HOW DO REPAYMENTS WORK FOR A PAYDAY LOAN?
How Do Repayments Work For a Payday Loan Online?
Collections for a payday loans are made on your pay date, the day of the month you receive the salary from your employer. This could be a specific date of the month but for most, it is the last working day or last Friday of the month. Prior to your collection date, the lender is entitled to send repayment reminders via SMS and email for up to 5 days just to let you know in advance.
The idea of a payday loan is to tide you over until you receive your next salary. Therefore, the lenders prefer to collect from your account when you are next likely to have money in your account. Once you have repaid your payday loan in one lump sum, it means that your loan would have been repaid in full. If you are borrowing an instalment loan that lasts between 3 and 12 months, you could repay in equal monthly instalments on your pay date or at the end of the loan period, depending on the terms of the lender.
Collections are made via Continuous Payment Authority
You will notice that all lenders ask for your debit card details when you apply for a loan. This is because the collections process is made through Continuous Payment Authority that allows the lender to collect from your account at any given point. The advantage is that the lender can collect from your account automatically on your pay date so there is no need to do anything manually or get in touch to repay. It allows for a simple and easy collection process. And just to make things a little safer, the lender cannot try to collect from a customer’s account more than twice a day. This is different to a direct debit that the customer can set up and cancel at any point. Continuous Payment Authority cannot be cancelled on the customer’s end but can be easily stopped by simply contacting the lender.
Can I repay my loan early?
Some of the lenders we feature allow you to repay early and some do not. Please check the terms and conditions on the lenders’ website for confirmation. There are lenders that charge a small fee for early repayment and others that do not charge a fee for repaying early, only charging you interest for the days that you have had the loan open for and allowing you to save money in the process. If you find that you are in a financial position to repay your loan off early, we encourage you to do so.
Can someone pay on my behalf?
When it comes to repaying payday loans, the repayment should be coming out of your account only. This is why the lender authorizes your own debit account using Continuous Payment Authority. In extreme cases, if you are unable to repay your loan on time, you may ask the lender to allow a family member or friend to repay the balance for you. If you would like some extra help from a relative to repay your loan, you may find that a guarantor loan is better suited to your requirements. Please visit our guarantor loans comparison page for more information.