When it comes to repaying the payday loan you take out, there are a few crucial things you’ll have to know. While the process might seem pretty straightforward, some people have issues due to a basic lack of knowledge. We will provide you with all of the information you need to pay back your loan on time and in full. This will help you to avoid a number of very unpleasant consequences, which you should also understand. You should not get this type of loan without know how to go about repaying it first.
What Happens if I don’t Repay My Payday Loan?
If you simply do not pay back the money you have borrowed from the lender, the full balance of your account will be sent to a collections agency. You will be contacted on a regular basis to pay the money you owe. This usually takes the form of frequent phone calls, emails, and regular letters in the mail. Your credit will also take a fairly major hit. You can expect a substantial decrease in your overall credit score. This will make it far more difficult to obtain any type of financing or loans in the future.
Repaying Your Loan Early
An overwhelming majority of private lenders will allow their customers to pay back the money they owe early. You will need to check your loan contract to see what exactly it says about early repayment. You should definitely try to do this if at all possible, as it can save you a lot of money on interest. If there is a prepayment penalty, you need to find out what it is. If this is the case, paying your loan back early might not be worth it. It’s a good idea to look for a lender that doesn’t charge anything for early repayment.
Late Payments
If you have an instalment payday loan and you miss a payment, you will be charged a late fee. This fee could be fairly nominal or quite expensive, depending on the lender. If it is your first missed payment, they might be willing to waive the fee. You should at least talk to your lender about doing this, as the worst they can do is say no. Before you sign your loan contract, make sure that you understand what the late fees are like so you know what to expect. Late or missed payments will negatively affect your credit, so you need to keep that in mind as well.
Getting an Extension
Some lenders are willing to give borrowers an extension if they aren’t able to pay back the loan on time. If you expect to be late paying back your loan, you should get in touch with your lender right away to find out about this. You might not be able to get more time from your lender, but it’s an option worth exploring. Most lenders are willing to do this, simply because they want to get paid the money they are owed. You won’t be given an indefinite amount of time to pay back your loan, but an extra few days or week could be of great help.
Automatic Repayment
It is now fairly common for payday loan lenders to automatically take the full amount of the loan from the borrower’s checking or savings account on the due date. This is sometimes optional, but you have to ask the lender to find out for sure. Automatic repayment is typically a good thing, as it makes things a bit easier for you. You won’t have to worry about remembering to pay back the money you owe. There is nothing worse than incurring steep late fees because you forgot that your loan was due that day.
Alternative Ways to Repay Your Loan
If you are having serious problems paying back your payday loan, you might want to consider using a credit card. While you still have to pay off your credit card balance, it can help you avoid all sorts of high additional fees. Take the time to consider this option carefully so you don’t end up making a bad decision. If you have a credit card with a 0% introductory APR, this could be a great option.
You absolutely have to repay your payday loan on time, because otherwise you are going to be left in a very bad financial situation that is difficult to get out of. The best thing you can do is to spend some time finding out what your repayment options are. Make sure that you look for a flexible lender that can work with you if you end up having problems with repaying your loan. The more reasonable your lender is, the easier it will be to reach a good solution for both parties.