Payday Cash Advance Repayment

In countries where payday lending is regulated, a payday lender is subjected to a disclosure and warning regulation. The lender is obligated to explain all the features of the loan, including how much you will have to pay back in terms of interest and arrangement fees, what happens if you do not pay the loan back, the extra charge you will have to pay if you do not pay the loan back on time and that the loan is not suitable for long-term borrowing. 

In the UK, all payday loan websites and payday loan adverts, must include the following warning ‘Late repayment can cause you serious money problems. For help, go to www.moneyadviceservice.org.uk. This was effected on 1 July 2014 for all payday lenders. A similar disclosure and warning regulation was made mandatory for payday lenders in Australia. While in the US, different states have instituted different regulations on payday lenders. In some states, Payday lending is strictly prohibited whereas in others similar disclosure obligations have been imposed to payday lenders.

Payday loan Repayment Options

You should engage the payday lender before engaging in any payday lending contract to explain to you the details of the loan as well as the available repayment options you can choose from. Commonly, the following options are available with most reputable payday lenders. 

• A regular one-off loan repayment on your next payday cycle: This is the cheapest and best option you should always choose. Payday lenders thrive on repeated borrowing and this option doesn't favor them much. They would rather prefer you default so that they charge you a late repayment fee in addition to your loan and interest.

• Rollover is an option which allows you to choose another date other than the initial loan due date. It is customary for a lender to levy an additional fee for late repayment. Some countries have gone ahead to put a cap on the additional fee citing predatory and extortionate charges imposed by some Payday lenders on borrowers.

• Payment Plans:  A payment plan allows an individual to pay off the loan in installments. The number of installment payments is determined by the payday lender. Some reputable payday loan lenders may stop charging interest for as long as you make regular payments as per your payment plan. In the state of Washington, law makers enacted a regulation in which you become eligible for a Payment Plan once you take four successive loans from the same payday lender. 

Payment Plans are flexible and convenient but not necessarily the cheapest option. It depends on the lender. That's why it is important to first understand all repayment options available from a payday lender as well as all the charges that apply for each option. It's advisable to limit the repayment term as much as possible to prevent getting trapped in a cycle of payday loan debt; even if it means cutting your budget to pay off the loan. 

How do you repay the Payday loan?

• If it is a one-off repayment, you can repay your payday loan by Debit Card or Credit Card. This option is more flexible and convenient.

• Continuous Payment Authority(CPA): If you anticipate to be late on your repayment or if you are on a Payment Plan, this option is the most convenient. With CPA you share your bank or credit card details with the payday lender, notify your bank or credit card provider, and instruct the lender to make regular installment debits on your account or credit card by the due date. However, you have to be careful and "keep your eyes" on your bank statements to ensure repayments and amounts are deducted to your expectation. You are free to cancel payments through your bank if payment amounts drawn are not to your expectation or if you do not have enough money on your account to cover loan repayment. You are expected to notify the payday lender should you choose to stop payments  because of the legal credit contract you have with the lender. 

• Repayment by Cash: Choose this option if you don't wish to use your credit card and running low on your bank account balance. It's not the most convenient because you will have to deliver the money in person to the lender and in addition, some lenders may reject this repayment method because they are only an online business. It's best to ask the lender the available repayment methods you can use. For a one-off payday loan repayment by cash might just be as convenient for you as adding gas in your tank!