Payday loans can become very vicious and seemingly a never ending debt cycle. Frequently, the astounding interest rates that are associated with these loans can sometimes make them impracticable to repay, leading to default.
If you’re struggling to pay off a payday loan, it’s possible to re-negotiate a settlement plan which will let you pay a much smaller fraction of what is owed while getting rid of debt once and for all. Below are ways on how to settle a cash advance for less.
Get the full picture
Request your current copy of the credit report from the three key reporting bureaus, Experian, TransUnion and Equifax. The reports can be obtained for free via the annual credit report website once a year. You may obtain one report every 4 months; it is worth it to pay for 2 of the reports to speed up the process of trying to settle your online loan for much less.
Look over the credit reports vigilantly and evaluate the info contained. You need to decide whether the account is still with the initial lender or if it’s being sold or even assigned to the collection agency.
It’s essential to not make any attempts to settle the debt until you have verified who is in fact in charge of collecting it. Furthermore, verify the age of your accounts. If it’s old, there is great possibility that it’s time barred from the collection actions owing to age. Make sure the decree of confines in the state you are in, if the debts are over two years old.
Tally up the total debts, including fees and interest. Decide the percentage of debt that you are able to repay as well as the maximum amount possible. Also decide if you’re going to offer monthly payments or a lump sum and be equipped with multiple offers. The creditor may accept the first offer , if not it’s essential to have a ready counter offer.
Contact the creditor through writing with your settlement proposal. If the account is being held by the original creditor, the process will somehow be easier as a collection agency will often use strong arm tactics to make you pay as much as possible.
Make it official
Once you are able to reach to an agreement, it’s very significant that you ask for a written acknowledgement letter from the creditor stating that they’ve agreed to accept the said amount as the full payment for the payday loan. You may as well negotiate how your account will always be reported to credit bureaus, as paid or as settled in full. Once you’ve written down the agreement, send your payment, either by a certified check or money order.
Never give your creditor or collection agency direct access to the bank account.
Once the cash loan is repaid, continue monitoring your credit reports to ensure that your account is always being reported as you'd expect. Keep a well written record of all that is happening between the debt collector and yourself.