One of the phenomenons of modern times, the payday loans cycle is one of the most difficult financial problems to escape from. There are ways of getting out of the payday loans cycle of not being able to pay back a loan and having to extend it or take out an entirely new loan to pay off a previous debt. The main issue customers and consumer groups cite for the problem of payday loans is the high interest rate charged on them, with high interest rates the chance of paying off a payday loan is almost nil for many average American people.
When taking out a payday loan a reputable company should be used, with some protections awarded by lenders who are members of a financial industry consumer group. Where possible the best option is to take out a loan with a lender who offers some form of protection for consumers who cannot make the regular payments they signed up for. An extended payment protection plan can often be worked out with a payday loan lender, which means that an extended payment plan will be worked out between the consumer and lender to repay the loan over a shorter period of time. Regular payments will usually need to be made for this kind of protection to escape the payday loan cycle to remain in place. When a lender is not part of a group offering such protection it is a good idea to discuss the situation with the lender, who may be able to assist in reducing payments to get the loan back on track.
Often the major problems facing a person trapped in the payday loan cycle is often bad budgeting. Across the US charitable groups will often offer individuals, couples and families free financial counseling, this will assist in forming a budget that gets the consumer back on solid financial ground and escape the high interest loans that are the only option to pay off small debts. Many counseling groups will also offer tips on any groups or charities that offer financial assistance to help an individual get back on track with their finances.
Apart from taking the steps mentioned earlier the main options for escaping the payday loans cycle is to tighten the reins on the amount of money spent in outgoings. When this is not possible because of the high interest rate paid on payday loans the other options are to take on extra work to raise more money or seek assistance from friends or family. A friend or family member may offer tips on employment opportunities or be able to offer a loan with no interest or a low interest rate.