by Ben Sweiry ·
Modified on 14 September, 2022
You can cancel your personal loan application at any time – even after it has been approved by the financial lender.
However, you may have to pay interest for the number of days that the loan was open.
Once your loan is paid off in full and you have contacted your lender, you can consider your payday loan to be cancelled.
How To Cancel a Payday Loan
Step 1
In order to cancel a personal loan, you should first contact your lender by calling, emailing or writing to them. Your lenders contact details will be presented on their website.
There may be a login or ‘my account’ section where you can cancel your loan or pay it off in full.
Step 2
You may be required to pay off any interest that has been building up – since payday loans accrue a daily interest. So if your loan is open for 3 days, you may have to pay 3 days worth of interest for the loan to be cancelled or no longer active.
Step 3
Once you have confirmation from the lender, your loan will be cancelled and you will no longer be eligible for further payment.
What is a Cooling-Off Period?
Cancelling your payday loan agreement usually means calling or writing to the lender and typically paying off your loan in full – or however much interest has accrued up to that point.
Some lenders may offer a ‘cooling-off period’ where you have 24 or 48 hours to be able cancel your loan with no payment or interest accrued.
To do this you will need to check the terms and conditions of your loan agreement which is presented to you during the application and approval process.
Will Cancelling Early impact my Credit?
Provided that your loan has been repaid or cleared and is not overdue or in arrears, there will be no negative impact to your credit score.
Why Would I Cancel My Payday Loan?
Finding Alternative Options
If you need money fast, you may find that a payday loan is the easiest solution, but with a little more research, you may find that there are other alternatives out there that are cheaper such low interest credit cards, using a credit union or borrowing from close friends or family.
Clearing Your Account Early
Payday loans are typically used to help with a shortfall of cash, such as paying for an emergency expense or pressing bill, but once you have paid this off, you may find that you no longer need a loan.
Hence, you can save on interest by paying off the loan early and maybe only pay 5 days worth of interest, rather than 30 days.
Affordability
Payday loans are an expensive type of finance, usually because they are quickly funded and only used for short term purposes.
You may find that you needed the loan initially, but it may be getting too expensive to manage and with other debts pilling on, this will put you under further financial difficulty.
Can a Lender Charge Me If I Cancel After 1, 3 or 5 Days?
A lender can charge you interest even if you wish to cancel your payday loan after just a few days. Usually, from the moment that the loan is approved and funded into your bank account, you will start to accrue interest each day.
There are exceptions in that some lenders offer a cooling period of 24 or 48 hours where you can return and cancel the loan with no fees applicable. You will have to check the terms and conditions to see if you are eligible for this.
Lenders may charge as it costs them to process, underwrite and credit check your loan application, so even a small payment can help recover their sunk costs.
Can I Cancel a Loan After Approval?
Yes, you can cancel a personal loan after it has been approved by your lender in most cases.
However, you will need to return the full amount of the loan to the lender as well as any cancellation fees that are incurred as a result of the early cancellation.
If you wish to cancel your loan after approval, you should alert your lender as soon as possible, as the cancellation process may take a few days to complete.