Paying off a
payday loan is not the same as a credit card or personal loan. Payday loans are
short-term and are expected to be paid back with your next paycheck. The timeliness,
convenience, and ease of borrowing with a payday lender may overshadow the fact
that the money needs to be paid back quickly. Perhaps this is why many
consumers that borrow this way find themselves unable to repay within the
expected time frame, forcing them to have to extend their loan
("rollover") and pay high interest and fees as a result. If you have
taken out a payday loan and are finding yourself in this very predicament, what
are some ways you get creative in order to pay off what you owe and cross that
payday loan lender off your list of debtors?
1. Cash out your
savings account- You may not have a dime saved which is why you got the loan in
the first place but if you do, this may be a great option for you. It's scary
tapping into your reserve but in the long run, you will be better off if you
get your fast cash loan paid off. You most likely are earning a very low
interest rate on your savings so it's not like you will be losing a lot of
money should you turn to your savings to pay off your payday loan balance. In
fact, the amount of interest and fees you will pay in the process of trying to
pay off the loan will greatly outweigh what you would make off your savings.
This may be a good learning lesson for the next time you find yourself in a cash
crisis. If you have to, use your savings instead of borrowing. If you have the
option, don't spend at all.
2. Turn to family
and friends- Perhaps this is the route you could/should have taken in the first
place when you needed help financially, but regardless, this may be an option
for you now. Assuming you have a good relationship with those you are close to,
you may be able to borrow what you need to pay off your loan. If so, take a
business point of view and type up a written agreement between you and your
lender. Establish an interest rate and repayment terms to avoid any
misunderstandings. Make your payments on time and fulfill your part of the
agreement. The last thing you want to do is default on your friend or family
member and risk ruining the relationship you have with them. Money should never
come between you and your loved ones.
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