Payday loans are a quick source of funding, but they are expensive compared to other short-term loans. Many of you take out these loans because of a shorter repayment period. As you are to pay off the whole amount of money on your next payday, you think it is the most affordable loan offer.
However, the reality is not as seems. The shorter repayment period can be a significant cause for being unable to repay your debt. If you fail to reimburse your debt, the lender will impose interest penalties and late payment fees. As a result, the total cost of the loan will continue to add up.
It is not unusual to see that you are struggling to make the repayment, but the worst thing you do is ignore it. Whatever the reason, you should immediately take stock of your financial circumstances.
You do not need to panic, nor do you need to take any step that boomerangs on you. If you are facing difficulties making repayments of a payday loan for bad credit people, you should take the following steps.
Contact your payday lender
If you are not able to keep up with repayments, you should talk to your payday lender. Inform them of difficulties you have been facing – it is because of job loss or due to any other reason. Make sure that you have a sensible reason to convince your lender to help you in any way.
- They will advise you about debt management.
- They will stop bombarding you with emails and text messages once you have reached to them with your financial trouble.
- The lender will suspend the recovery of debt and instead offer you another repayment plan by evaluating your current financial condition.
- The lender will give you enough time to repay your loan. They may freeze interest penalties until that period.
- They can also accept less than the due payment in case you are not able to pay your essential expenses like food and utility bills.
Cancel continuous payment
Sometimes it can be so hard to pay off the loan that you have no money left for your essential expenses like food, rent and utility bills. Contact your bank and ask them to cancel the continuous payment authority.
It is a recurring payment system that allows the lender to withdraw money from your account on the due date. However, cancel this service before the loan is due for repayment and inform your lender. After cancellation of continuous payment, the lender cannot take money from your account, and if it happens, you will get a refund.
However, the cancellation of recurring payment does not free you from the debt. You still owe the loan, and the interest will keep accruing. It is why you should take free debt advice to combat this situation.
Carefully pick the solution
When you inform your payday lender that it is getting hard to be on top of repayments, they will likely give you some suggestions. They can either put you on a new repayment plan, or they can ask you to roll over a loan.
Most of the payday lender emphasizes rollover a loan. It is a bad idea as you will end up paying three or four times more than you owe. Although they cannot rollover the loan twice, it is still a bad idea. You should look for other repayment plans and choose the one that you can afford.
Consult a debt advisor
Consulting a debt advisor can be a better option to find out a solution to deal with your payday loan. A debt advisor will look over your financial condition and accordingly let you know a repayment plan.
If you are seeking help from a debt advisor, you should inform your lender that you are working with a repayment plan. Your lender will hold the debt collection and nagging you with emails and phone calls.
Payday loans are undoubtedly expensive. When you take out these loans, you should be careful with your repayment capacity. A good rule of thumb says that you should have money set aside so that you do not need to rely on loans for every emergency.