Request a repayment plan
Research shows payday loans have interest and fees that are so high, it can be almost impossible to make payments and still live on a budget. The good news is, you may have options to cut your payments.
Some states mandate payday lenders allow an extended repayment plan that gives you more time to pay back payday loans without incurring additional penalties or fees. Laws vary by state, though, and your lender may have the right to charge you a fee for entering into a repayment plan.
You can find out your state’s laws by checking the National Conference of State Legislatures.
Even if your state doesn’t require lenders to provide a payment plan, lenders may be willing to work with you if they fear they’ll otherwise get paid nothing. So it doesn’t hurt to let your lender know you cannot continue to pay as planned and need to work something out.
Asking for a payment plan is far better than taking out more payday loans. By taking out more loans, you’ll drive yourself deeper into debt that you can’t afford.
Use lower-interest debt to pay off a payday loan
There are other kinds of debts out there that are much more affordable than payday loans.
Payday alternative loans offered by credit unions are one example of a loan you could potentially get quickly and use to pay off existing payday loan debt. You could also apply for a debt consolidation loan.
A debt consolidation loan is simply a new loan you can use to pay off other existing debt. Often, debt consolidation loans group multiple existing debts together into one big loan. But you can decide which debts to include in your consolidation.
While some lenders specifically advertise “debt consolidation loans,” it’s possible to consolidate debt with any kind of personal loan from:
- A bank
- Credit union
- Online lender
Getting approved for a loan with bad credit can be challenging, but some online lenders are more flexible than traditional financial institutions about their requirements.
Use the calculator below to estimate monthly payments on a debt consolidation loan or payday alternative loan. If you’re not sure what interest rate to use, 18% is a good starting place – that’s the average interest rate for fair credit borrowers.
Note: If your credit score is below 579, expect an interest rate closer to 30%.