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Stuck in a Payday Loan? 5 Tips to Pay Off Your Payday Loans Fast & Easy
Carter Bell 2016-07-03
When we're a little short at the end of the month and the rent is coming up, the light bill is due or the fridge has broken down, many consumers turn to a payday loan. This is especially true for those who do not have access to conventional forms of credit. Payday loans can be a lifesaver.
Short-term, high-interest loans can help households when they face pecuniary difficulties. A large number of consumers and households today do not have enough in their rainy day funds. So, they turn to payday loans when financial emergencies arise, which can be the only solution for an immense portion of Canadians.
You may be concerned about being trapped in the payday loan cycle when you borrow the funds. However, it's always important to have a financial plan in advance to pay back the principal amount, plus any additional interest charges or fees that are tacked on to the payday loan. By doing this, you ensure that you're just using the alternative financial product only once.
Want to avoid being stuck in a payday loan trap? Are you already have difficulties paying back your payday loan? Here are five tips to pay off your payday loans fast and easy:
Always Talk to the Payday Lender
In addition to reading the fine print and understanding the terms of the agreement, you should always talk to the payday lender and inquire about your various options. During the application process, you should ask questions pertaining to payment options, how much you'll be paying back in full, if there are other options available and if you can negotiate the contract. Always find a payday lender that you can trust, such as Lendgreen, to ensure your loans come from a credible source.
Limit the Amount You Wish to Borrow
If the vehicle repair costs $250 or if the utility bill is $300 then limit the amount you wish to borrow to these amounts. It can be easy to be enticed to borrowing $500, but refrain from doing so. Think about it this way: if you're having a hard time coming up with $250 then imagine how hard it will be to pay back $500 in the next two weeks or so. Borrow within reason.
Make a Quick Two-Week Budget
For the most part, payday loans are taken out for around two weeks until your next paycheck. Therefore, in order to guarantee that you can pay back the funds on time, you should create a quick two-week budget to see how much you can work with and what you will have to spend in that time period. If you can make a couple of cuts to your grocery bill, ask for an extension on an expensive bill or sell some possessions then this will help you avoid the debt trap. You can even use the online PearBudget tool to do your budgeting simply and quickly!
Do Not Use All of the Funds
When you borrow, for instance, $350 then try your hardest not to use the entire amount. Rather than spending the entire $350 on the refrigerator repair or on your child's dental or eye visit, attempt to always find a cheaper price elsewhere or negotiate the costs. If you spend just $300 as opposed to $350 then that's less money to pay back within the next 14 to 20 days.
Negotiate an Extended Payment Plan (EPP)
If all of your other options have been exhausted then you can always negotiate an Extended Payment Plan (EPP). By entering into this agreement, the EPP allows borrowers to extend the repayment period by several weeks without any extra penalties. This will certainly reduce the strain of paying back the payday loan. It should be noted that not all payday loan stores provide this service so it's important to find out in advance from a business.
Remember, this should be the last resort for you when you have no other alternative.
With so many Canadian households living paycheck to paycheck, annual incomes remaining stagnant and the cost of living skyrocketing, payday loans can be a necessity for low- and middle-income consumers. We all face emergencies, and not all of us are tremendous savers. When there are no traditional credit options available, payday loans become the next best thing.