@thrasher865 wrote:
She owes approximately $5000 in total. 3 cash advances of $500 a piece and the rest are subprime loans.
There are subprime loans, and then there are subprime loans. The dollar amount is one piece, but you need to find out the specifics of the interest rates and the payments.
In your friends situation debt counselling is probably the best solution; however, just at a swag, if her car is mostly paid down she could take out a title loan to refinance it that way. Also on the Payday loan side, those are screaming to get a 130ish% APR unsecured loan from Cashcall or similar vendor if she can qualify for them to get out from under those (do the math on PDL fee structures vs that APR if you don't belive me, but you come out WAY ahead especially if it gets you breathing room to pay back everything faster).
Where your friend is going to have issues is they may already be into some of those companies.
Final option, and arguably the best if it's reasonable, family loan. The dollar amount is trivial from the IRS perspective so it wouldn't even have to be declared as a loan; however, in this situation if I were asking for money I'd create the paperwork and pay the nominal interest rate that the IRS mandates for loans above the gift strata.
It's a bad situation but a BK is to be avoided if at all possible.
Edit: further thought, your friend needs to take a hard look at their life to figure out where the money went, and how not to do it again. There may be other areas in their where they can cut back immediately and start getting some traction as well. I.E I've been out of work since early March and wound up cutting my expenses way back to conserve cash... a minimalist existence isn't particularly fun, but it's better than the alternatives and it saved me around $600 / month out of my usual $1000/mo food/discretionary spending.
Agreeing with the other posters, you need the exact amounts of the loans and the finance fee she's paying on each loan every paycheck.
I've been down this road, and this thread hits close to home. I was 6 loans in the hole once for about $1400 and finance fees. I had to take a personal loan and pay them all off and pay the personal loan back.
Talk to her and convince her your really trying to help.
As stated numerous times before, the scope of this thread was simply the best way to handle cash advances. I have the full situation. I don't need to post it, because it's outside what I was asking about. I know you guys are just trying to help, but preaching about her spending habits, etc. is not helpful. She fell into the trap thinking her income when she graduated would bail her out. She found out otherwise. Hopefully she has learned. If not, then she's going to have a rough road ahead.
I went with her yesterday to speak to one of the managers and they agreed to allow her to pay it off in biweekly payments equal to the fees she's been paying, except no additional fees will be added on. That will pay off a $500 cash advance there and a $750 high interest loan in the course of 3 months, with no added fees. It's a good start, but the other two cash advance companies are bigger chains, and I don't think they'll work with her as nicely. Those are due next Friday, so she is going to talk to them on Monday.
I went with her yesterday to speak to one of the managers and they agreed to allow her to pay it off in biweekly payments equal to the fees she's been paying, except no additional fees will be added on. That will pay off a $500 cash advance there and a $750 high interest loan in the course of 3 months, with no added fees. It's a good start, but the other two cash advance companies are bigger chains, and I don't think they'll work with her as nicely. Those are due next Friday, so she is going to talk to them on Monday.
Just wanted to bump this for an update to help anyone in the future searching on this topic. She went and spoke to all three payday loan businesses, and all three were very willing to settle for payment plans with no additional fees. So willing, in fact, that I'm sure it's built into their business model. Bleed people dry until they work up the balls to come talk to you, and then let them off the hook, only paying what principal is still owed.
So, now she has payments that are double what the fee was, every two weeks, except it actually reduces the principal now. They will be paid in 2 months, and then I can show her how to snowball the rest of her loans.
She had to negotiate with one of the loan places. They asked if she could afford to pay it off as a loan, with a much reduced APR, and she said that she wasn't willing to pay any more fees, so they set up the same plan as the other two "lenders."
So, in summary, negotiate with these people. They will settle.
Great news!
Hopefully she's wiser for the experience. I really haven't heard many good stories about Payday loans that weren't from people positioned to pay in full on the due date.
Yes, they are all around bad news. I told her that payday loans should really never be used, but if so, only in extreme emergencies when they will be able to be paid off on payday, while still taking care of other bills.
Then, I told her that borrowing from one lender to pay another is very, very poor practice, and that it will put her in jail with her uncle Bernie. She didn't laugh.
Yep. Thanks for the advice. It was very helpful.
@thrasher865 wrote:Yes, they are all around bad news. I told her that payday loans should really never be used, but if so, only in extreme emergencies when they will be able to be paid off on payday, while still taking care of other bills.
Then, I told her that borrowing from one lender to pay another is very, very poor practice, and that it will put her in jail with her uncle Bernie. She didn't laugh.
I laughed for her, LOL!
I had a response brewing that was about female prisons but shot it down, LOL!
I hope she pulls things together! 