How to Pay Off Payday Loans

Payday loans create a financial trap.

Payday loan companies have a bad reputation and they deserve it. Although they provide a legal service to consumers facing pressing money problems, instead of offering real help, they charge high fees for short-term loans that leave the person in worse financial shape than he was when he walked into payday loan office. If you find yourself trapped in the payday loan cycle, it’s time to get tough and get out.

Instructions

1. Refuse to take another payday loan. The first step in getting out from under the vicious payday debt cycle is to quit using the service. Unfortunately, this can be tough when the loan company entices you with fast cash to pay off the money you already borrowed.

2. Calculate how much you pay to use a payday advance service. Consumers often don’t realize how much the loan really costs. A payday loan calculator can help you figure out exactly how expensive the service really is. (See Additional Resources.)

3. Sell something to get out of the payday advance cycle. Have a garage sale or advertise items you no longer need on a local radio swap program. Use the money to pay off your payday loan only.

4. Cut back on household expenses to free up money to pay back the payday loan. Many people feel deprived if they can’t purchase expensive name-brand food items. Fortunately, your family will probably be healthier if you skip the high-cost fast food restaurants and fancy packaged foods and cook a meal,instead. Children are better off drinking water than sugary sodas. Tighten your belt until the debt is gone.

5. Get a temporary second job. Even if it’s just until you pay off the payday loan, additional income goes a long ways towards alleviating the money crunch. It won’t help, however, if you use that money for non-necessities. You still have to budget and cut your expenses.

6. Contact a credit counselor if you’ve tried to get your finances in order but failed. The National Foundation for Credit Counseling maintains a searchable website of reputable counseling agencies in your state.

7. Talk to the payday loan company and tell them that you need additional time to pay off your debt. They may pressure you into taking another payday loan to do so but refuse. Instead, find out what rights you have in your state when it comes to dealing with payday advance agencies.

Tips & Warnings

• Figure out the difference between things you want and things you need. Cut out the wants until you've paid off the payday loans.

Resources

• Find out what a payday loan really costs.
• National Foundation for Credit Counseling
• Find out about the regulations governing payday loans in your state.