5 ways to repay or refinance a payday loan

Core Insights - Payday loans are characterized by high fees, often exceeding 400%, with payday lenders collecting $2.4 billion in fees in a single year according to a 2025 report [1] Group 1: Costs and Risks of Payday Loans - Payday loans come with significant fees, typically ranging from $10 to $30 for every $100 borrowed, leading to high overall costs if loans are rolled over [4] - A report from the Consumer Financial Protection Bureau (CFPB) indicates that 80% of payday loans are rolled over or renewed, resulting in borrowers often owing as much or more than the original amount borrowed [5][14] Group 2: Alternatives to Payday Loans - Debt consolidation loans can be used to pay off high-interest payday loans, allowing borrowers to repay the new loan at a fixed interest rate over time [6] - Payday alternative loans (PALs) offered by federal credit unions provide a lower interest rate cap of 28%, with loan amounts up to $2,000 and terms ranging from one to 12 months [9] - Extended payment plans may allow borrowers to pay off payday loans with smaller payments over a longer period, although these plans are underutilized [14] - Credit counseling services can assist borrowers in managing their debt and creating repayment plans, although payday lenders may not cooperate with credit counselors [16] - Debt settlement could be an option for those unable to pay down their payday loans, potentially reducing the overall debt owed [20]