If you can’t pay off your payday loan, rolling over a loan is a last-ditch effort to avoid costly late fees and delinquencies. But this option usually has a considerable price tag with no guarantees you’ll be able to pay back what you owe by your next due date.
What is a Roll Over?
A rollover is the payday cash advance world’s way of describing an extension of your terms. Your lender may allow you to push out your due date as long as you pay a rollover fee to renew your contract.
By paying this fee, you’ll receive an extension as long as your original term. And for payday loans, that’s usually another two weeks. Once this new due date arrives on the calendar, you’ll have to pay your outstanding principal plus any interest and finance charges applied by your lender.
And there’s the rub — for people with tight budgets, another two weeks may not be enough to come up with the cash to pay off what they owe. According to the Consumer Financial Protection Bureau, a whopping four out of five payday loans are rolled over or renewed!
Falling into a debt cycle is a legitimate fear. How can you ensure you don’t get stuck constantly pushing out your due date and paying the price? Keep reading to learn all the tricks of safer borrowing.
Search for Other Short-Term Personal Loans
Many people turn to payday loans when they need a quick solution, thinking it’s the only option for which they can qualify.
In reality, there may be more potential choices for you if you look online. You can learn where to apply for a quick cash loan with a fast application process and longer terms that may be accessible to you.
Start your search with this simple query: cash loans near me. Look for online loans with monthly payments — this distinction means you’ll break up your debt over several smaller payments rather than one lump-sum payment.
Have Your Budget Ready When You Compare Your Options
Online loans with monthly payments may seem more affordable on the surface, but any borrowing option can be a trap if you don’t double-check your budget. This spending plan lets you know how much money you have on hand and whether you’ll have enough to pay your cash loan and your usual bills.
Cut discretionary expenses to free up more cash for your payments if you need help. Simply putting a pause on impulse spending (like extra clothing, takeout, shoes, and technology) could free up as much as $314 per month. Learn to live on a tight budget until your term closes.
Rebuild Your Credit
It’s harder to qualify for cheap rates and favorable terms when you have poor credit. That’s why most financial advisors will tell you to build your credit before you borrow. While this isn’t an option in the midst of your emergency, it’s something to think about for the future.
Paying bills on time and reducing how often you carry over a balance on your credit cards and lines of credit could help you raise your score down the line. Check out these other tips to help you raise your score.
Think About Next Time
As the old saying goes, an ounce of prevention is worth a pound of cure. Beefing up your finances so you don’t have to borrow in an emergency is the best way to avoid rolling over. After all, you won’t be taking out a cash loan at all. Tweak your budget to set aside proper savings and build up a substantial emergency fund.