Keeping up with your loan repayments can be stressful, which is why you should make sure you only take out what you know you will be able to pay back in the future.
Using a few techniques to help you to repay accumulated debt may help give you peace of mind, and if you are able to repay your debt on-time, this would make you a much more reputable candidate for an online payday loan in the future, in the eyes of a lender.
This guide should give you some ideas about how to make your repayment period go more smoothly.
- Repaying your loan is key to maintaining a good credit score, making it easy to borrow money if you need to in the future.
- Plan ahead with a budgeting app such as Mint to make sure you set aside enough money to pay your debts in a timely manner.
- Consider the 50/30/20 budgeting rule.
- If you are really struggling, you could ask a loved one or your employer for financial support.
- Only 14% of US borrowers can actually afford to pay back their loans as planned.
Put Money Aside For Repayment
When it comes to repaying your payday loan, it may be a struggle to accumulate the money that you have borrowed, plus the interest charged on the loan. But it is important to pay off your loan, because if you cannot repay on time, you can accumulate late fees and damage to your credit score. We all have other expenses to take care of, and managing all of the costs within your paycheck may pose a challenge.
We recommend putting a specific amount of money aside immediately when you get paid to cover all essential bills. You should always make sure that you are prioritising your necessary finances so that you don’t fall into financial pitfalls. Putting money aside for a specific purpose such as gas, electricity and loan repayments will give your mind ease and avoid bad credit.
Make Sure To Make An Affordable Budget And Stick To It!
There are many different ways to budget, and you will need to find one that suits you.
You can track expenses by writing them down daily or make budgeting as simple as possible and use a mobile application, such as HoneyDue. These applications are a pocket-tool to track your spending, spot where you could save, and even set up direct debits to your savings account to make saving automatic.
You could even create an excel spreadsheet to record your in-and-outgoings, and this could help you put together your repayment plan.
While the process of budgeting may seem tedious, it is incredibly valuable to keep track of your spending.
Have You Considered The 50/30/20 Budgeting Rule?
If you haven’t found the right budgeting method for you and your finances yet, why not start by trying the 50/30/20 rule which divides your income into three parts.
50% goes towards essentials, including bills, debts and food. 30% is for non-essential expenses such as clothes, entertainment and holidays, and the remaining 20% gets saved to help you face any financial emergency that might come up.
Reduce Spending On Non-Essentials
If you are finding it hard to save enough money to put aside each month, you may need to look at reducing your outgoings. Those who struggle with money management may find this the most challenging part of trying to repay their debts.
Looking carefully at your income and outgoings is essential, especially at high-cost times of year. 25% of festive holiday spending goes towards impulse buys, so it is well worth rethinking your purchases before you make them.
You need to work out which costs are necessities, allowing you to cut unnecessary items and reduce your outgoings. This may include cancelling monthly entertainment passes, eating out less or buying fewer clothes. Once you can start to save yourself money, it will become easier to meet repayments on time.
What Else Can I Do?
If none of the above options are suitable for you, there are other methods of helping you to pay-off your payday loan.
Ask About An Extended Payment Plan
For payday loan payoff assistance, first try going to the source – speak to your lender. They may be able to offer you an extended payment plan, which gives you more time to pay your debt.
Typically, an extended payment plan provides four extra pay periods to pay back the loan without adding more fees or interest.
In addition, you won’t be handed over to collections as long as you continue making your payments each pay period.
Ask Your Employer For a Cash Advance
Some cash advance companies are willing to help their employees out with advanced paychecks, especially if you have been on the job for a while and are trustworthy.
Just be sure you have a plan in place to cover necessary expenses during the period when your paycheque will be a little lighter than usual, so you don’t fall back down the payday loan rabbit hole.
Ask For Help From Family And Friends
Money has been known to damage relationships, so if you are going to ask your family or friends for help in paying off your loan, you should ensure that you go about this carefully.
First, determine how much you can contribute to the loan on your own so you’re asking for as little as possible. Then ask friends and family to make up the difference.
Make sure you come prepared with a plan in place for how you’ll repay them; having it in writing will also make them feel more comfortable and will make you more likely to hold yourself to it.