When Should You Pay Back Your Payday Loan?
Posted on Friday, July 23rd, 2010 at 11:05 am in General Payday Loan Tips, Helpful Payday Loan Info
Payday loans were originally designed as instant cash transfers on both sides: The lender instantly deposits the borrowed cash amount into the customer’s bank account on approval, and the customer pays back the cash loan in a single payment at the end of the 14- or 30-day lending period. Due to payday loan regulation and reform in states all across the US, many payday loan lenders now offer online payday loans with payment plans. New payment options sometimes prompt our customers to ask us when they should pay back their cash advance loan.
The simple answer is right away. Payday loans are fast and temporary cash solutions, and as such you should pay back your loan in full when it’s due and avoid renewing it for another term which can lead to high interest rates on your lender’s service fees. A $15 service charge for a $100 is reasonable when your loan is paid back right away but can quickly lead to triple-digit interest rates when the loan is rolled over for several months.
If you can’t repay your loan in full at the end of the lending period, what should you do? First, you should always discuss payment options with your lender. Not every lender offers the same payment plans, and some are more willing to negotiate payment than others. If you cannot afford the full payment, your lender may present you with the option to pay only the service charge and renew the loan (though this option can quickly get expensive). In this case, you should pay the interest charge on your loan and repay the principal amount and renewal fees in full on your payday loan’s new due date. Your lender might also offer you the option of an installment plan, where you repay your payday loan in several smaller installments each month. With this option, you and your lender will discuss due dates for each installment.
So when should you pay back your payday loan? It depends on your lender and payment plan. Ideally, you should pay back your payday loan in full on its due date. All other payment options should be discussed with your online payday loan lender.
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