How to Payoff Payday Loans

Payday loans are hard to pay off. That's because money is lent before it is earned and the interest rate is high, with an APR of 400 percent. With a disciplined approach, and an acknowledgment of what got the borrower into the situation, a payday loan can be paid off quickly.

Instructions

1

First and foremost, the borrower needs to analyze why he or she is using payday loans. The borrower must write down every expenditure for the month and create a realistic budget.

2

Next, the borrower needs to analyze the budget. Are there any line items that are too high? Are there ways to create "extra" funds by cutting expenses? Can cable bills be lowered? Can they negotiate better rates on any of the services that they carry, such as Internet and cell phone? Can any of these services be turned off for a few months to create some "extra" money?

3

To create extra money, the borrower needs to look into making quick cash. This can be done by selling items to a pawn shop, having a garage sale, selling items on eBay or Craigslist. Additionally, they can offer services to friends and neighbors, such as mowing lawns, cleaning services or babysitting. The borrower can also ask for overtime or extra work at their current job to earn more money. If all else fails, the borrower can get a second job.

4

Once all of the analyses and extra work are complete, the borrower should use every extra dime to pay down the loan. He or she should not stop searching for extra work until the loan is paid in full. Even at that point, if it is an option, the borrower should try to continue working the overtime or second job to earn extra money to put in an emergency fund to prevent ever having to use payday loans again.