Paying Off a Payday Loan
Often called payday loans or cash advance loans, these short-term, high-fee loans can turn a temporary setback into a major financial crisis.
Here are a few tips to help you pay off your payday loan:
- Understand what you’re up against.
If you signed a contract for a payday loan, you are obligated to pay it back. You can avoid paying extra fees by paying your bill on time. Be sure you don’t take out another payday loan to pay off your current loan.
- Pay off the loan ASAP.
This may seem unrealistic, but it is important to pay the loan off quickly. Here are a few suggestions on how to find the funds to pay it off:
- Have a garage sale or utilize free ad space in your local newspaper to sell some of your unnecessary/unwanted possessions.
- If you are employed, consider asking for a raise or an advance.
- Explore ways to cut down your monthly expenses. For example, commit to cooking meals at home rather than going out to eat until the loan is paid in full. Check out our budgeting resources if you would like help creating a budget and finding ways to reduce your monthly spending.
- Ask for Help.
Paying off a payday loan can be challenging. Sometimes asking for help from professionals is the best place to start. Call Consumer Credit Counseling/Money Management International at 1-866-889-9347 or InCharge Debt Solutions at 1-877-906-5599. Your bank/credit union may also have advice and may be able to help you secure a loan with a lower interest rate.
The Consumers Financial Protection Bureau is also a wonderful resource that can help you know your rights and learn how to pay back your loan.
If you would like to dive deeper into reducing your debt, check out our “Reduce Your Debt” section.
Here are a few general savings tips:
- Save your loose change.
- Keep track of your spending.
- Review your bank account and credit card statements to see where you are spending money and what you can avoid going forward.
- Avoid purchasing expensive items on impulse. Think over each expensive purchase for at least 24 hours.
- Use credit cards prudently.
- Establish a budget.
- Take advantage of discounts and/or incentive programs provided through your employer.
- Build your savings discipline by saving an amount equal to whatever you spend on non-essential items.
- Aim for short-term savings goals.
- Bring lunch to work instead of going out to eat.
For more advice on how to build your savings, check out our “Build Your Savings” page.
Other helpful resources include:
Matched Savings Programs (FDAs)
Family Development Account (FDA) matched savings programs can help you build your savings by matching your dollars at a 4:1 ratio. We currently have two types of FDA accounts in Maine, the Federal FDA program, and the Maine FDA program.
The Federal FDA Program offers a matched savings account for income-eligible individuals and families who want to save money to:
- Buy a home
- Pay for education or training
- Start or expand a small business
Please note: The Federal FDA program offers a limited number of accounts per year.
Maine FDAs: The match for the following asset goals is provided by the Maine Department of Health and Human Services Office for Family Independence and accounts require a minor child in the household:
- Home purchase
- Home repair
- Vehicle purchase
- Vehicle repair
- Emergency savings
Both Federal and Maine funded FDA programs match each dollar you deposit (up to $1,000) in your FDA with $4 from public funding and private donors. It also gives you guidance on how to save and manage your money effectively, how to build good credit, and how to reach your goal.
For more information contact:
If you are in the Bangor area, you can also contact Bangor Penquis CAP at 1-800-215-4942