Repayments will be determined by the length of time you borrow the money. If you take out a 2- to 4-week short-term payday loan, you will pay back the money in full at the end of the loan.
You will pay back your loan in equal monthly installments if you choose a longer-term loan, which many lenders provide for up to 60 months.
How do payday loan repayments work?
Repayments and repayment terms typically vary for different payday loan periods. Repayments will be determined by the length of time you wish to borrow the money.
You will repay the payday loan in full at the end of the loan if you take out a 2- to 4-week short-term payday loan. This is true for the majority of short-term payday loans.
Most payday lenders also take repayments in the form of equal monthly installments. The amount you must pay will be offered in writing and included in a loan contract that you’ll electronically sign in advance.
Equal monthly payments are meant to ensure that there are no hidden costs or hassles and that you know exactly how much you will pay back each month.
Many lenders employ a procedure where the whole amount owed is automatically deducted from the bank account each month to make repayments.
This means you won’t be making a manual payment, going to the bank, or phoning the lender to make a payment because everything is taken care of.
You can specify the date on which you would want payments to be made; most customers use their payday because that is when they are most likely to have funds in their account.
Repayment options include the last working day of the month, a specific day, or a four-week cycle. Some borrowers choose the day right after they get paid to give their check time to clear.
Let’s assume you borrowed $200 for 122 days as a payday loan.
Assume an interest rate of 211% p.a.
That amounts to four repayments of £71.71 each with a representative APR of 504.7%.
Payday loan repayments can take a number of forms, from one lump sum to multiple installments.
Can I roll over or renew my payday loan?
As long as the lender agrees, you may renew or roll over the payday loan due date. If you’re having trouble keeping up with your loan payback schedule, renewing a payday loan may be an excellent choice.
As long as you contact your lender as soon as you suspect you could have difficulties making timely, complete repayment of your loan, your lender will probably be sympathetic to your position and work with you to devise a new, extended repayment schedule. However, this arrangement may result in late fees.
Depending on the lender, you may incur a charge for the rollover along with your continued interest charges and principal rate, or you might have to pay a predetermined fee along with a higher interest rate. Your rollover contract will provide a complete breakdown of all fees.
Can I repay my payday loan early?
It is possible to pay off your loan early. It would be best if you spoke with your lender to explore your options, as there could be a time limit on how long the loan must stay open.
Customers frequently have the option to make early payments if they so choose with many lenders. With loans that last up to six months, borrowers might find that they can pay off their balance early and would like to do so.
Early repayment can lower the total cost of the loan, because the loan is open for less time and incurs less interest overall.
When it’s time to repay your loan, most lenders will automatically deduct the amount due from your account. They will utilize the account you provided when applying for the loan.
There may be bank fees associated with unsuccessful efforts to retrieve the money you owe. Lenders frequently try calling you in an effort to collect repayment. Any attempts at communication could incur extra charges on your account.
The lender may try to secure its funds using bailiffs if you cannot return your payday loan on time, which could result in higher interest rates.
You may need to go to court if your lender decides to sue you over an unpaid payday loan, but you’ll never go to prison over not paying back a payday loan.
Additionally, your credit history will suffer, limiting your future borrowing options.
Therefore, it is essential only to obtain a payday loan if you are confident you’ll be able to repay it.
But if you have a sudden financial emergency and talk to the lender immediately, they may understand and be willing to give you a more flexible repayment plan.