Break the Payday Loan Cycle
The nation is currently in a debt crisis, with more people than the ever-accumulating debt that they simply cannot afford to pay back.
And it can be a vicious cycle for many people living with debt, as they are constantly having to borrow from one lender to the other just to be able to get by from month to month.
People choose to take out a payday loan for a number of different reasons but it’s mostly to cover unexpected one-off expenses or a shortfall at the end of the month. Whatever it is for, borrowers are finding it increasingly difficult to pay back the loan, leaving them with no other option but to take out another loan the following the month.
But don’t worry, there’s always a solution when it comes to breaking the cycle of a payday loan.
Here’s helpful guide outlining the ways that you can break the payday loan cycle:
What is a payday loan?
A payday loan is a high-interest loan that is often used to cover short periods of time and they are designed to cover any financial shortfalls until you get paid again.
Although this type of short-term loan is manageable for some, their notoriously high-interest rates cause countless problems for borrowers that are unable to pay back the loan.
How do you escape a payday loan cycle?
One of the most effective ways to get out of a payday loan cycle is to consolidate your debt so that you are able to manage one payment at a more manageable APR. This is because payday loans have extremely high-interest rates, which can quickly spiral out of control.
There are lots of lenders out there that will help you to consolidate your debt even if you already have bad credit. So whether you decide to apply for a personal loan or a balance transfer on a credit card, there’s lots of ways you can gain control of your existing debt.
Of course, you could also apply for a personal loan from a credit union, which offer flexible loans to borrowers that have a history of debt or bad credit.
Formulate a plan
When trying to break the cycle of a payday loan, you should always have a plan of action in mind.
And this starts by closely analysing your finances to understand why you are in the debt that you are, how you can make significant savings on your existing outgoings and it is also wise to formulate a manageable re-payment structure.
A lot of people call on the help of professional services for this such as debt councillors and professionals that are able to help with budgeting.
Of course, in the meantime, there are lots of ways that you can look at cutting expenses including swapping service suppliers for your monthly bills to cheaper rates, eating out less, spending less money on luxuries and evaluating your social life.
There are also lots of ways that you can earn extra cash to help top up your monthly wage including selling items you no longer use on sites such as eBay, taking on odd jobs to earn extra cash and setting a budget that allows you to pay off your loan and live at the same time.
Download our app now to find out how we can help with handling payday loan debt.