During a tough financial crisis, many people turn to payday installment loans for help. A payday installment loan is a short-term loan offered by lenders to people who need quick cash. This popular financial resource is available anytime because of its online application.
However, since most of these loans must be repaid in short-term, usually two weeks after the approval of the application, many are unable to pay on time. Many borrowers get caught up in the cycle of accumulated fees and finance charges.
In case you are one of those borrowers who is unable to pay your payday installment loan on time, you may negotiate with your lender. These are the things you should do:
1. In the case where your lender calls you, do not avoid it. Avoiding your lender will not resolve the issue and they will only continue bothering you. It is better if you can approach your lender and have any documentation that reflects the current status of your finances. This will prove that you are unable to pay your payday installment loan but are willing to negotiate a new repayment plan. Talking with your lender will help both of you find ways and options on how to come up with a new repayment plan.
2. You can offer your lender a payment plan that will enable you to pay your loan. Determine your principal amount and the interest of your monthly payment. Calculate your desired reimbursement plan that will help you cope up with your missed payments. Set-up a payment plan that is affordable and convenient for you. What matters most for lenders is to see a good payment plan that will repay the loan in a timely manner. Don’t wait with this option since most state laws allow a payment plan for borrowers who are unable to pay their loans.
3. It is important that you know the laws in your state in case you are unable to pay your payday installment loan on time. Each state may have different rules and regulations on how payday lenders should deal with payment defaults, but the law requires them to provide options for their customers. In fact, some states put interest rate caps on their payday installment loans. The annual percentage rate should not be more than the cap amount. Also, some states require lenders to provide payment arrangements but this varies from state to state. Consumer protection laws are enforced to prevent predatory activities of some lenders.
4. There are some cases that lenders put the responsibility for the collection of a defaulted payday installment loan into the hands of collection agencies. These agencies are in charged of calling you and getting your payment. In this case, you may settle with them for one lump sum at a discounted rate. They will be willing to work with you.
5. In most cases, you may consider applying for a debt consolidation loan. This will help you put your various loans into one payment that will be easier for you to repay.
6. If your lender refuses to negotiate with you, prepare a backup plan. You may consider borrowing from your family or friends, ask your employer for a cash advance, or take out another loan that will roll over your first loan.
Whenever you decide to take out a loan, remember to pay it responsibly. Not paying your loan will lower your credit score which may hinder your chances of loan approval in the future. In case you are unable to pay your loan, negotiate with your lender early. But, remember to make payment arrangements that you can afford to keep.