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How to Get Out of Payday Loan Debt

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If you’re currently stuck with a payday loan that you can’t seem to ever pay off, you aren’t alone. According to the Consumer Financial Protection Bureau, more than 60% of borrowers are trapped in payday loan debt. Those trapped in payday loan debt often roll over the loan and end up paying more in fees than their initial loan amount.

Even if you find yourself in the midst of the payday loan
debt cycle, there are strategies to help you break the cycle and get out of payday
loan debt.

  • Extended payment plans allow borrowers to pay back their loan in installments over a longer time period. Check with your payday lender to see if this type of arrangement is offered.
  • Contact your state regulators if payday lenders refuse to work with you on an extended payment plan. State regulators may be able to negotiate a payment plan with your payday lender.
  • File a formal complaint against the payday lender if it refuses to work with you on a payment plan. Complaints can be filed with your state regulator or with the Consumer Financial Protection Bureau.
  • Find an alternate loan source to pay back your payday loan in full. This could be from a traditional lender like a credit union or bank or a family member.   
  • Seek credit counseling for help with strategies to better manage your payday loan debt. Counseling is offered from many nonprofit organizations – just make sure to do your research when finding a reputable organization.
  • Look for payday loan debt assistance like a debt management plan (DMP) or a debt settlement program. A DMP is a debt-relief option that will work with your creditors to come up with a monthly payment plan. You will deposit your money into an account that a debt management company uses to pay your bills. A for-profit company can negotiate a debt settlement program to pay a lump sum (or settlement) to pay off your debt. The settlement is typically less than the full amount owed, and it will require that you make regular payments into the settlement until the full settlement amount is reached.
  • Bankruptcy is sometimes the only way to get out of serious debt, but it will come with consequences like a large blemish on your credit report for many years.

Getting out of payday loan debt will help you get your finances on track. While it will require time and effort, breaking free from the payday loan debt cycle will be worth it to build ongoing financial security for your future.   

For more information on payday loans, click here.

Representative APR 391%. Average APR for this type of loans is 391%. Let's say you want to borrow $100 for two week. Lender can charge you $15 for borrowing $100 for two weeks. You will need to return $115 to the lender at the end of 2 weeks. The cost of the $100 loan is a $15 finance charge and an annual percentage rate of 391 percent. If you decide to roll over the loan for another two weeks, lender can charge you another $15. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.

Implications of Non-payment: Some lenders in our network may automatically roll over your existing loan for another two weeks if you don't pay back the loan on time. Fees for renewing the loan range from lender to lender. Most of the time these fees equal the fees you paid to get the initial payday loan. We ask lenders in our network to follow legal and ethical collection practices set by industry associations and government agencies. Non-payment of a payday loan might negatively effect your credit history.

Calculate APR Rules in Your State Alternatives to Payday Loan For Military Consumers

Consumer Notice: A payday loan, also known as cash advance is a short-term loan given to the borrower until his or her next payday. Purpose of the payday loan is to provide the borrower a short-term financial relief. Payday loan is not a long-term financial solution. Borrowers who face debt and credit difficulties should seek out professional financial advice. Borrowers are encouraged to review local laws and regulations governing payday loans.

Availability: This service is not available in all states. Please review local laws and regulations for availability in your particular state. The states this website services may change from time to time and without notice. All aspects and transactions on this site will be deemed to have taken place in the state of Nevada, regardless of where you may be accessing this site.

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