In this article, we share tips on what you can do if you are experiencing a difficulty repaying payday loans or having difficulties in repaying your payday loans in South Africa.
A payday loan can seem like a quick fix when you need cash fast. Unfortunately, it can turn into a debt trap, which feels impossible to escape from.
But don’t despair. There are things you can do
Tips to take when you have a Difficulty Repaying Payday Loans
- If you’re going to struggle to make payments, it’s important you talk to your lender or provider as soon as possible. If you took out a payment holiday that has now come to an end, it’s important you understand what happens next. (Ask for a repayment arrangement)
- Contact the creditor as soon as possible. Remember to keep copies of all emails and letters you sent to the credit provider and write down all details of your phone calls to them. This is evidence of how you’ve tried to contact them if they don’t reply, you can escalate the matter to The National Credit Regulator or the credit ombud to make a formal complaint.
- Speak to one of our debt counsellors – If you have already missed a payment or are worried you’re going to miss a payment and are not able to come to an agreement with your lender? Then it’s best to get advice as soon as you can, especially if you’ve got other debts as well. Make sure you pay off priority debts first. These are debts such as mortgage or rent arrears, and fuel bills.
How to Rebuild Credit After Defaulting on a Payday Loan
There’s no denying that defaulting on a payday loan can bring you a great deal of stress and uncertainty about the future. The good news is that there are ways you can rebuild your credit and reduce the severity of the situation. Here are some tips to help you out.
- Get current on payments: If you don’t have the cash to get current on debt payments, you may want to reduce your expenses or take on a part-time job or side gig. You may also opt for professional help with debt counseling, or debt consolidation.
- Pay your bills on time: Unfortunately, even one missed payment can hurt your credit. So it’s imperative to pay all your bills on time. If you’re worried you’ll forget, sign up for automatic payments or set calendar reminders. This way, you can ensure your mortgage, credit cards, car loans, and other bills are paid in a timely manner.
- Consider your credit utilization ratio: Your credit utilization ratio is the amount of credit you’re using relative to the amount of credit available to you. Your credit utilization should be no more than 30%, and the lower, the better. Keeping your spending down and your balances low can help you get there.
- Check your credit report regularly: Make it a habit to monitor your credit report. You can visit Credit Scores to get all 4 major credit reports free & forever.
You Can Move Forward After Defaulting on a Payday Loan
If you default on a payday loan, you will have to work hard to rebuild your credit and get over this financial hurdle. There is, however, a silver lining. After going through this experience, you’ll likely become a more responsible borrower and go out of your way to prevent similar financial problems in the future.