93% of payday loan borrowers regret taking out their loans, survey finds

93% of payday loan borrowers regret taking out their loans, survey finds

3 strategies for getting out of the payday loan trap

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Payday loans can be a debt trap for borrowers who can’t afford to make payments. Here’s how you can repay your payday loan balance before it’s sent to debt collectors. ( iStock )

Payday lenders prey on borrowers with bad credit who desperately need money, trapping them in a cycle of high-interest debt that’s difficult to repay.

The vast majority (93%) of borrowers regret taking out their payday loan, according to a new survey from DebtHammer. Just 1% of respondents said their financial situations improved after borrowing a payday loan, while 84% said they were worse off.

Payday loans give consumers an avenue to borrow small, short-term cash loans without a credit check. But the typical repayment period is just two weeks, which leads 4 in 5 borrowers to borrow a new payday loan to repay their current debt, the Consumer Financial Protection Bureau (CFPB) reported.

It’s possible to get out of payday loan debt without renewing your loan and incurring additional fees. Keep reading to learn how to break the cycle of payday loan borrowing, such as consolidating debt with a personal loan. You can compare rates on debt consolidation loans for free on Credible without impacting your credit score.

3 ways to get out of a payday loan

The average cost of a payday loan is equivalent to an annual percentage rate (APR) of nearly 400% – in other words, borrowers who keep rolling over their payday loans could pay 4x the amount they originally borrowed over the course of a year.

Payday lenders may have you think that rolling over your loan is the only way to pay off your debt, but that’s not the case. Here are a few alternative ways to break the payday loan cycle:

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