If you’re in a tight squeeze financially, then it may seem that a payday loan is your only option. For many, it is. Payday advance lenders know this, and borrowers are seen as a risk. For that reason, payday loans obligate borrowers to extremely high interest rates and financially risky terms. If you must get a payday loan, your best bet is to get out of it as fast as you can. Here are five tips for quick payday loan repayment.
Set a budget. Outlining exactly what your monthly income and expenses are allows you to identify exactly how much you can afford to put toward your payday loan payment, as well as how long it will take you to pay off your loan. Moreover, when you have all of your monthly expenses laid out for you on paper, it’s much easier to see where you can afford to skim wasteful spending.
Cut back unnecessary spending. Every cheeseburger you eat could be an additional $3.50 towards your payday loan. Add it up. Even if you eat out only twice a week, you could be spending $80 to $100 on eating out. Now add all of the other unnecessary spending you do on a day-to-day basis: $1 here and there at the work vending machine, convenience store coffee every morning, lottery tickets, ATM fees – the list can go on and on – that is, unless you take conscious steps to shorten the list.
Credit card cash advances. Although it is most ideal that you pay off your payday loan with cash, and ahead of time, that’s not always possible. When you consider the exorbitant interest rates associated with payday loans, it may make more sense to apply for a credit card that offers an introductory zero-percent interest rate, then borrow cash from your card to pay off your much more expensive loan. Just be sure that, if you use this method, you pay off your credit card balance before the interest has time to accrue, or else you could be in for another whopper of a debt.
Scrutinize your monthly bills. Look over all of your bills very carefully to make sure you are not paying for anything that you don’t absolutely need. For example, it’s possible that you don’t need all of those premium cable channels, especially if you regularly stream videos from online sources, and you may be able to greatly reduce your power bill by lowering or raising your thermostat by just a couple of degrees.
Payment plan. It’s possible that your payday advance lender might put you on a payment plan if you find that the interest is stacking against you and you are having trouble making payments. Some states actually have laws requiring that such lenders offer this options, so it is definitely worth asking about. When you go on a payment plan, you agree to make monthly, generally interest-free, payments, in lieu of letting the interest compound indefinitely as you struggle to pay your loan down. This plan can save you a lot of money, and can speed up your repayment period, considering you’ll have less to keep up with.
If you have an outstanding payday loan, then it is important that you understand how much it is costing you, and that the longer it goes unpaid, the further you are getting into the hole. Payday loans have a questionable reputation, and for good reason: no other type of loan carries such a high interest rate, and comes with such extreme penalties. Protect your pocketbook, and your sanity, by paying off your loan as quickly as you possibly can.
About the Author: Stanley Swafford loves helping others find ways to save money and live a more financially stable lifestyle. He also enjoys writing about bankruptcy and recommends www.TotalBankruptcy.com to anyone struggling with outstanding debt.