If you are in a financial bind and don’t know how to make payment on one or more of your loans, look no further. We will leave you with an action plan that can help you minimize the damage to your finances and prevent things from default happening. Before we move further, it is important to understand that you are not alone in your struggles. Seeking professional guidance from reputable credit services, such as Credit Singapore, can provide you with the necessary support and resources to navigate through your financial challenges. These services offer personalized advice, debt management strategies, and financial education to help you regain control of your money towards a more stable and sustainable financial future.
Back in 2016, Pew published extensive research on the high-interest small-dollar payday cash advances. The report concluded that these expensive loans were unaffordable for most Americans. More than 12 million borrowers ended up paying $9 billion in fees on those allowances, which is $750 per person on average.
Six years later, the likelihood of defaulting on a payday cash advance is still high. A more recent study states that around 50% of borrowers default on a payday allowance in a range between one and two years after taking the first loan. But what are the potential risks of not making a credit payment?
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What Can Happen if you Don’t Repay
If you have no money in your account and your bank doesn’t pay the overdraft, the lending company will continue trying to collect payment for your loan. Each time the withdrawing repayment will be deducted, and your bank will charge insufficient penalties, fees, and interest charges which dig you deeper into the debt cycle.
Eventually, if you stop making payments for your payday cash advance, you will default on that loan. Your FICO score will also fall, and may take several years to rebuild and borrow once again. Then, you will have to deal with collectors whose threats and efforts can be more aggressive than the original payday cash advance company.
The worst thing that can happen is your case going to court. It is very stressful and exhausting, so it’s best to take action sooner rather than later to avoid the worst-case scenario.
Options to Consider to Get Back on Track
Hopefully, you have some time before you are officially late on your payday cash advance payments. If that’s the case, below are several strategies to consider. Even though none of them is ideal, they might still help you stay afloat.
Prioritize your Payments
First of all, you need to make a conscious choice about which payments to stop paying and which ones you can’t skip. We recommend you make a list of your monthly expenses and then decide about each one. Of course, your safety and health should be top priorities.
Thus, try to keep current on such monthly payments as your rent, utilities, and auto loans. Consider a break from paying unsecured allowances like personal loans and credit cards if you have to.
Pay Late
The ideal scenario is to pay off early or make payments on time. However, paying slightly late is better than not paying at all. Therefore, try to repay the lending company within one month from the due date. Most lenders don’t even report to credit bureaus about those late payments, so your credit history will not be affected in that case.
Consolidate your Debt
Making late payments leaves you the option of refinancing your debt. This, in turn, can result in lower fees and required monthly payments, especially with high-interest short-term allowances. In addition, a new loan will give you more time to repay.
Before you start missing withdrawing repayments https://filld.com/same-day-loans/ , apply to qualify for an unsecured personal loan. Typically, the latter will allow you to receive the money all at once and then repay them in equal monthly payments over two to seven years.
Talk with your Lender
Explain to your lending provider that you can’t make payments on your loan https://www.philaloan.com. It might have options to help you, such as changing your due date or letting you take a break for several months. There might also be an opportunity to negotiate a settlement if you manage to convince your lender that you are unable to pay. And yes, your credit score will be affected in that case, but at least you will not be defaulted on your allowance.
Consult with your Credit Counselor
Counseling with a reputable person may help you understand your situation from a different perspective and come up with a debt management plan or other course of actions, depending on your circumstances. In many cases, this feature goes at no cost, but you need to make sure that a counselor doesn’t try to sell you something.
Preparing for Next Time
Most of these options are short-term fixes that will not address the problem itself. You will ultimately need a loan-term strategy to stay afloat for next time when life brings surprises. It is best to consider building a budget now that will include some room for savings, wants and urgent needs. A goal of $500 can be a good starting point.