What to Do When You Can't Repay a Payday Loan

Payday loans are big news these days. It's no secret that payday loans are not designed for long-term or frequent use. The name says it all: a payday loan is aimed at tiding you over with an unexpected bill or payment and the point is to pay it all back as soon as you are paid yourself.

The interest rates on these loans are very high, so prolonging your payments isn't really a good idea as you will end up paying back a lot more than you borrowed in the first instance.

You may take out a payday loan in good faith and then find you are hit with another big or unexpected payment which means your salary isn't enough to cover your loan repayment. Firstly, you could speak to a financial adviser to find out the best way to repay or extend your loan. Some loan companies will have advice lines, or you could speak to an independent adviser. They can look at your individual circumstances and offer you guidance as to the best routes. Non-payment of a loan can sometimes affect your credit rating, so you need to keep the loan company informed at all times and in many cases they will offer you alternatives so your credit score is unaffected. It is really important to prove that you are willing to pay off your loan and that you are open to suggestions, lack of cooperation on your part can sometimes lead to the loan company asking their debt collection agency to retrieve the debt.

Whatever your circumstances, do not be tempted to take out another payday loan in order to cover your first. This is how debt can easily spiral out of control and you will end up racking up large fees and interest payments on top of the loan amount. You can, however, extend your loan with your current lender, who will make sure that you are given a suitable credit limit to avoid plunging yourself into unmanageable debt.