Yes, you may be able to renew a payday loan after you’ve fully paid off your existing loan.
Your lender will typically perform several checks to ascertain how much you are able to borrow and whether a payday loan remains the best option for you.
This could result in your application being rejected; you get a smaller or comparable amount or a much more significant amount if you’ve developed trust with the lender.
Payday loans are for small sums usually between $100-$1,000 and are usually due two to four weeks after the application is submitted.
What does payday loan renewal mean?
A payday loan renewal is when you get a payday loan from a lender and then another one from the same lender when the first one runs out and is completely paid. Once you have fully repaid your previous debt, your loan will “expire.”
Let’s take the scenario where you must pay an unexpected $1000 in vehicle damage to the mechanic. If you borrow $1,000 and repay it in one month, you have paid your lender in full and on time.
But after a while, your mechanic has let you know that you’ll need follow-up work, which will cost an extra $1000 on top of what you’ve already paid.
Renewal of a payday loan usually means getting another payday loan right away, usually for the same amount ($1000), after the first one has been paid off.
This happens more often than you might think. Many people who take out payday loans renew them because they find out that the original loan isn’t enough to cover the bill or payment or because they had unexpected expenses like a hospital, car, or vet bill.
Why do people renew their payday loans?
The typical payday loan consumes 36 percent of the borrower’s average gross income, with a lump-sum repayment of $430 due on the following payday.
According to the data, the majority of borrowers can only afford 5 percent while still being able to pay for their essential needs. The majority of customers rollover, refinance or renew their loans.
80% of payday loans are taken out again within two weeks of paying off the first one.
How can a payday loan be renewed?
Although it’s a very regular procedure in the online lending sector, with 80% of payday loans usually renewed yearly, a payday loan renewal isn’t always guaranteed.
If you are judged to be a risky borrower who can’t return a loan, a lender may decide not to risk lending to you.
The amount you’ll have to pay back depends on a few factors when applying for a payday loan online, like the loan’s tenure or duration, the interest rate, and the frequency of payments.
Each of these factors has a distinct impact on the amount you will pay. By renewing your loan, you may have the chance to change these things and meet different needs.
Adopt better habits, like paying back your payday loans on time and, on the whole, keeping more money in your account when you can to raise your average balance and telling your lender if your income goes up so you can get a lower rate.
Could I borrow more if I renew my payday loan?
Yes, you may borrow more money than the previous loan amount when you renew a payday loan.
First-time applicants often qualify for loans in the $500 range or less, especially if they don’t have a stellar credit history.
Due to the fact that lending puts a lender’s money at risk, they want to make sure the borrower won’t default on a sizeable portion of their loan.
However, if your initial loan demonstrates that you are a solid applicant, a lender will likely provide you with a more significant sum if you decide to borrow more.
For a lender, a strong prospect has proven the capacity to return their initial loan promptly and in total with each instalment.
In addition, keep in mind that payday loans are prohibited in several places since they are notoriously difficult for borrowers to repay.
Before you consider getting a payday loan and the possibility of renewing it, you should check your state’s laws to see if you can do this.
Do I need to be approved again for a payday loan renewal with my lender?
You will need to apply and be approved for the payday loan renewal. The lender will do a few checks before accepting your application, at which point you will receive your payday loan renewal.
Renewal of a payday loan is not guaranteed since if you are thought to be a risky borrower who cannot return a loan, a lender might not want to risk extending credit to you.
Be sure to take specific steps to increase your likelihood of being authorized for a loan renewal at a higher rate.
For example, check your credit history and report to ensure no errors or inaccuracies are made to your accounts, pay any unpaid bills, including rent, mortgage, utilities, and medical expenses, on time, having a solid payday loan history up to this point, and keep your credit usage percentage as low as possible.
