How to Get Out of Payday Advance Loans
Many individuals are facing financial crisis in 2010 and 2011 with mortgage closures and unemployment at an all time high. Many people have taken out payday loans to stop foreclosures and meet monthly bill obligations, but have found themselves in a revolving cycle. As payday rolls around, there may be just enough money to pay the payday loans and take out a new loan, but there is a way out.
Items Needed:
- Billing statements
- Calculator
- Paper
- Payroll stub
- Pen
- Stop and consider all alternatives before taking out a payday loan. The interest rate on these loans is equal to paying 390% APR.
- Stay calm. There is a way out of the payday loan cycle.
- Continue to buy back the check each month or ensure the payday loan check will clear. Insufficient fund fees will add to the problem.
- Face the facts concerning the interest that is charged by the payday loan company, by placing pen to paper.
- Write down the original amount of the loan at the top of the paper and then the fees or interest that have been added each payday.
- Estimate the fees for the next 12 months adding in the total from the previous month.
- Realize the problem will soon escalate at this rate.
- List the name of each bill including mortgage, utilities, groceries, gasoline, etc., on the left side of the paper. Write in the amount of the bill on the right of the sheet across the item and total all the bills.
- Write down the amount of net pay from the payroll stub on the paper, and subtract the total of all bills from the payroll stub. Do not be surprised if this amount is a negative number.
- Call the payday loan company to arrange a payment plan.
- Consider contacting an attorney to negotiate a payment plan, if a favorable arrangement is not agreeable with the payday loan company.
- Shorten the loan duration by paying as much as possible each month.
- Take out a smaller loan each month, if possible, or consider taking out a loan with a smaller interest rate to pay off the payday loan company in full.
- Pay the loan each month plus some when possible to lessen the total fees.
- Search for ways to reduce monthly expenses, such as delete cell phones, car pool, disconnect cable, redeem coupons with groceries and prepare meals at home.
- Work a second job, have a yard sale, sell items on the Internet or perform odd jobs for neighbors to raise extra cash. This cash should be used to pay down the loan.
- Build an emergency cash fund of at least $1,000 after paying off the first loan while continuing to raise extra cash.