If you’re struggling to pay back payday loans, there are several options for getting out of debt. Some of these options include debt settlement, debt consolidation loans, and nonprofit credit counseling. But before you choose a solution, you should understand your options. Before applying for a payday loan, make sure you understand all the options available.
Nonprofit credit counseling
If you are drowning in payday loans, you should consider non-profit credit counseling. These programs can help you resolve your financial problems and take control of your future. While these services are free of charge, they may require a small fee to cover administrative costs. They can also help you improve your credit score.
While payday lenders usually don’t work with credit counselors, they can help you understand your options and come up with a plan for repayment. Often, they will offer a free extended payment plan or debt management plan to make payday loans easier to repay.
Personal debt consolidation loan
When you need to consolidate your payday loan debt, you can find an unsecured personal loan from a number of lenders. This type of loan is preferable because it does not require collateral. On the other hand, a secured loan requires collateral, and your lender can take it if you do not repay it.
One disadvantage of a consolidation loan is that it usually has longer terms than payday loans. Besides that, you may have a bad credit history that prevents you from being approved for a consolidation loan. Some lenders also have minimum loan amounts, which can make it difficult for some people to qualify. Also, consolidation loans usually require a credit check, and hard inquiries will lower your credit score.
Debt settlement
A professional debt settlement company can help you get your money back. The first step in the process is to understand your financial situation. Calculate how much you owe and how much you can afford to pay. Try to find a solution that is mutually beneficial. For example, if you owe $6,000, you may want to negotiate a settlement to get back a portion of your money.
The process of debt settlement for payday loans is similar to that for credit card debt. Once you reach an agreement, the lender will often agree to settle your account for a lower amount. In some cases, the amount can even be as low as 50% of what you owe. However, you need to be aware that payday loan lenders are not required to agree to a settlement offer. In fact, only 10% of all payday loan settlement offers are accepted by the lenders.
Alternatives to payday loans
If you’re in need of a few hundred dollars, but can’t wait until your next paycheck to get started, there are several alternatives to payday loans. These options are more sustainable and can help you pay off your payday loans more easily. Many banks offer overdraft protection and will cover your check for a small fee (typically $5), or they will move money from your savings account to cover your check. Other options are cash advance apps, peer-to-peer lending platforms, and a personal installment loan. Some of these options have lower interest rates and fees, longer repayment terms, and help you build your credit in the process.
Credit unions also offer payday alternative loans, and can provide small amounts of money to members with competitive rates. If you don’t belong to a credit union, you can apply for a credit-card cash advance. While credit-card cash advances tend to have higher interest rates than payday loans, they can help you get the money you need. The downside of this option is that it could take a few days to get the money you need.
