When taking out a payday installment loan, it is important to pay off your lender on time. If you fail to repay your lender at the agreed due date, you end up paying for late fees and additional charges. There are several repayment options on how to pay off payday installment loans. These include giving the lender post-dated checks, electronic withdrawals, and installment and roll-over options depending on the state that allows them.
The most common practice to pay off payday installment loans is by giving your lender a post-dated check. The lender will hold the check until the schedule due date of the loan. At the time the payday installment loan is due, the lender deposits the check, and the loan balance is repaid. Usually, post-dated checks are required by storefront lenders.
With the emergence of online payday installment loans, lenders do not require submission of a post-dated check anymore. Electronic withdrawal has become the most feasible means to pay off the loan. On the application, the lender of payday installment loan will ask for the bank account information (the name of the bank, account number, routing number, etc.) of the borrower to withdraw funds when the agreed day of repayment occurs. Once the loan is due, the lender will automatically withdraw money from the account of the borrower.
Electronic withdrawal is very convenient for both the lender and the borrower. The lender can just automatically withdraw online the amount from the borrowers account and transfer it to his account. As for the borrower, there is lesser risk of forgetting to pay off the loan when the due date comes. However, the borrower must ensure that there are sufficient funds available in his bank account during the scheduled due date or he may incur additional bank charges.
There are also lenders who offer installment repayment plans with longer and flexible terms to pay off the loan conveniently. However, they are some states who have regulations on how long the term should be offered. The various terms included in the installment repayment plan are paying weekly, bi-weekly, monthly, or bi-monthly within 3 to 6 months. With this type of repayment option, the borrower is given a burden-free means to pay off his loan.
In case you are unable to pay off your loan on the scheduled due date, most lenders offer renewal of the loan through a roll-over loan. In a roll-over loan, the borrower is offered another loan to pay off the previous loan. This will “roll-over” the balance of the old into the new one. However, borrowers should be careful with regards to these roll-overs. Additional fees are charged from the original loan and the new one. So, you end up paying more fees than you originally planned.
It’s still preferable to contact your lender if you are unable to pay off your loan on the designated due date. Most lenders offer loan extensions wherein a new due date will be either set by them or you. But, be careful to abide with this new set of due dates and do not default on your payments again. This may cause your lender not to trust you anymore.