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You probably know that a Payday Loan is a simple and safe type of financing that helps people with any type of credit to get financing and cope with a difficult life situation. Since the loan is short-term, you must pay off the debt on the day of your next paycheck (often within 2 weeks). Also Payday Loans are famous for being unsecured and do not have a lot of criteria, so they are easy enough to get.
However, Payday Loans have extremely high interest rates that are almost impossible to repay. Typically, you will have to pay between $ 15 and $ 30 for every $100 you borrow, which is over 400% APR. Moreover, the Consume Finance Protection Bureau recently canceled measures that prohibited the issuance of Pay Loans to borrowers who do not have the funds to repay them. Thus, Payday Loans have become even more accessible to everyone. That is why the high interest rate, short repayment terms and loan renewals and rollovers can drag the borrower into a debt hole.
Also, you should know that more than 80% of borrowers who received Payday Loans were due because they could not repay the debt on time. Moreover, about 15% of borrowers, who got up to 400 dollar loan, renewed them 10 times or more. Thus, as you can see, more often than not, people who receive a Payday Loan cannot pay it off on time due to unfavorable lending conditions and extremely high interest rates.
What if I am overdue on my Payday Loan?
As already mentioned, most borrowers are unable to repay the Payday Loan on time, so they face penalties and fees for late payments. However, in some cases, creditors may turn to collectors to collect the debt from you. Remember that a missed or late payment will negatively affect your credit and worsen it. Thus, you will not be able to get a favorable loan offer in the future.
However, even if you received an advancePayday Loan and found yourself in a debt trap from which it seems impossible for you to get out, there are still options that can help you.
Options to help you get rid of Payday Loan debt
• EPP (Extended Payment Plan). The first thing you should be aware of is that many states require lenders to offer EPP. EPP is a procedure that allows a borrower to repay a loan over a longer period of time. Thus, if the lender belongs to the CFSA trade association, then he is obliged to offer an Extended Payment Plan to anyone who has problems repaying the loan.
• Debt consolidation loan. Another great option that you can use to get rid of debt is debt consolidation loans. This loan allows you to borrow a certain amount of money with a relatively low interest rate in order to use the money received to pay off the debt. Please note that these loans usually require a credit check, but more often than not they are available even for people with bad or poor credit.
• Payday Alternative loans. This loan was developed by credit unions in order to meet the needs of borrowers with more favorable repayment terms than Payday Loans. These loans offer you an amount of up to $ 1000 to cover your needs up to salary. Moreover, these loans do not require a credit check, so almost anyone can get it. Although the Payday Alternative Loan is designed to be used instead of Payday Loan, you can also apply and get it to pay off your Payday Loan. It will be much easier for you to pay off this type of loan, since the maximum interest rate is 28%, and the repayment terms vary up to 6 months. However, please note that in order to obtain this loan, you must belong to a credit union for at least 30 days. You will also likely have to pay an application fee of up to $ 20.
