It’s no secret that getting out of payday loan debt is not easy at all; in fact, if you borrow $500 as a payday loan and you can’t pay it off for the next couple of months or so, you will find yourself paying an exorbitant amount of money in the process. A typical $500 payday loan results in a $55 fee payable within the next 10 to 14 business days. This means you would have to pay $555 to settle the loan after a couple of weeks or write out another check to start the process all over again with an extension on your loan.
Getting a Payday Loan Can Be a Good Thing If You Plan Wisely
Although some experts say that getting a payday loan is actually not such a bad thing after all, the prospect of getting out of that hole once you dive in is extremely difficult.
Luckily, getting out of payday loan debt to be a little bit easier if you follow a proven strategy.
The best strategy, if you cannot pay off the loan by the due date, involves paying off the loan a little more each time you visit the lender.
Here’s an example:
Let’s say you took out a $500 loan and you have just returned to the check cashing lender to make your payment. The fee will be roughly $55.00 on that loan on top of the amount you borrowed. Instead of just paying the fee, writing another check for $500 and continuing the loan as is usually the case, pay the lender another $50 and write a new loan check for $450. Your total payment will be $105.
Even with this method, if you only pay an extra $50 dollars on every trip back, it will take you approximately 4 months to get out of that payday loan debt completely. In the end, even though you will have paid more than double the amount you borrowed, you won’t feel it as much as a person who continues paying these cash loan places $55 dollars for 40 weeks! This is how getting a payday loan can hurt you. They put you on the hook for the loan and your bi-weekly fee payment to them is like an automatic ATM cash withdrawal for the company.
Now for the best part; since you have been able to pay the $105 bi-weekly to get rid of the loan, why not start automatically deducting that amount to another savings account “not to be touched” for the next year? This way, you won’t have to resort to living paycheck to paycheck and when an emergency comes along, voila! You’ve got it covered. Getting out of payday loan debt looks a little easier now, doesn’t it?