Payday loans are also known as cash advance; this loan is specially formulated with the intention helping you as a borrower to access small amounts of money to settle bills or emergencies that won’t wait. As a borrower, the payday loan lender expects you to give them a signed check or link them to the borrowers account directly, this supports the assumption that you as a borrower will pay back the loan on the next payday.
Failure to repay back the payday loan may result in fatal consequences. This may include a law suit, wage garnishment, or additional fees. Therefore, it’s necessary to know how to clear a payday loan; this will not only save you from financial and legal consequences, it will also help you save money. Having that in mind, below are several tips to aid you in repaying a payday loan.
Understand What to Expect
Unlike the overdraft fee that a borrower pays in a conventional bank after overdrawing from the checking account, the cost incurred while getting a payday loan (often known as finance charge) is much less and convenient. Nevertheless, it’s important to note that there is a late fee that you incur as a borrower if you default in payment. There is also a rollover rate that is incurred in the event the borrower wants to extend the loan terms. Of great importance is the interest rate that one incurs, its significantly high.
Read The Terms Carefully
Operating out of assumptions can affect you adversely. It’s therefore advisable to familiarize yourself with the terms of the payday lender you intend to borrow from. It might catch you off-guard to learn that the lender is allowed by their terms to extend or renew a payday loan without your consent. This can result in large sums of debt. It’s therefore important for you as a borrower to understand the terms and condition of the payday loan before you put down your signature on it.
Have A Budget in Place
It’s only right that you have a spending budget that is in accordance with your income and stick to it, this saves you a great deal of trouble in terms of high interest and fees.
Engage in activities that will enable you to save a great deal of money so that you can use the extra to pay off the loan. This includes buying groceries to cook at home rather than eating out.
Have a Strategy to Clear The Loan by The Next Payday
Restrain yourself from making impulse purchases that are not relevant. Instead, manage the finances you borrowed for the intended reason and set aside adequate resources to clear the loan. It’s also important to have a savings account to cater for future emergencies.
How About a Roll Over?
Depending on your geographical location, rolling over might be possible or not. If you are lucky enough to be allowed to roll over, you can use this to extend the time limits so that you accumulate the money required to pay-off the loan; bear in-mind that this comes at a fee.
How About You Consult a Credit Counseling Agency
The credit counseling agencies are of great importance in helping you as a borrower to figure out how you can pay off your payday loan. These agencies aid you in the process of exploring the available options that you can use to repay the payday loan.