When you are facing a shortage of cash, a payday loan can be a big help. Most payday loans must be repaid immediately usually on your next paycheck. But what happens when that payday advance turns out to be more than you can afford to comfortably repay?
There are options when you want to make a payment conversion on your original loan to a more manageable payment. This is possible by converting your payday loan into an installment loan. With an installment loan, you can repay your loan in easy monthly installments.
Here are the steps you need to follow in order to make a payment conversion of your payday loan into an installment loan.
1. These are the necessary documents needed in every payment conversions.: your personal check, an identification card, the copy of your original loan or payday loan agreement. Some lenders may ask for additional requirements, depending on the outstanding balance of your loan.
2. Verify whether your payday loan lender is a member of the Community Financial Services Association of America (CFSA). This is a national organization established to promote laws and regulations that will protect borrowers with credit options and encourage responsible practices in the industry of payday loan lending. If your lender is not a member, ask for specific regulations and policies regarding their installment loans and make sure you are eligible for a payment conversion.
3. Approach your lender on or before your repayment due date and inform them that you wish to make a payment conversion of your payday loan to an installment loan. Some lenders will not consider your request for a payment conversion if you are a day late.
4. Sign a new loan agreement that will amend the original contract. This will break your balance into equal monthly payments. This time, be sure to pay on or before each due date. You should not be late on your new payment plan or else you may be disqualified for the payment conversion.
5. After you have completely paid off the installment loan, make sure to ask what your lender’s and state’s regulations are concerning how many times per year you can make a payment conversion on your payday loan to an installment loan. This will be helpful in case you need to take out another payment conversion for an installment loan in the future.
When getting payday loans, it always advisable not to borrow more than you can easily repay. It will be good news if your lender allows a payment conversion of your original loan to an installment loan. Installment loans will give you the benefit of repaying in small and easy monthly payments.