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18 Feb 2015

If you have gotten caught up in the pay day loan craze and you now have several loans hanging over you, what should you do? How can you manage your pay day loan(s)? Depending on how deep you have gotten yourself and how many loans you have the best thing to do is to plan a way to repay them without taking out any more loans.

Let's just use a hypothetical situation or two. Scenario number one:

A worker bringing home 700 pounds every two weeks has three pay day loans. The finance charge on all three loans is 25 pounds per 100 pounds borrowed. According to the website

  • Loan #1 is for 300 pounds and has been rolled over twice. The finance charge is 75 pounds. So the current balance is 375 pounds and he has already paid 150 pounds in finance charges.
  • Loan #2 is for 900 pounds and is new. The finance charge due on his next pay day will be 225 pounds. The total amount due on the next pay day is 1125 pounds.
  • Loan #3 is for 500 pounds and has been rolled over once. The finance charge is 125 pounds and so the amount due now is 615 pounds and he has already paid 125 pounds.

So on this worker's next pay day he owes pay day lenders 2115 pounds if he were to pay it all off. Of course with take home pay of only 700 pounds there is no way he can do so. In fact the pay day lender who gave him the 900 pound loan was not following responsible borrowing guidelines as he clearly would not be able to pay it back on any one pay day. What is this worker to do? The longer things go the worse they will get. This is what he should do to manage these loans.

  • Pay the finance charge on all three which is 425 pounds. Pay 100 on the 900 pound loan.
  • Now he owes 375 on loan #1.
  • 1000 pounds on loan #2
  • 615 pounds on loan three.

On his next pay day he must do the same and continue to pay day loan #2 until it is less than loan #3. Then he needs to make 100 pound payment on loan #3 until it is paid. Then pay loan #2 in full and loan #1 in full.

This is an excellent demonstration of how you can get into trouble with pay day loans. You really need to have only one loan at a time and be sure to pay it back in full within the first two pay days.


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