How can she repay her payday loan?
Repaying Payday Loans
Get Out of Debt in 3 Steps
Repaying Payday Loans
How can I get out of debt with online payday loans? What will happen if I'm late with payments? Is it the same for regular payday loans?
Start With Payday Loan Renewal Fee
If you want to get out of the "whirlpool" of payday loans, contact the lender and tell them you don't want to renew the loan, but want to make payments until the loan is repaid. Check to see how much you've actually already paid them in renewal fees. Most of the payday loans range in the 320 to 520% interest rate area. Make an offer to pay off the balance over a 90-day period and build in some interest, if you haven't already paid an exorbitant amount of interest. Depending on your income source, they may not be able to take any legal action against you, especially if your income is from any entitlement (Social Security or other government check). You may have to close your checking account, so that they can't continue to send the check through your account. You need to talk to your bank about this action. Many states have laws regulating the amount of the loan and also the number of times a loan can be renewed. The Consumer Federation of America has compiled very good information to identify your state's laws and contacts to call if you are having trouble. Their website also has information on dealing with online lenders.
Extreme Measures to Repay Payday Loans
As with any debt, pay them on time, and if at all possible, pay more than the minimum to avoid paying so much interest. And do not get a second loan to pay off an existing loan. You're just compounding the problem.
I read the blog of a woman who went so far as to live in her car for a while to get out of debt. Sometimes extreme measures are called for. Find ways to cut expenses and earn more money.
If you haven't canceled Internet and cable service yet, now is probably the time. If you're taking payday loans, you're beyond your means and/or in an emergency situation.
Here are some things that have worked for other people in debt:
- Rent out a room, get out of your lease, or otherwise cut back on housing expenses.
- Never buy beverages (coffee, soda, water, etc). Drink tap water.
- Never go to a restaurant to eat. Cook at home and bring some water and lunch with you when you're out.
- Drive only to and from work, and if you have other errands, like the food bank or the grocery store, do them on foot or on the way to/from work. If you live less than two miles from work, sell your car and walk. If you owe on your car, try to cut a deal with the dealer to take it back from you.
- Find things to sell on Craigslist like pots, pans, clothes, furniture, and jewelry.
- Turn down the heat and wear more clothes.
- Find other ways to earn money. Consider lawn care or dog walking. Around here people pick up dog poo in yards for about $15/hour. Clean houses in the evenings. Do post-party clean up. A cousin of mine does clean up after fires and is making good money at it. It's hard work, but no one else wants to do it.
Stop Digging With Additional Loans
My best advice on payday or online loans is do not go there! The interest rates are beyond anything reasonable and make it that much harder to get out of the hole. As the old saying goes, if you find yourself in a hole, stop digging!
If you already have major problems with payday loans, the first step is do not borrow anything else. If that means canceling the newspaper, cable TV, cell phone or kids dance classes or football team, you may have to do it for the short run.
If you are working, consider ways to increase your income until you get out of the worst of the debt. You may be able to get an additional part-time job, increase the hours you are working on your present job, or negotiate for a raise. If you are not working, you probably don't have payday loans, unless you got them before you were jobless.
Put every penny of disposable income into repaying these loans, which means no meals out, no entertainment expense, and no shopping. This may be painful for the short run, but once the payday loans are paid off, the relief alone should make you feel blessed.
If you are really unable to make it payday to payday without that kind of loan, consider asking for help. You must find a way to live on your income. Put a little time into calling local churches, the Salvation Army, or social services and ask for help making a livable budget. Temporarily you may need to visit community resources like food banks, clothing banks and free counseling services.
Once you get out of the payday loan bind, start spending some serious time researching frugal living sites and reading books from the library on debt reduction and finding ways to reduce your expenses.
Take the Next Step:
- For more ideas on repaying payday loans or to share your own ideas, please visit The Dollar Stretcher Community.
- For more on repaying payday loans, please click here.
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