How to Stop the Cycle of Payday Loans

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Payday loans are short-term loans that allow a user to write a check to a lender and postdate that check for the date of the user's next work payday. It is very easy for someone who is behind in his bills to fall into a trap of seeking payday loan after payday loan, one pay period after another, just to make ends meet. However, the interest rates on these loans are high, and an individual often ends up paying hundreds or thousands of dollars while stuck in the cycle of payday loans. Getting out of this cycle is difficult, but it can be done with some effort.

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Instructions

  1. 1

    Get a firm grasp on your financial situation. If you are behind on your bills and find yourself in a cycle of payday loans, it is critical to get caught up as soon as possible in order to stop using payday loans. Many people use payday loans as a crutch in a difficult financial time but have trouble getting out. Sometimes the cycle of payday loans only ends when the user is unable to pay off the loan at the agreed-upon date. This causes the user to default, and the loan can eventually ruin the user's credit.

  2. 2

    Take a second job, if you need more money. The difficulty many payday loan users have is that they don't have a high enough cash flow to stop the payday loan cycle. Taking a second job or doing odd jobs for a few weeks helps the user have more cash and enables him to both pay off the most recent payday loan and pay his bills that are due at the same time.

  3. 3

    Talk with one or more of the people to whom you owe money and ask for an extension. If you are taking out the payday loans to pay your rent and your electric bills on alternative pay periods, tell your landlord about your situation. Your landlord may just work with you for one month and allow you to be late for a couple weeks so you can pay your payday loan and get out of the vicious payday loan cycle. You can then get caught up on your rent for the next month. Do the same with your electric bill. Ask your electicity supplier if you can divide up your high bill to be paid in three instalments to ease the strain on your finances.

  4. 4

    Ask a friend or family member for a loan instead of using the payday loan. A payday loan has high interest rates and is often detrimental to those who use them. A friend or family member likely won't require such a high interest rate and can be paid off more leniently if you make those arrangements with him or her. Doing this allows you to pay off your payday loan and be completely rid of the cycle.

  5. 5

    Call your payday lender and tell him you are wanting to end the vicious cycle you are in with payday loans. These lenders are people, too, and likely can relate to your situation. A payday lender may be able to extend the deadline for your loan for you, so you can pay your other bills with the money from your pay check and you can pay off the payday loan over the next few pay periods to help ease the strain and rid yourself of the payday loan cycle.

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