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How to Pay Back a Payday Loan

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We all would ideally love to stay debt free. But sometimes, we must borrow money for special requirements like buying a home, a new car, for carrying out urgent repairs, for a long awaited overseas trip, medical emergencies and such other reasons. We might need a big amount, but often the requirement can be small as well, just to see us through till the next payday, as there is a slight financial crunch.

That’s where a payday loan can help you. These are small dollar loans typically between $500 and $1000. Some lenders may also offer $1500. But usually the first loan given is for $500 only. It is OK to get these loans. The money is disbursed quickly as well, which is a big relief in an emergency.

But do remember, unlike a car or home loan, these are short-term cash advances, where you are expected to pay the sum back after just a few weeks, on receiving the paycheck next month. Yes, sometimes, there can be an extension if you make that request with the lender. But these are rare instances.

Taking a payday loan is a good way of solving a temporary cash crunch situation. But it is essential that you make every effort to pay it back on time. Unfortunately, credit counseling agencies don’t usually offer advice on payday loan debt management.

Still, there could be many constructive ways in which you can approach the issue of paying back your loan. That is what we want to explore in this article, because we want to help people repay their payday loans quickly. So let us find out how you can pay back the loan quickly and remain debt free.

Tips to Help You Pay Back Your Payday Loan On Time

1. Plan to make the payment after the next payday – Remember, you have taken a loan, and so, your priority at this time should be to pay it back as soon as you can. So don’t make any big purchases that aren’t absolutely essential. Learn to differentiate between “Needs” and “Wants”. Use the cash advance only for urgent requirements. Set aside anything that might be left for the repayment.

2. Tell the bank to pay back the loan – You can give a standing instructions to your bank to pay back the loan as soon as you get a loan from us. Do not worry, when you do this, the money will automatically be debited from your account the day you get paid NOT before – because this is what you will tell to your bank. Lenders too will not try to take their money before payday. Of course, there should be enough funds in your account for this to happen. We also offer standing instructions for auto-debit facility with our payday application. Try our loan now and contact us to fill the debit instruction.

3. Talk to the lender – If you are unable to pay loan back on time for some reason, then talk with the lending agency and try to negotiate. Call up the company and see whether you can speak with the manager. Find out whether you can be placed in some sort of a hardship program that you can afford. Also find out whether the interest rate can be lowered. It is much the same as negotiating with a credit card company.

If you took a loan with us you must be having phone number of your lender. Please talk to them directly.

Many payday lenders are eager to work with their clients if they see that the person is sincere about meeting his or her commitments. There are ways to work out payment issues.

4. EPP or the Extended Payment Plan – Often, many do not know that there is a way to extend their repayment period by several weeks, and that too without any penalty as well. Only the EPP fee will be charged. That is the Extended Payment Plan or EPP. Such a plan will surely ease your burden by a great deal. You will get the time you need to get your finances in order. But remember, only a few payday loan companies offer the EPP plan. Companies that are members of the CFSA or the Community Financial Services Association of America should offer this plan.

So find out whether your company offers this, even before taking the loan. You have to apply for the EPP plan on the last day before the amount is due. You will then be able to repay the borrowed money in four equal installments.

Well most of our lenders are also members of CFSA and offer a EPP plan. Contact your lender for Extended Payment Plan if for some reason you are unable to pay. They should be able to help.

5. Wait for the loan to go to collections – This is another option for those who are unable to pay back in time. What happens if you default? The payday lending company is going to send you reminders. But if you are still unable to pay back, then your loan will be forwarded to a collection agency. This is when you can roll over your accounts to a debt management program. There are some individuals who find this a more manageable option.

Remember that once you get into a debt management plan, it will be handled by a third party. They negotiate with lenders on your behalf and that is why we recommend, avoid them as much as you can. Lenders want to talk to you not a third party on your behalf. This is human behavior. If you give a loan to someone, would you like if someone else negotiates on their behalf?

By the way the debt negotiators will not do negotiations for free, they charge a fee as well. This is where your overall payment increases since now you need to pay the lender plus you need to pay the debt negotiators as well. This is not a good situation to be in.

However this situation is recommended ONLY if you are deep in debt from many sources and have no way to get out of it. For small debts you can yourself manager better.

6. Refinancing the loan – Payday cash advances are quick loans where the money is disbursed within 24-48 hours. That is perfect in an emergency. But there is time in your hands once you have got the money and dealt with the issues. So why not get the loan refinanced from a local bank? This way, you pay off the original loan easily, and get more time to repay the loan amount to the bank. There are quite a few credit unions and local banks that will entertain such loans.

Of course, you can use this option only if you have good or semi-good credit. Unlike, payday companies, banks do not issue loans to people with a poor score.

One more thing, refinancing just a payday loan through banks will not work. You may have to apply for a bigger loan for various works and use part of that money to payback your payday loan. Credit unions are a much better choice. They can offer a small loan to refinance your current loan.

7. Create an emergency fund – This tip will not help you pay back the loan quickly, but it will help you manage your finances better, and so it’s a relevant one. In fact, it is an important one as well. Siphon off a portion of the income every month into a new bank account. Make sure this “siphon off” is automated. It could be 10% of your pay or whatever you are comfortable with. Over time, this will be your emergency fund, and it will surely come in very handy in emergencies. If you have this fund ready, you do not have to take a loan again and get into debt ever.

Payday loan companies exist out there to help when their clients are in urgent need of cash. Like other loan companies and banks, they too want to get the money back. It helps everybody. The company stays liquid and keeps offering loans to others who need the cash. It is good for the clients too if they can repay on time and find innovative ways of not defaulting. And there are indeed several ways in which they can meet their commitments.

Frankly its not just the bad lenders but also people who take a loan with the intention of not paying back, bring bad name to this industry. We are all hard working individuals trying to help people with bad credit get the cash they deserve. But after all, this is a business which people must understand and payback the loan on time.

Thank you for visiting our website. Hope we helped you get a loan.
2 comments… add one
  • Faylinn

    Last week, I took out a short term loan and so now I am trying to figure out how to pay it back. However, I had no idea that it could be possible for me to refinance it and pay it off at a scompetitive rate. However, does the interest of a loan change when I have it refinanced by a local bank?

  • Amanda Drew

    I like your suggestion to get a payday loan then get it refinanced from a bank so that you have even more time to pay it off. Recently, I had a pipe break, and the bill was pretty hefty. I’ll have to find a payday loan to take advantage of so that I can pay it.

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