You are not alone if you are one of the individuals who take out payday loans and their repayments have cost you much more because you receive long-term loans. Today, many people take out payday loans. Payday loans with very high fees and interest rates can become a trap for individuals. Therefore, individuals receive another loan with more fees because they have problems making repayments. Lenders of payday loans structure payday loans that the amount to be repaid can grow rapidly and therefore repayments to become increasingly difficult.
Many states have laws that limit the amount of payday loans. In this sense, the fee charged for each 100 dollars varies between 10 and 30 dollars. According to the Consumer Financial Protection Bureau, typical two-week payday loans with a $15 per $100 fee equates to an annual percentage rate (APR) of almost 400%.
Given all these reasons, many people want to get out of payday loans. There are many legal methods to get out of payday loans. The sooner you get out of these loans, the better.
Legal methods that can be used to get out of payday loans
It seems impossible for many people with payday loans to get rid of payday loans. However, it is possible to do so. There are some legal methods to help you get rid of the weight of payday loans lenders. These methods are;
- Short-Term to Generate Cash
- Consider Extended Payment Plans
- Refinance with a Personal Loan
- Friends and Family Financing
- Faith-Based Organizations and Military Relief
- Look Into a Payday Alternative Loan
- Consider Credit Counseling
- Where bankruptcy is an option
Short-Term to Generate Cash;
Many people resort to payday loans when they run out of resources and think it will be a solution. However, this is not the case. You start to suffer financial difficulties again due to payday loans. Therefore, you need to earn short-term income and there are two ways to do this. Either you need to reduce your spending or you need to find methods that can generate extra income.
Reducing your spending on payday loans may work for a while, but there is no definite solution. Therefore, you will have to find methods that will give you extra income in the short term. The best way to make money in the short term is to sell stuff. Another method is to work overtime until you pay your debt. If you can’t work overtime, there are many ways to make money. For example; At weekends or evenings you can sign up to drive with Lift or Uber.
Consider Extended Payment Plans;
One way to get out of payday loans is to negotiate with the lender the lender for an extended payment plan (EPP). When you realize that, EPP will break up the payday loans into smaller installment payments for a longer period of time without additional fees or interest.
If you are asked to make a new agreement when you apply to EPP to get out of payday loans, do not sign until you have read all the terms and conditions. Not all lenders may want to perform EPP to repay their payday loans. Even if EPP occurs, do not use this method unless you are sure that you will pay within the specified time period. If your payday loan lender does not want the EPP option, you can contact other lenders for help. For example; if you have car loans or credit card debts.
Refinance with a Personal Loan;
Another way to get out of payday loans is to take personal loans. The interest rates of individual loans are lower than the interest rate of payday loans. It can offer you an option to make your refunds on more favorable terms and in a longer term.
There are certain criteria that are looked at before taking out personal loans, and many factors may change according to these criteria, such as payment terms or interest. Therefore, when you apply for personal loans, you will be able to finance your payday loans with personal loans if you have better conditions than payday loans.
Friends and Family Financing;
One way to get out of payday loans may be to borrow money from friends and family, but it may have risks in itself. You should treat these credits from friends or family as if you were from lenders. Set your monthly payment amounts, considering your budget and situations. Determine the amount, terms of payment, and make a written contract, as if you were taking out a loan from a lender, without thinking that you were receiving it from friends or family. Close your debts by following this agreement.
Faith-Based Organizations and Military Relief;
If you want to get out of payday loans, you can find some faith-based organizations and credit unions to help you. For example; Exodus Lending allows you to get out of payday loans. Minneapolis-based Exodus supports borrowers willing to get out of payday loans with refinancing with a 0% interest rate. There are no fees and you can earn up to $ 1000 if you are a qualified participant.
There are also a number of faith-based credit unions offering payday alternative loans. An example of this is the Greater Galilee Credit Union in Milwaukee.
Veterans and military members can communicate with various veterinary organizations that offer emergency assistance, benefiting from the Federal Military Lending Act. Some of these protections are for borrowers who take out payday loans.
Look Into a Payday Alternative Loan;
If you wish to opt out of payday loans and are a member of a credit union, you may take out an alternative payday loan. The National Credit Union Administration allows federal credit unions to offer loans between $200 and $1,000 to members.
Consider Credit Counseling;
Another option you can use to get out of payday loans is credit counseling. Credit consultants can help you choose the best method for your circumstances by considering the many options available to you.
Where bankruptcy is an option;
To use your bankruptcy option, you must have all of the following conditions;
- If the payday loan cycle gets out of hand,
- If you owe so much,
- You have no income to pay your debts.
When you apply for bankruptcy, payday loans can be released as part of your bankruptcy, just like any other loan. However, bankruptcy should be the last method you use to exit payday loans. Since bankruptcy is a factor that will affect credit transactions in the following years, you should have exhausted all alternative solutions before trying this method.