How to Pay Off Payday Loans

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how to pay off payday loansThere are about a million different articles out there that help you GET INTO payday loans, but only a few that actually instruct you how to pay off payday loans… Why is that? What can you actually do to get out of payday loan debt? And how do you stay out of them for good?

It’s time to get these questions answered. It’s time to figure out how to break the cycle of payday loans and instead start keeping all that money for yourself!

How to Pay Off Payday Loans

I started this blog in 2010, and to date I’ve probably had about 1,000 requests from various companies to post content on my blog for payday loans. Why? Because if they get just one person to sign up for a payday loan, they’ve more than made their money back on the advertisement… That’s how good of a deal it is for them, and how BAD of a deal it is for you, my readers!

Thankfully, I have learned to just reject these inquiries immediately. Nobody should be told that taking out a payday loan is a good thing…or that nearly everyone does it. 

It’s not.

They don’t. 

And you shouldn’t.

Drop everything you’re doing and read this post from beginning to end. I want you to learn how to pay off payday loans and be done with them for good.

Why Are Payday Loans So Bad?

A payday loan is a small short term loan (usually $500-$1,000) meant to cover the borrower from one paycheck to another. When people have 3-4 days before their next paycheck, but they have a bill due that they don’t have the money for, they just head to the payday loan shop or get a quick loan online. This covers them for a few days, then they pay it off when they get paid.

It sounds simple enough, and apparently quite a few people do this (like…12 million people every year…!!), so why would I advise against it? What makes a payday loan such a bad thing?

A payday loan is a bad deal for many reasons actually:

  1. It gets you comfortable with borrowing in the short term instead of actually planning ahead. This makes you more and more lazy until you get into serious trouble and can’t pay the loan. A payday loan is almost never a good solution to a short-term financial problem. It only creates long term pain.
  2. The interest rate on these short-term loans are mind-boggling — we’re talking between 300% and 700%! This means that if you borrow $500 for just a couple weeks, you’ll owe back $575. This doesn’t sound like a huge deal…but what if you couldn’t pay the bill until 3 months later? You’d owe over $1,000…Yikes!!
  3. You’re keeping yourself from saving or investing — Instead of building your financial future, you’re tearing it down one payday loan at a time! 

Related: How to Save Up $1,000 in Just 4 Weeks (Without Taking on a Second Job)

Get Out of Payday Loans Fast

Alright, so I think it’s pretty clear that you should get yourself into payday loan debt, but if you’re already in the cycle, how can you get out? And, since that interest rate and fees are working against you so quickly, you’ll need to learn how to pay off payday loans fast! Here’s some solid tips to get you there.

1) Live on Next to Nothing

Open up your bank and credit card statements and figure out what you’re spending your money on each month. Then, write it all down on a piece of paper. Then…stare at it.

Start looking at the numbers and ask yourself how you can get rid of some expenses and how you can reduce the others.

  • Do away with cable, Netflix, Hulu, and any additional entertainment expense
  • Look at your phone bill, your insurances, and Internet, and start calling the various companies to see if you can get your bills reduced

2) Sell Everything You Can 

You probably own a ton of stuff that you haven’t used in a few months and probably won’t use for months to come. Getting rid of this payday loan is an emergency. Treat it like one.

Sell your:

  • Small kitchen appliances (think ice cream maker, bread maker, mixer, waffle maker, etc.)
  • Kids toys – they don’t play with most of them anyway
  • Wall art/throw pillows/old furniture/books/DVDs/clothes/shoes/etc.

Sell them. Put the money toward your payday loan.

3) Start a Gig That Pays Money Immediately

Many sites would tell you to start a blog and make money that way. First of all, it’s not that easy. Secondly, it costs money to start (money that you don’t have). And third, it takes at least 6 months to start making any money. You’ve got a payday loan that needs to be paid back. You need to make some money NOW!

  • Collect money that your friends owe you
  • Tell your friends and family that you’re in a bind and that you want to do work for them…at half the cost of anyone else
    • mow their lawn
    • clean out their gutters
    • clean their windows
    • detail their car
    • do anything for them that can earn you money TODAY
  • If you have a side gig going already, ramp it up – send out an email to all of your contacts telling them that you’re looking for immediate work and can give them a deal on it – as long as they pay as soon as you complete the work. Examples of this could be…
    • Writing articles for blogs
    • Web development work
    • Engineering
    • Design work
    • SEO/social media management
  •  

What If the Payday Loans Are Too Much For You to Pay?

This is a very real question – especially if you haven’t been able to make your payday loan payments for a few months (remember the example above? The amount borrowed can quickly double because of the crazy-high interest rates). What if the payday loans are too much for you to pay? Do you need to file bankruptcy?

The answer is likely “no”. Don’t panic yet. There’s still more you can do.

Every state has their own laws around payday loans, so the advice here can get a little tricky. But, here are a few pointers that should help you out.

Extended Payment Plans (EPPs)

In some states, payday loan companies (at least those that are members of the Community Financial Services Association of America (CFSA)) will give you a payment plan option to help you pay down your debt. This includes a few additional grace periods with no penalties or interest. 

  • You must apply for this option before the loan is due
  • You must sign a new agreement (for the new terms)

Talk to the Payday Loan Company – Explain Your Situation

Often times, employees (and even managers) of payday loan companies aren’t the brightest, but if you speak this logic to them, they should understand.

Here’s an example of the situation and the negotiations:

  • The original loan was $500
  • The bill is now $1,100 (I’m just making numbers up here, but introduce your own, especially if you’re in a similar situation)
  • Let them know you can’t pay the $1,100…and you certainly can’t pay whatever it balloons to in the next weeks/months/years
  • If you can’t get a break on the loan, you’re going to have to file for bankruptcy (which is probably true if this loan continues to grow)…which means they, the payday loan company, get nothing.
  • You know you owe them money, and you’re willing to pay them something to settle the loan. You have $575 right now (after all your side gigs, selling stuff, and reducing your budget to nothing). You’ll give them the money if they send you this agreement in writing. 

They likely won’t agree to the deal when you first call them. Be persistent. Call them often. Tell them your situation and your offer and if they’re smart, they should accept it. After all, they’re getting more money than they lent you initially, and if they don’t agree to your terms, they’ll get nothing.

It’s Time to Get Out of Those Payday Loans – You Can Do It!!

There you have it. If you got yourself into a bind and needed to quickly learn how to pay off payday loans, you’ve now got nearly all the information you need.

  • Cut out all extra spend
  • Sell everything that’s not absolutely necessary for survival
  • Do whatever you can to make money today — not 2 weeks from now….TODAY!

And, if you’re in over your head, look into the EPP option. If that doesn’t exist, call up the company and do your best to negotiate them down. It won’t be easy, but it can be done!

You CAN get yourself out of this cycle. Get out of those payday loans, keep living on next-to-nothing, and then build up a mini-emergency fund of $1,000. You won’t believe how freeing it is to actually have some money in the bank!

Are you ready to pay off your payday loans? Get out of the crazy debt cycle start living with a plan!


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Get Out of Debt Money

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

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