How to Finance a Payday Loan
January 26th 2012 -
Payday loans are popular because they’re flexible: You can use a payday loan for anything you need with no restrictions. Instant payday loans online also have the added benefit of flexible payment plans, making it easy to finance your cash loan if you can’t afford to pay in full right away.
Most lenders offer three options for financing your payday loan: Paying in full, installment plans, or rollovers. Each of these options has some benefits and drawbacks. Talk with your lender to find a payment plan that works best for you.
Full Payment It’s always best to pay off your payday loan in full whenever possible. Paying in full not only gets you out of debt sooner, it can also save you money on interest. Some lenders will refund your service fee if you pay in full before the due date. Generally though, the faster you pay off your cash advance, the less you’ll pay in annual interest rates. Paying in full makes your payday loan more affordable, but might not always be doable depending on how much cash you had to borrow.
Installment Plans An installment plan is the next best option after paying in full. Installment plans can work one of two ways: Either your lender will withdraw automatic payments from your bank account every payday, or arrange equal monthly payments over a few months until your loan is paid off in full. Installment plans will cost you a little more in interest than paying in full, and some lenders may charge an additional fee for installment plans, though many states prohibit this. If you can’t afford to pay in full, an installment plan is your next best option for keeping your payday loan affordable.
Rollovers It’s a good idea to avoid rollovers if you can. A rollover renews your payday loan, extending the terms until your following payday. However, you’ll need to pay whatever interest is due on the original due date plus an additional service fee to renew your loan. You’ll need to pay more every time you wish to renew your payday loan. One or two rollovers can be handy to give you extra time to repay, but any more than that will make your payday loan extra expensive. Try to opt for an installment plan if you can instead.