You may have all the best intentions for paying back your payday loan but unforeseen circumstances make it such that you can’t honour your commitment. With the right action steps, you can get yourself out of a difficult situation. The worst thing you can do is ignore the lender. As soon as it becomes apparent that you won’t be able to pay back your loan, below is what you should do.
Contact Your Lender
Honesty about your situation will go a long way in getting you out of it. Call your payday loan lender as soon as possible and explain your situation. Fortunately the law is on your side and there are a few things that are likely to happen.
First, the lender may suspend recovering the loan if you have a repayment plan in mind. This period is of course within reason but you need to have a sensible repayment plan and communicate this clearly to your lender.
Next, the lender is also mandated by law to point you to an independent and free debt advice service.
Finally, the lender should take reasonable measures to accommodate your new repayment plan which may include suspending charges and freezing interest.
In the meantime, the loan company shouldn’t call you insistently as you figure out a way forward. Keep a record of all communication between you and the loan company throughout this process. You may choose to take legal action if you feel the loan vendor is being unreasonable, threatening or otherwise unethical.
Consider Cancelling Recurring Payment
Consider cancelling recurring payments with your bank if you find that repaying the loan means you cannot afford utility bills, mortgage, rent and food. Call the bank and follow up the request with a formal letter.
It is crucial that you tell your payday loans lender that you have cancelled the payments. Keep in mind that the lender may continue charging fees and interest so it is a good idea to find out what these are and try to negotiate wherever possible.
Consider Rolling Over the Loan as a Last Resort
Make sure that you have gone through every conceivable option including speaking with a debt expert before agreeing to roll over your loan. This situation means you end up paying even more in interest and charges and considering your financial situation in the first place, the answer isn’t more debt.
The light at the end of the tunnel is the law is on your side and payday loan lenders are reasonable. At the end of the day, your lender want to recover the money and is therefore willing to arrange for the best possible terms to make that happen. The best asset you have is honesty and being forthcoming with your lender.