Payday loans charge hefty servicing costs, which make the entire loan amount very expensive. Owing to the enormous costs, short maturity date, and the vicious cycle nature of payday loans, you probably might find yourself dragged into a financial crisis when it comes to your financial management capability and your future creditworthiness.
Failure to develop a robust plan on how you can work out your repayment method can have deleterious effects on your financial capability. One of the immediate impacts of failing to service the payday loan timely is its multiplier effects which make the interest rate to continue doubling daily.
To stay safe from black swam events that can result from payday loans, here are some of the ways through which you use to get rid of your payday loan debt.
Apply for Extended Payment Plans (EPPs)
In case you were lucky enough, and the lender you borrowed from has registered with CFSA, then probably you have got a temporal reprieve from payday loan turmoil because they accept borrowers to apply for an extension of their repayment period. Once approved, borrowers will be given more time to settle their loans devoid of additional daily costs.
EPPs is one of the best ways to offer you a temporal reprieve in case you have financial challenges. By restructuring your loan through EPPs, you will have the chance of paying only what you have and reduce the continuous burden of having to meet high targets daily which in most cases leads to the default.
Borrow what is only needed and reduce borrowing cycle
You should get a payday loan out of your life if possible by only borrowing for emergencies gives you the certainty that you will be in a position to settle the debt timely. Unplanned spending should not drag you into payday loan menace as this can empty your pocket the worst.
Borrow from your friends and support network
Borrowing money for emergencies from your friends, family and the entire support network can relinquish the trap of payday loans. This will offer you a chance to negotiate better terms between you and your friends, which might not be worse compared to the payday lenders.
Seek credit union loans
Credit unions may be another alternative that you can use for payday loans. You need to register with one of them and be entitled to a particular loan for a specific time, depending on your agreed repayment plan with your credit union firms.
A credit union can offer you an extended time to service your loan and hence causing less pressure on your available income. Credit unions have fair terms that you can use to finance your activities. In most cases, credit unions can give you up to 6 months to clear.
Get rid of payday loans by Generating more cash and cut on expenses
Generating more cash can be done in two ways: first, you need to ensure that you have more sources of revenue, which offers you enough liquidity and precautionary money. Secondly, you need to guarantee that you reduce your expenses as this will permit you to have more money and avoid getting payday loans, which are hyper-expensive. You can sell some of your properties and equipment to raise cash to pay the mortgage. This can be a good move to reduce the financial burden.
Use savings to pay off the payday loan
Instead of using your payroll to service the loan, you can develop an alternative strategy towards the repayment of the payday loan by using part of your saving to pay it and avoid future default, which leads to extra charges accumulating daily.
Use a less expensive loan to pay off the payday loan
Sometimes when you have a chance to obtain a different type of loan, you can go for that which is less expensive and help you to pay the payday loan. The arrangement will offer you an opportunity to avoid defaulting and increasing penalties, which can make the arrears surpass the principal loan amount. Moreover, it also includes consolidating the debt with affordable loans, which will give you enough time to start paying a less cheap loan. However, to avoid trapping yourself, you should only borrow what will help you to settle the expensive loan and avoid getting another line of a payday loan.