Payday Loans

Understanding The Repayment Terms For An On Line Pay Day Loan

An on line pay day loan is advertised in such an attractive way that consumers often get trapped easily and borrow such loans, but it is only at a much later stage when they realize that these loans are not what they are promised they are. They are easy to borrow, but not at all easy to repay. It is an extremely costly loan program. Before you apply for this type of loan, you are advised to do your calculations thoroughly in advance and determine whether you can really afford its timely repayment based on your monthly income and other monthly financial obligations. Following is a brief rundown on some of the most important aspects about the repayment terms associated with online payday cash advances.

Submitting A Postdated Paycheck

In general, when you borrow an on line pay day loan, you have to repay the same as soon as you receive your paycheck. Though these types of loans are unsecured, but lenders often require you to submit a postdated check. They send this check for collection on the scheduled due date and collect the repayment amount. But, it is very important for you to keep in mind that Internet-based lenders often require you to authorize them for direct debit from your bank account. If you are considering borrowing a loan from a payday loan company that does not have its office located in your state, you are strongly advised against doing that. Though not all internet-based payday lenders are scam, most of them are, and so, it is always safer to borrow from a lender that also runs a local payday store in your area.

Providing Direct Debit Authorization To Your Lender

When you authorize your lender for direct account debit, your lender gets the right to withdraw money (principal amount plus interest plus other charges) directly from your bank account.

Charges Applicable On Check Bouncing

If you do not have sufficient amount of money in your bank account on the scheduled due date, the check sent by your lender to your bank will obviously get bounced, which can bring legal and financial troubles for you. When you issue a check, you promise the bearer to pay a certain amount of money, and if that check bounces, it is considered as a case of forgery, which is a criminal offence. Besides that, there are certain check-bouncing charges that are debited in your bank account. Furthermore, your on line pay day loan soft viagra debt account is also charged with hefty amount of penalty charges. If you know that you won’t have sufficient fund in your bank account on the due date, a wise way is to stop that check payment and inform your lender in writing in advance about the same. This way, you can avoid the bank charges for check bouncing. Besides that, it is not a legal offence to stop a check payment, especially when you notify the lender in advance about it. If you do not do that, your lender may keep on sending the same check again and again for collections, which means your bank account and debt account will be charged again and again with check bouncing charges and penalty charges respectively.

Charges Applicable When Debit Authorization Request Fails

Similar things happen when a debit authorization request fails. It is again a criminal offence and certain penalty charges are added to your bank account and debt balance due to this. You can avoid this situation by using similar strategies as mentioned above. You can revoke such authorization in advance (before the due date) and inform your lender about it.

Rollover Or Extension Of Due Date

If you do not repay an on line pay day loan in time, your lender may offer you an option to make a partial payment and extend the due date for the remaining debt balance for the next thirty days. This option might sound like a great convenience, but opting for it can actually turn out to be an extremely costly affair. This extension of due date is often termed as rollover of loan. It is very important for you to keep in mind that such rollovers of payday loans are strictly prohibited in many states. Other states, where such provisions are allowed, have specified a maximum number of times an unpaid online payday loan can be rolled over. Therefore, awareness of your state payday loan laws is very important for you else your lenders may take undue advantage of your legal ignorance.

Extended Payment Plan

If the payday loan company you have borrowed an on line pay day loan from is a member of the CFSA (Consumer Financial Services Association), they are obligated (under the rules

of the association, not under the state or federal laws) to offer you an extended payment plan in case you miss the due date. Under this plan, you are allowed to make the repayment in four equal monthly installments over a period of four months. But, this option is offered only once per year per lender. Even if your payday lender is not a CFSA member, you can check with your state laws, as many states also have such provisions, where it has been made mandatory for payday lenders to offer installment payment plans to those borrowers that are miss the due date. The beauty of this extended payment plan is that you are not charged any penalty charged or additional interest for the extended repayment period.

You are strongly recommended to have in-depth understanding of the repayment terms that on line pay day loan programs come with. In general, you should avoid such costly and risky loans, but if you must borrow it (because there is no better alternative), you must read the fine prints thoroughly and ask for written clarification from your lender wherever the terms are not clear to you. This way, you can avoid unpleasant financial shocks at a later stage.

Custom Search

Tags: , , , , , ,
Posted in Repayment Strategies | No Comments »

Leave a Reply

You must be logged in to post a comment.