If you have ever taken out a payday loan or are currently trying to repay one, you will agree with me that these types of loans are one of the most difficult to deal with. The reason is that payday loans have shorter repayment periods with higher interest rates.
Even though repaying payday loans can be very problematic, it is possible to get out of the debt cycle today. In this article, you will find out ways to pay off payday loans faster so let’s dive in.
#1. Maximize the Extended Payment Plan
The extended payment plan is a mandate given by most states to payday loan lenders to extend the repayment period for borrowers. This option is however not available in all the states. However, if your state offers this as a relief option for borrowers, then it is ideal to maximize it.
With an extended payment plan, instead of paying for the loan once, the borrower can work out a weekly payment plan with lenders making repayment more manageable for them. This helps to ensure there is no default in payment as the loan amount is spread out in more manageable portions.
#2. Payday Alternative Loan
A payday alternative loan is a loan that is taken out by the borrower from a credit union to pay off the debt. However, this loan comes with lower interest and a longer repayment period. While the alternative loan is a more favorable option than a payday loan because of the terms of the loan, an individual can also get these loans for the purpose of paying back a payday loan.
These loans are usually short term and the repayment plan can span through 6 months. With an annual interest rate of 28 percent or less, the payday alternative loan is a good way to benefit from lower interest and a longer repayment period. However, to qualify for this type of loan, the borrower will have to be an active member of the credit union for a minimum of 30 days.
#3. Debt Consolidation
Debt consolidation is one of the best ways to leave the payday loan debt cycle. The idea behind debt consolidation loans is pretty much similar to payday alternative loans. Debtors go on to borrow a huge sum that would cover their payday loans and credit card debts and pay them back with a more favorable interest rate and the repayment period.
#4. Debt Management Plan
This option is more or less the last resort for repaying a payday loan. A debt management plan entails involving a financial counselor who will help you come up with a feasible budget and in some cases negotiate a more favorable repayment plan with your creditors. However, a debt management program will entail closing your credit card accounts and will surely appear for some years in your credit report.
Conclusion
While it is overwhelming to be stuck in the quicksand of payday loan debt, it is a situation that you can come out of. Beyond coming out of a debt cycle, you will require discipline and consistent effort to ensure that you do not go back there. Contact us if you have a question about our payday loan relief services.
