One of the worst type of loan that can cause you many problems is the payday loans. These loans are like drugs and once you take a payday loan, you will not come out of easily and you will have to take the loan again and again to meet ends every month. According to a survey, one in ten people has taken a payday loan. Payday loans comes with a high interest rate and a high fee, thus it is not a good option to even consider it. Many financial experts name this loan as a trap for borrowers because the payment date comes in a very short time and most of the lenders do not have money to pay, thus they again get a loan and pay the fee again.
This type of loan is made in such a way that the amount of money owe increases dramatically and you can’t afford it. Although some states have make laws on setting a limit of fee on this type loan but still according to a report of Consumer Financial Protection Bureau, if you take a loan for 2 weeks on a fee of $15 per $100, it is equal to an annual PR of 400%.
If you compare a credit card debt with a payday loan. Credit card debt is a much better option than a payday loan because a credit card debt comes with an annual percentage rate of 10% to 35%. Thus a credit card loan is much better but of course a loan is still a loan so you should not consider it.
So, we were talking about payday loans, if you have a payday loan it is difficult to get out of it easily. There are some genuine ways through which you can pay off your payday loan.
1. Refinance with a Personal Loan
You can save thousands of dollars by simply refinancing your loans. You can refinance your student loan, personal loan or mortgage loan to get a lower interest rate on the loan you have. As payday loans are only for a short period of time so it would not make sense to refinance it with a payday loan again. So to get rid of payday loan, you can refinance your payday with a personal loan. A personal loan has a much lower interest rate in comparison to the payday loan. In order to get a personal loan on a lower interest rate, you will need a fair credit.
You can take a personal from different platforms but before taking a loan make sure you read the terms and conditions well. So that you won’t face any surprises if you fail to pay any payment.
2. Take a Side Hustle for a Short Time
Getting out of payday is not much easy as I have told in the start that it is like a drug which you have to take again and again to get rid of the previous one. But do not worry, you will be able to get rid of a loan easily after reading the article. We need a payday loan because we are not able to meet end in the money, so we have two choices if we want to get rid of payday loan. First is to get extra income and the 2nd one is to reduce the expenses. I suggest both of them at the same time so that you could also save money for your future. Both of the solutions are not as easier but if you do some hard work it will be worthy. You won’t be able to save much money by cutting expense as you would by increasing your income.
There are many side hustles and ideas that you can use for a short time to increase your income. The simplest way which does not requires much work is selling your extra stuff. If you have anything extra in your home that you do not use, just sell it. Follow the simple rule, sell everything that you have not used in the past 6 months. You can use online selling platforms like Craigslist, Decluttr and Facebook Marketplace etc.
You can also work overtime with the company you are working with. This will enable you to bring in extra amount of cash every month. If your company does not have any overtime policies then you can take a part time job. This would be bit difficult but you can make a good deal for yourself if you consider a part time job. If you cannot get a part time job, you can take a side hustle, there are many side hustles that allow you to work whenever you want and as much as you want. If you have a car, you can drive it with Uber or Lyft to make some extra cash. You can deliver groceries with DoorDash or other companies or you can also delivers pizzas. Thus you can do any type of job to make extra income to get rid of your payday loan.
3. Extended Payment Plan
You will be amazed to know that you can get an extended payment plan from your lender even on your payday loan. There are some lenders that allow borrowers to get an extended program for payment. If your lender allow you to get this program, than you would be able to break the payment in installments for an extended period of time without paying any additional fee.
If you are thinking about applying for this program, then the 1st thing you need to do is to calculate the maximum amount of money that you can pay to your lender. After you figure out the maximum amount, you can talk with your lender so that you can take a program which you can pay on time. Before you finally sign on your EPP, make sure you read all the term and conditions carefully.
Keep in mind that not all the lenders allow you to take an extended payment plan and if your lender refuses you to provide you an extended payment plan then you should try to negotiate with your other lenders. Auto and personal loans can be rescheduled if you are having any financial issues.
4. Payday Alternative Loan
Not every time you need to get a payday loan to meet ends, there are also some alternatives for this. If you are a credit union member, you can take an alternative payday loan from Credit Union. The federal credit unions can offer a loan to a maximum amount of $1,000. Although there is a little fee for this alternative loan that could be up to $20. There are certain requirements that you need to fulfil before you can get a loan and that is that you must be a member of a credit union for at least one month.
The loans you get from a credit union are easier to pay than a payday loan because these loans have a longer time period to pay the loans. You can get a maximum of 6 months’ time to pay off the loan. Thus this an easy way to get rid of the payday loan that you have and to avoid the next loan that you would probably have to take.
5. Take Help from Friends and Family
One of the methods to get rid of pay day loan is to get help from your friends and family. You can take a loan from your friends on a much lighter terms than a payday loans companies. When you take a loan from your friends and family, it has its own issues but it could be much better than a payday loan. You can set your terms and conditions with your lender friend or family person, also set the repayment time and payment schedules. This would help you to treat the loan as of the same important as you take the others loans. If you set the terms and conditions, you will easily pay the loan on time and you will not face any consequences.
This could be an easy way to pay off the payday loan and manage the next way in a way that you will not need a payday loans again.
So these are some of the methods through which you can get rid of the payday loans. Although some methods are again taking you in to a different kind of debt but that debt will come with less issues than of the payday loan. So it is sometimes better to take another loan instead of a payday loan and of course you can easily pay these type of loans. After paying your loans, cut your expense and save money for yourself, so that you will not end up again in a payday loan. Do comment in the section below and let us know if you have any queries regarding the article because we would love to hear from you.