may not be a bad idea. I do not advise you to take a loan from your friend and jeopardizing your relationship, instead seek their help. Explain your current situation; you will be surprised how many of your friends or family will be willing to be there for you. You may take financial help from them and repay the loan; you can then pay your friends/ family slowly over time.
Starting a side hustle and working overtime
You may not like this, but the best option out for you is to take on a side hustle or work a bit extra. If your loan is significantly more than your current paycheck, working a few extra hours will be a good idea. There are also tons of side hustle ideas you can try both online and offline. There is no shame in working hard; put in that extra effort, and you can succeed in getting out of the loan.
Look for a credit card.
Given that you have a good credit score applying for a 0% APR credit card won’t be a bad idea. You can then use the credit card to pay off your outstanding loans without paying any interest. But, most credit cards have a period of around 45 days before which you have to pay off the credit. Failure to do so will incur additional interest. You will most likely be able to pay off your payday loans within this period, but this option will not be valid if you have a poor credit score or do not have a very good relationship with your banking provider.
Create a strict monthly spending plan
Having a monthly plan will help you cut down on your expenses. Saving money is earning money, compiling a list of payments you make and find out which can stop for a while. We often do not realize how much we spend on things we rarely use. You can apply the 80-20 rule here; 80% of your expenses are spent on things that add no more than 20% value to your life.
Try for a debt settlement program.
Consolidate programs are designed to combine multiple payday loans and put them into one single payment. There are mainly two types of programs that offer debt settlement. Here, the lender will give you another loan with a new interest rate, which you can then use to pay off your current payday loan. This is often a risky route, and it is recommended to talk to a credit counselor before going this route.
The second route of settling your loan is that a third party takes all the responsibility of repaying the loan and charges you a flat monthly rate. These will stop lenders from automatically drawing money from your checking account.
This makes keeping track of your loans easier and often is considered the best option to pay off your outstanding loans.
Get professional credit counseling (non-profit)
Money management is something that is not easy; unfortunately, we are not taught about these in schools and colleges either, so comprehending everything can get tricky at times. A credit counselor can help you in these situations and help you get out of the depth cycle. However, we strongly recommend you not shell out any money for this counseling as many non-profit organizations offer these services for free. They will teach you how to make sense of your money and how to use it correctly.
Many affiliate companies are offering 24 hour payday loans online Such as RedPayday in Canada, PaydayLV in United States. These Payday loans with hard credit checks are designed to help you with short-term money problems that you can balance out from your next paycheck. Many people make the mistake of not grasping it and fall into multiple payday loans. But if you are responsible and willing to cut down on your expenses, these multiple loans are not very difficult to clear.