Payday loans are short-term loans that might assist you in bridging the gap between paychecks or covering unforeseen needs. If you need help paying back your payday loan by the deadline, you might ask if the due date can be extended.
This article will explore the extension of a payday loan, what to expect if your request is approved, and some options for rolling over your payday loan payment.
The first step is to get in touch with your lender if you need to extend your payday loan due date.
Why you might need to extend your payday loan due date
Numerous factors could hinder someone from making their payday loan repayment on time. For instance, an unanticipated expense like a car repair or hospital bill can result in a cash shortage.
Alternatively, a shift in your income or unexpected costs could mess up your budget and make it impossible for you to repay your loan. No matter the cause, it’s critical to understand that you’re not alone. Over 80% of payday loans are renewed or rolled over within two weeks, according to research by the Consumer Financial Protection Bureau (CFPB).
How to request an extension
The first step is to get in touch with your lender if you need to extend your payday loan due date. If you don’t make a payment on time, lenders could, in some situations, automatically extend the due date. It’s preferable to take the initiative and ask for a delay as soon as you realize you won’t be able to make your payment though.
The cost of an extension is where the primary distinction lies between extending and rolling over a payday loan. When a loan is rolled over, only the corresponding fees are paid for the new term.
Depending on the lender, several steps may be required to request an extension. While some lenders might let you ask for an extension over the phone or online, others might insist that you go in person
Generally, you must submit basic loan information, such as the loan amount and the due date. Additionally, you can be questioned about the reason behind your need for a delay and your anticipated payment date.
What to expect if your extension is granted
You should know a few factors if your lender agrees to extend your due date. First, the extension may be subject to additional costs or interest charges.
Before approving the extension, it’s vital to understand the details because these fees can mount up quickly. Make sure you know the whole cost of borrowing by asking your lender for a breakdown of the expenses related to the extension.
Second, the extension can have an impact on your credit score. Payday loans usually do not involve a credit check, but your lender may report your loan and any late or missed payments to the credit bureaus. Your credit score may need to improve.
As a result, you are making it more challenging to obtain credit in the future. Consider alternatives like a loan for debt consolidation or a credit counseling program if you are worried about how an extension would affect your credit score.
What are the downsides to extending my loan?
- Increased fees and interest rates: If you take out a payday loan, you’ll probably have to pay higher fees and interest rates. This can soon pile up, increasing the cost and complexity of repaying your debt.
- Debt cycle: Payday loans are intended to be short-term loans that usually last a couple of weeks. When you take out a payday loan, you risk getting trapped in a debt cycle where you must keep borrowing money to pay off the added fees and interest.
- Risk of default: If you cannot return your extended payday loan on time, you run the risk of default. Additional fines, a lower credit score, and possibly civil proceedings from your lender could follow.
- Impact on credit score: Your credit score may be impacted by each credit application you make, including a request to extend a payday loan. As a result, future loan and credit applications may become more challenging to get approved for.
- Stress and anxiety: Financial stress can hurt your mental health causing anxiety, sadness, and other problems to worsen.
Alternatives to extending your payday loan due date
You might want to consider a few options if you can keep your payday loan due date and if you are worried about how it will affect your budget. Here are a few possibilities to consider:
- Ask your lender for a payment plan: If you cannot make your full payment by the due date, you can ask your lender for a payment plan. This entails spreading the payment over a more extended period in smaller, more affordable amounts. Even though you might have to pay more in fees and interest, this might be cheaper than extending your loan.
- Look for additional revenue: If you need money right now, you can think about finding other sources of income. Selling stuff you no longer need, working extra hours at your job, or taking on freelance side work are all examples of how to do this. Even though it might not be a long-term answer, this can help you get by until your next paycheck and prevent the need for a payday loan in the future.
- Ask for help from family and friends: If you get along well with your family and friends, you can borrow money from them to pay your bills. Although this may be a more cost-effective choice than a payday loan, it’s crucial to treat this as a formal loan and develop a repayment strategy.
- Consider getting a debt consolidation loan: This may be a more cost-effective solution if you have numerous high-interest loans or credit card obligations. By taking out a new loan to pay off your current debts, you can reduce interest costs and make payments more manageable.
- Payday loans can be expensive and include high fees and interest rates.
- Payday loan extensions can lead to increased charges and a debt cycle.
- Before extending your loan, consider other choices, such as working out a payment schedule with your lender, generating additional money, or asking family or friends for help.
- You should be ready to pay additional fees and interest if you decide to prolong your payday loan.
- Remember that applying for payday loans should only be done as a last resort and with prudence.