Every year, 12 million Americans borrow money via a payday loan. These unsecured personal loans get you money quickly when you need a bridge until your next paycheck.
But if you don’t pay them off in the established time, you may find yourself rolling the debt into another payday loan. You’ll spend more in fees and extend your debt. It can leave you wondering, “When will my loan be paid off?”
Focusing on paying down the debt quickly can save you money and get you back on track financially. Check on the terms of the loan, and find ways to put as much money as possible toward the loan to pay it off.
Use these tips to pay down your payday loan faster.
1. Limit What You Borrow
Payday loans aren’t meant to serve as long-term financial solutions. They’re designed for short-term financial situations to help meet your immediate financial needs. Relying on payday loans to handle your regular expenses can put you into a cycle that’s difficult to break.
Borrow only what you truly need to handle your financial emergency. If you’re spending the money on groceries, clothes, or similar items, you’re borrowing too much money. By limiting what you borrow, you’re better able to pay back the money on time.
2. Ask for an Extended Payment Plan
It may seem counterproductive to ask for an extended payment plan when you want to pay off your loan faster. But if you’re having trouble affording your payday loan, this option can cut down on additional fees.
If you fail to meet your payday loan obligations, you’ll likely face extra fees and interest. You might end up taking out an even larger payday loan. The amount you owe can continue climbing instead of decreasing.
When the lender is willing to work with you on a payment plan, you can break up the amount owed over time without the higher fees. It can keep you from falling behind even more.
3. Find Extra Money in Your Budget
You likely feel like your budget is maxed out, but most people can find places to cut back and free up money. Grocery shopping, entertainment, eating out, and splurges at the store are often areas where you can cut back.
You don’t want to miss out on fun, but putting yourself on a temporary spending freeze can help you get caught up and get your loan paid off quickly. Think of ways you can curb extra spending for now.
Pack leftovers for lunch and put what you would spend on lunch out toward your loan. It’s easy to spend $10 for a meal even at a fast food restaurant. That gives you $50 a week just for your work lunches to pay down your loan faster.
If your budget is already tight, consider selling things around the house for cash. You may even have luck picking up free items from the curb and selling them for cash. Put that money directly toward your payday loan.
4. Get a Part-Time Job
The idea of a payday loan is to use your next paycheck to cover the payment, but sometimes you can’t pay it all off as planned. Your current paycheck needs to go to other bills, and you may not have the extra to put toward the loan payment.
Consider getting a second job to get through your current financial situation. Working extra hours may seem like a pain, but it’s a temporary sacrifice to improve your finances.
Since the second job is new income you didn’t previously count on for bills, put your entire paycheck toward your payday loan. Continue paying your normal bills with your regular paycheck.
If you’re tempted to spend the money from your part-time job, deposit it into a different check account so you don’t see it with your normal income. Apply it to your payday loan as soon as you receive the money.
5. Make Extra Payments
Even small extra amounts can cut down on your loan repayment time. If you get a little extra money for working overtime, as a gift, or for any other reason, use it to make an extra payment toward the loan.
When you make your regular payments, round them up to a higher amount. If the required payment is $282, round it up to $300. You won’t miss the extra money, but it helps cut down your loan balance faster.
6. Refinance With a Different Loan
If you’re struggling to pay off your payday loan, consider refinancing that borrowed money with another type of loan. An unsecured installment loan can give you more flexibility on your repayment term. You may get a better interest rate and avoid some of the fees you have with a payday loan.
7. Utilize an Assistance Program
Sometimes your financial situation is more difficult, and you need some help. Check for local programs through the government or nonprofit organizations designed to help people with financial difficulties.
You may qualify for assistance for various expenses, such as rent or utilities. Consider visiting a local food bank to help stock your pantry.
Financial help in other areas can help you keep up with your loan payments. It can help you get back on your feet and improve your financial situation in the long run.
8. Borrow From a Friend
Borrowing from friends and family can be risky. If you can’t afford your payday loan payments, can you afford to pay back your friend? You don’t want to hurt your personal relationships over money.
Still, getting a temporary loan from a friend or family member may be an option if you’re struggling with your payday loan. If your personal lender charges interest, it’s likely a smaller amount than your loan fees. You may also be able to pay back the money over a longer time period to make it easier to afford.
When Will My Loan Be Paid Off?
The answer to, “When will my loan be paid off?” depends largely on your financial situation and your commitment to paying off the debt. Coming up with extra money to pay the loan on time or ahead of schedule puts you in a better financial situation.
Contact us if you need a payday loan. We can help you get the funding you need, and with these tips, you can pay it off quickly.