How to Get Out of the Cash Advance - Payday Loan Cycle
Let's face it, unless your last name is Hilton, Buffett, Walton, or Trump, you are experiencing a little of what all America is feeling in this recession. Almost all of us have been in a need of extra cash from time to time and let's face it... even if you don't NEED it... we all WANT it! With the economic downturn of the United States as well as the holidays quickly approaching more and more people are turning to cash advances and payday loans. Though they seem the perfect answer at a time in need, more and more people are falling into the quick and easy trap that payday loans can bring, as they plunge deeper and deeper in debt. Get your finances back on track and get our of the cycle.
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Instructions
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When you get a payday loan, the lender requires your banking information. The reason is this... they can and will draft your account for the money you owe them. Very few cash advance companies are the type that will work with you. They make the bulk of their money off you not making your payment on time. When you fail to do so, they will charge you an outrageous extension fee, or even draft your account for the total amount. So first thing you need to do... close your account and open a new account at a different bank.
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When closing your old account, speak with a bank officer about blocking any future draft from the loan companies. Most banks are more than happy to work with you to get out of the trap of payday loans. Many times automatic drafts from the cash advance company will send you over the limit which then causes you to be charged a fee from your bank as well. When you are late on your payment, the cash advance company many times will try to process the transaction everyday until they receive their money. If you do not cancel the draft authorization, you can be charged fees with every attempt to process the draft.
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Contact the cash advance company to attempt to settle the debt on your terms. Honestly, this doesn't work well at first. Most companies are not going to be willing to work with you, but this correspondence is important. Unfortunately you will probably receive calls requesting money and so forth. Continue to tell them you can not pay the amount requested and do not allow any threats to deter you. Legally, there is very little the company can or will do about it.
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After 60 days, contact the company again and try to settle. Cash advance and payday loan companies go through many borrowers a day and this is usually the time frame in which they will move on to a settlement. You can usually then pay off your debt for much less and no fees, or interest. If not... wait 60 more days and repeat the step.
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Tips & Warnings
This in no way should be considered legal advice.
Always read the terms of agreement in your loan documents.
