How To Get Rid of Payday Loan Debt

By Subodh / June 2, 2010

In order to understand as to what is the way out of payday loan debts, firstly it will be vital to understand as to what is a payday loan. Payday loans are also termed as cash advances and they are very easily available from financial institutions. It is actually a short term loan which helps in dealing with short run financial crunch. And as soon as the payday arrives, the loan is paid off. There is no interest usually but yes, service charge is definitely there depending upon the term of loan.

When the documents and the details for payday loan are supplied the loan is passed and approved. And as soon as this is done the borrower writes a post dated check usually of the date that is near the payday. But if again there is some expenditure and the borrower is willing to extend the loan then he may apply or the same again to the borrower for extension of the loan. With extension of the loan there will be late fees added to this.

This is how the debt grows. And it makes the vicious cycle of debt. This cycle is borrow-pay-borrow cycle. This is because the salary will actually be used in taking up day to day expenses. And then again you will be stuck with insufficient finances to pay the loan which will either require one more loan or a payday loan extension. This debt cycle is really very stressful. But the good news is that one does not need to take stress for payday debts because it is simple to get rid of payday loan debt. But you need to follow the given suggestions:

Firstly, you must calculate as to how much is the debt and expenses that you are supposed to pay. Pay off all the expenses with the money that you already have. Do not forget anything. Include all the previous debts. Since multiple debts will put you under lot of stress. It is therefore vital to take up loan consolidation. Borrow the exact amount that will equal to all those multiple debts. Also, make it a point you know everything about the new consolidated loan. This is because any kind of miscalculation or misconception will attract extra fees and charges.

The second option to stay stress free is that you can pay off all the payday loans with your credit card, if you have one. But the best way to use credit card is at that time when the rates of interest are very low.

And the third way of getting rid of payday loan debt is to change the financial habits. It includes spending money wisely only on essential things and avoiding fancy and snobby stuffs for sometime till the payment of debt is done. You must make a budget and strictly follow the same. And while borrowing money try to get money from friends and relatives as this amount if interest and charge free unlike payday loans.