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Payday loans – what to do if you can’t make the payments

Payday loans have been in the news a great deal lately, and not for good reason. This type of borrowing is associated with very high interest rates and inflexible terms, meaning that many people do not realise what they are getting themselves into, let alone what to do if they find they cannot afford to make the payments.

Although it may seem like a good idea at the time if you are in need of a short-term loan, getting a payday loan often only deals with the problem briefly, and leaves you in a bigger mess than you started.

I can’t afford my next repayment– how do I stop it?

If you absolutely know you will not be able to make your next payment, then it is better to stop it before payday loans company tries to take the money. When you take out a payday loan, the company will usually make you agree to a continuous payment authority (CPA). What this basically does is give them permission to take money from your account, without providing as much consumer protection as direct debits do.

Although CPAs are not exactly the same as direct debits, it is still possible to cancel them. First of all you should contact your bank or building society and inform them that you have withdrawn permission for this payment to be made. You may have to confirm this with the bank in writing, but contact them by telephone first.

Unfortunately, due to the terms on virtually all payday loans, you are likely to incur charges when the payment is not made.

I’ve cancelled the payment –what next?

Now that you have cancelled the payments, you need to do two things: first of all, you need to get yourself some professional debt advice. By speaking to personal debt experts such as ourselves, you will be able to work out exactly what your options are and how you will go about repaying the debt. Once you have received that advice, you must contact the payday loans company to inform them you will no longer be able to make the scheduled payments.

You have to negotiate with the company how you will now go about repaying the debt. Part of the advice you will receive will cover your income and expenditure, and working out your personal budget. This is important information which will help you understand how much money you have to work with, and the loan company may also request this information in order to find a solution.

Will I be able to pay by instalments?

If you are unable to make your scheduled repayments, you must try to arrange repayment by instalments at a reduced rate than the one you originally agreed. Of course, payday loans company will be reluctant to do this, as they will not be making as much money out of you as they wanted to. However, this will show a willingness to pay back the debt and will work in your favour. If the payday loan company refuses this, you must again seek further debt advice, although most companies are more likely to receive a negotiated offer, than no repayments at all.

For more information about how we can help you with payday loan debt please contact us.

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