As the cost-of-living increases, many people struggle to keep up with their bills. Living from paycheque to paycheque can be a challenge. It even becomes more challenging and stressful when a sudden expense–from medical emergencies to a broken work laptop–pops in.
In this case, fast cash from a 24/7 Payday Loans might seem tempting. Payday loans can be helpful when you need the extra cash in hand, but you also need to pay it off quickly to reduce the risk of higher debts.
This article shares the basics of a payday loan and how you can pay it off quickly.
What Is A Payday Loan?
Also known as cash advance loans, a payday loan is a short-term loan that charges high interest levels. The amount you can borrow and interest rate typically depends on your income.
The principal is often taken from a portion of your next paycheck with a payday loan. Also, it’s a type of unsecured personal loan since it doesn’t require any collateral.
4 Ways To Pay Off Payday Loans
Due to the high-interest rate, these loans can create a debt trap for consumers. You can avoid that by quickly paying off your payday loan. Here are some tips to follow to do this:
- Ask For Extended Payment Plan
If you’re missing out on payments and think you can’t pay your payday loan on time but don’t want your interest rate to increase, you can inquire about an extended payment plan (EPP).
In general, most states require payday lenders to provide EPPs. An EPP allows you to repay your loan for an extended period (usually in four weekly payments) without additional interest or fees. This will give you more time to find the money to repay your loan.
- Find Ways To Increase Your Budget
There are two ways to pay off your payday loan faster: spend less, earn more, or do both.
- Find An Extra Source Of Income
An additional source of income can help in paying off your loans fast. Depending on your family responsibilities and schedule, a part-time job or side gig can help you earn more. It could be as simple as a dog walking or driving an Uber during your day off and vacant time.
In addition, you can sell your handyman skills or provide other services. For instance, if you have web development skills or a talent in writing, you can try finding extra jobs on freelancing sites or job search platforms.
You can also consider selling personal belongings, such as old clothes or furniture that you no longer use on eCommerce websites, to get more money. You don’t have to depend entirely on your primary salary to pay off your loan.
- Practice Frugal Living
Frugal living means cutting down unnecessary expenses. This can take determination and discipline. However, it’s worth it when you finally pay off your payday loan.
Try to assess your budget and find areas where you can cut down on expenses. Some ways to practice frugal living include refraining from shopping for unnecessary items, eating out, and going on expensive trips. Additionally, frugal living may also mean taking advantage of coupons and discounts, buying used items, cutting down on subscriptions, walking or biking whenever you can, etc.
- Use Your Savings
Most people don’t like using their savings for unnecessary things such as paying off loans. However, using the money meant for your future, a dream vacation, or a new phone to pay off your payday loan can end your debt.
After all, not being able to pay off your payday loan quickly may cause an increase in the interest rate and fees, which could add up to more than you take out from your savings.
- Opt For Debt Consolidation Loan
Debt consolidation loans can be a lifesaver when you’re stuck on the cycle of payday loans. The idea of a debt consolidation loan is to borrow money at a low-interest rate and use that to fully repay your payday loan, along with other debts you may have.
You will still need to repay this loan, but it allows you to have a predictable and non-escalating payment that fits into your monthly budget.
However, it would be best if you had a good credit score and rating to get approved for a debt consolidation loan. A debt consolidation program is another good option if you don’t qualify for a debt consolidation loan for your payday loan and other debts. This program involves rolling your unsecured debts in a monthly payment via a non-profit credit and financial counseling agency.
Take Away
Payday loans can be helpful under the right circumstances. While it may have high interest rates, there are several ways to quickly pay off your payday loan and avoid unnecessary fees. Make sure to follow the tips mentioned above so you can pay your loan as soon as possible and prevent further stress on your financials.
