Jake takes out a payday loan of $300. In two weeks, he doesn't have the money to repay it in full. What is one way that Jake can escape the trapping cycle of repayment?

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Karina Little

Business

21 September, 01:45

Jake takes out a payday loan of $300. In two weeks, he doesn't have the money to repay it in full. What is one way that Jake can escape the trapping cycle of repayment?

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Collin · Answer 1

A Dept Trap or trapping cycle of repayment is a situation in which a borrower is met with high interest rates on the loan that they have taken, and are stuck in a cycle of borrowing more in order to pay back the initial loan. The only way to actually get out of one is to pay back the owed amount in full and as fast as possible. Therefore the best way would be to get an extra job or side hustle to cover the interest and some of the cost, and pay off the loan as fast as possible.