What if you can’t pay back a payday installment loan you got from your lender? You would probably be worried about collection calls and the high fees associated with the default payment. But don’t worry so much because there are several ways to avoid this. Here are some of the tips you might want to consider if the time comes that you can’t pay back your payday installment loan.
Most payday installment loan lenders are members of CFSA or the Community Financial Services Association of America. This is a national organization that is dedicated to protect consumers through laws and regulations that preserve their credit options and encourage responsible practices in the payday loan industry. If your lender belongs to this organization, you can be assured that even if you can’t pay back your payday installment loan on time, your lender won’t be bugging you with collection calls and will give you an extended payment plan.
If your lender is a member of the CFSA, they are obliged to adhere with the Best Practices promoted by the organization. The mandated Best Practices ensures responsible conduct of lenders, upholds the protection of the rights of borrowers and shows the fees. The lender will also provide options for an extended payment plan. All lenders that become members of CFSA pledge their commitment to responsible lending and are required to put their CFSA Member Seal (a little blue oval that says “CFSA”) in the window of each store or on their website and they should display the CFSA Best Practices on their business cards.
A borrower who can’t pay back his payday installment loan has the option to apply for an Extended Payment Plan or EPP. As indicated on the CFSA’s Best Practices, lenders should grant a borrower additional weeks for repayment, usually four paydays, if the borrower can’t pay back his payday installment loan. Under an EPP, a borrower is allowed to pay his default loan balance in four equal payments with periodic repayment dates. As long as the borrower is enrolled on this service and the EPP obligations are met, he won’t be bothered by collection activities. This service is offered to borrowers at no additional charge.
In order to get a CFSA Extended Payment Plan, a borrower who can’t pay back his payday installment loan must ask his lenders on the last business day before the due date of his loan. He will sign an amendment to the original loan agreement and will have a new repayment schedule. There may be no charge to enter into an EPP, but if a borrower fails to abide with an EPP, a lender may charge an EPP fee and other additional fees as authorized by law. EPP is granted only once in a year.
So if you are planning to get a payday installment loan, or if you have already taken one and can’t pay it back, make sure that your lender is a member of the CFSA.