Debt Articles

Staying Away and How to Get Out of Payday Loan Debt

In these times of financial turmoil, more and more people are finding themselves short on cash, most likely because commodity prices have been rising continuously while salaries have remained the same. In any case, many of these people turn to payday loans because these are easy to acquire and there are no hassles involved. The lender will give you the cash you need without questions in exchange for a post-dated check.

The problem with payday loans is that they can potentially force the borrower into a vicious cycle that they will eventually be unable to get out of. When payday comes and the lender has cashed the check, everything is technically square. However, the borrower will need money again because he has already given up his salary to pay for the loan. He will then take out a new loan, to be paid during the next payday, and so on.

As the loan is rolled over each month, the initially almost insignificant fee will balloon up to huge amounts, essentially tying the borrower into the system. Their only hope of breaking away is when they get an unexpected amount of money which they can use to completely pay off their loans as well as the interests.

How to Get Out of Payday Loan Debt: Make Prompt Payments

We have already established that payday loans are fast and easy to acquire and this is why it's okay to use them for emergencies. However, the operative word there is emergencies. Payday loans are not meant to be used for every small monetary need you may have. When you take out a payday loan, you must make sure that you have a prepared plan to pay for it in full come next payday.

Depending on the size of your loan and the decision of your lender, payday loans can be payable in installments of up to 3 months. Alternatively, month-long extensions may be granted. These extensions will buy you more time to get your payment together but take note that this also signifies an increase in the fees to be paid.

How to Get Out of Payday Loan Debt: Consider Loan Consolidation

Sometimes, loan amounts are too high to pay with your monthly salary. Fortunately, there are other ways of how to get out of payday loan debt, such as consolidating your debt balance. This method of how to get out of payday loan debt can be very effective especially if you make the move while the interest has not gone up too much.

One of the main benefits of consolidating your debt into a single account is that you can qualify for a much lower monthly payment due to reduced interest rates. You won't have to worry about additional charges as well because all these will be waived if you consolidate your debt. The consolidation company will also take charge of submitting the payments to all your creditors.

If you want to search for other ways on how to get out of payday loan debt, you can always ask your financial service provider and they might be able to recommend something you can work with.