A payday loan can offer a quick reprieve from unexpected expenses or temporary tough luck.
But if you don’t have enough money to pay back the loan next payday, you may need to take out another loan — or roll your balance into a new loan with interest rates that can exceed 300%.
More than a dozen states have banned high-interest, short-term loans, but it’s still easy to get a payday loan everywhere else — and get trapped in the debt cycle.
If you’re stuck in that loop, we have advice on getting out and getting some payday loan relief.
The Payday Loan Problem
Almost 70% of payday loan borrowers take out a second loan within one month. And according to the Consumer Protection Financial Bureau1 in 5 new payday loan borrowers ends up taking out at least 10 payday loans.
This payday loan cycle can turn a short-term loan of a few hundred dollars into a growing mountain of debt totaling thousands.
The average repeat borrower pays $458 in fees on top of their principal over the course of a year.
And when you’re that far behind, it’s hard to get ahead.
“If you’ve gotten into the spiral, it’s really not your fault,” says Maurice BP-Weeks, co-director of Action Center on Race & the Economy. “Companies shouldn’t be allowed to peddle these products.”
If this sounds familiar, read on for practical tips on how to get payday loan debt relief.
The 6 Different Types of Payday Loan Relief
The type of payday loan help that’s right for you depends on your credit, your debt burden and your overall financial situation.
Payday loan relief options include:
- Speaking with a credit counselor and setting up a debt management plan.
- Asking for an extended repayment plan.
- Payday loan consolidation.
- Debt settlement.
- Consulting an attorney.
We’ll also discuss other ways to eliminate your payday loan debt, including cutting costs and boosting your income.
Work With a Credit Counseling Service
Facing this debt by yourself is hard. A…