Payday loans – seem like the perfect solution to a short-term cash flow problem. Unfortunately, when you borrow against your paycheck to cover everyday expenses, you do not get any extra money because you are actually borrowing against yourself.
It’s hard to break out of the cycle because you probably won’t have the extra money at the next payday. So how do you get out of the cycle? Here are a few ideas about how to get out of payday loans legally.
Extended Payment Plans (EPP)
Talk to your lender to see if you can extend your payments. Generally, you will have a total of four extra pay periods to pay back the money. You need to follow these steps:
1. Apply on time – you need to apply no later than close of business the day before the loan is due.
2. Sign a new agreement. You need to file the agreement where you initially took out the loan. If you filed online, the lender can tell you how to sign the agreement.
If you borrowed from a member of the Community Financial Services Association of America (CFSA), they have a rule that allows customers to enter into an EPP. As long as you comply with the EPP, you won’t be turned over to a collection agency.
Find an Alternative Lender
You can use money from another loan to pay off your payday loan legally. Many times, people use payday loans because they can’t get money anywhere else. However, if your credit is acceptable, you may qualify for a different loan with better repayment terms.
If your credit isn’t acceptable, you may be able to find a friend or relative to co-sign the loan. Be sure not to default in this case. It will impact the co-signer’s credit rating.
Find More Cash
If your problem is everyday expenses, you need to find more cash in your budget. Not so easily done. You need to either increase income or cut expenses. If you generally meet your bills but got behind because of an event, the fix is easier than if your expenses have outgrown your income.
For a quick fix, you can get a temporary job. Maybe do some seasonal work. Not only will you be earning extra income, but you will also be avoiding the payday loan fees. If you can’t work more, maybe you have something you can sell to raise money for a one-time rough spot.
Cutting costs is even less fun. You’ll need to get down to bare-bones: no eating out, no cable, possibly using a food bank. Look at your habits and see what you can live without.