Settling Your Payday Loans

Payday loans carry higher rates. It is worthwhile to learn a few things about how to settle payday loans.  A payday loan is one of the simplest ways to obtain money during times of critical need. Any borrower can default on repayment and get into debt trap easily. The challenge of settling the loan is quite difficult particularly for many cash strapped individuals. But, there are ways to settle your payday loans. Let's get acquainted with some of them here.

Inform the Lender

Inform the lending company in writing your inability to honor repayment. You should also tell them that you are stopping the payment. This way your account will be sent to the collections agency that will follow up.

The best way to communicate is in writing because it avoids harassment through telephone calls and personal visits. There are federal laws that protect you as well, so be sure to ask for what you want.

State Laws

It is best to know your state laws. Many states have banned payday loans and few others have restricted the interest chargeable. Though unlikely, if your lender has violated the law, you can become stronger and settle the loan balance easier. You can notify your state regulator if the lender does anything against the law in force.

The Collection Agency

Inform the collections agency about your intention to settle the loan. Of course, a collections agency is well within its rights to drag you to court and sue for the money owed. But in practice, most collections agencies would desist from taking such a step and even favor agreeing for a lesser amount to avoid a legal wrangle. Make it subtly known to the collections agency your willingness to negotiate a settlement. If the collection agency is unwilling, you should contact a bankruptcy attorney for guidance.

If your collections agency is not willing to agree to a lump sum settlement that you propose, then negotiate a settlement plan. Check your state laws as some states instruct collections agencies to accept payment in installments. You can benefit paying by installments as the strain will certainly be less. Even if your state laws do not require an installment plan, you can still negotiate for one such plan. 

If you succeed in your efforts at negotiations with the collections agency, search for debt settlement program in your area. They may come forward to settle the loan on your behalf and then reschedule the payment plan with you.

Repay Payday Loans

Because of easy availability and the high rate of interest charged, it is always wiser to promptly repay the payday loans. Of course, being over-enthusiastic may not be helpful as most lenders would charge a premium for premature repayment. As a matter of fact payday lenders would secretly feel happy if the borrower is unable to repay the loan on the due date as they can collect further interest on the extended periods.