Yes, you are usually allowed to pay off your payday loan earlier than you originally agreed with the lender, however, there may be some conditions involved with paying off your loan early, such as being charged an additional fee.
In order to pay off a payday loan early, you need to contact your lender to arrange an early collection. This will not always reduce the interest rates or fees you agreed to pay to the lender upon taking out the loan.
- Usually, you can pay off your loan early with no extra fees.
- In some cases, lenders will even lower the interest charged on early repayments. The average APR on payday loans sits at 396%.
- Only 14% of borrowers are able to easily meet repayments.
- If you aren’t struggling to make ends meet, you should avoid taking out high-cost and high-risk loans.
- Remember, loan repayments also charge interest, meaning that if you are repaying $100 that you borrowed in one repayment, it will cost you around $115, including interest.
Can I Pay My Loan Off Early?
You can usually always pay a payday loan off earlier than you originally agreed with the lender. Most lenders will not charge you a fee for trying to repay off any money borrowed earlier than they originally anticipated. In spite of this, all lenders do operate with different policies and so it is always important to check if you will be charged for repaying your loan at a different date.
On the other hand, some lenders offer reduced interest if your loan is paid off earlier than was originally agreed, meaning that you will end up paying the lender less money than if you were to repay your loan on your actual payday.
In some cases, the interest rate and fees may be the same, whether you pay your loan as agreed, or if you pay it back early.
If, before taking out the loan, you expect you will be able to pay it off early, perhaps a payday loan isn’t the right option for you. A payday loan is designed to provide emergency funds in times of need, and to tide you over until your next pay day. If this isn’t an emergency, you should consider other options, such as approaching your friends or family for support.
What is an Early Repayment?
An early repayment occurs when a borrower decides they are able to pay their loan off earlier than they had originally planned to with the lender. This can include paying off part of a loan or making an entire repayment.
Lenders do usually permit borrowers to make early repayments on loans, but it is always important to check the details of your agreement in advance.
How Does Loan Repayment Work?
With most lenders, repayments will be made on a monthly basis, on the same date each month (which will typically be your payday). When you take out a loan, you and your lender will come to an agreement and a repayment plan will be devised.
You will be paying back the money you have borrowed alongside the interest you owe. The amount you will pay will always be given to you in writing as part of your loan agreement, which you will electronically sign.
This means there will be no added fees and no surprises. You will pay exactly what you have been quoted as long as repayments are taken on time.
How Do I Repay My Loan Early?
You can repay your payday loan earlier than you planned to by contacting your lender and arranging a direct debit. This should not be difficult as your lender will normally collect the full amount of your payday loan alongside any interest or fees calculated in one payment on your arranged payday.
The lender should then provide you with a settlement quote which should highlight any differences in payments which you were not originally aware of.
What If I Can’t Make My Loan Repayments?
It can be incredibly stressful if you find yourself in the unfortunate situation of being unable to meet your repayment schedule for a payday loan.
If you cannot repay your payday loan, the main implications can include: follow-up correspondence from your lender such as calls and emails, late fees and added interest and a negative impact on your credit score, which will make it more difficult to get credit elsewhere in the future.
If you realize you will be unable to meet a scheduled payday loan repayment, you should make sure to contact your lender immediately. Your lender will try to find an arrangement that makes it possible for you to repay the loan. You may be able to agree to a payment schedule that would be more affordable.