PAYDAY LOANS ADVANCE — WHAT YOU NEED TO KNOW!!
Payday loans are an expensive way to borrow. Never take out a payday loan unless you’re certain you can repay it on time and in full — otherwise the costs can soon spiral out of control. If you’re thinking of getting one, here’s what you need to know.
Other common loan types include:
- Auto loans for buying a vehicle
- Home loans (mortgage loans), including second mortgages for buying a home or borrowing against equity in your home
- Personal loans, which can be used for almost any purpose
- Payday loans, usually marketed as the quick and easy solution to taking care of unexpected expenses
- Businesses s loans for starting or expanding your business
- Education loans (student loans)
How payday loans work
Payday loans are short-term loans originally designed to tide people over until payday.
The money is paid directly into your bank account, and you repay in full with interest and charges — at the end of the month.
Increasingly though, you can borrow for longer periods — typically three months (but longer loans are available) and repay in instalments.
What all these loans have in common is that they are high cost and short-term, and often for small amounts.
Normally you have until payday to pay back your loan plus interest, although some payday lenders let you choose the repayment period.
A payday loan is expensive and could make your situation worse if you can’t afford to pay it back on time. You need to think carefully before choosing one.
Payday loans advance rate and free
Before agreeing to a loan, many payday lenders will ask you to set up a recurring payment (also known as a continuous payment authority or CPA).
This lets them take what you owe directly from your bank account via your debit card on the repayment date.
This can be handy, but it is risky. It might not leave you enough money in your account for other bill payments, such as mortgage or rent or other essential spending such as heating or food. And it could take you over your overdraft limit, leading to bank charges.
If you don’t feel a CPA will leave you in enough control, ask the lender if you can in other ways.
You can cancel a CPA at any time — although you will still owe the debt so need to repay it in another way.
More about Recurring payments for payday loans advance. How it Works
Cancel Your Payday Loan Repayment
Despite what these companies would have you believe, payday loans are not a priority issue. Your rent, food, car cover and petrol are far more important. If repaying your payday loan would mean you can’t afford the essentials, you need to stop the money from being taken.
When you agreed to the loan, you likely set up a continuous payment authority (CPA). This is usually how these types of loans are repaid. Unfortunately, by giving these companies direct access to your bank account, they can attempt to withdraw the money even if it’s not in the account. If the money isn’t there, they can keep trying again and again.
If you can’t afford the repayment, your bank may charge you for overdrafts from the repeated attempts by the loan company to collect. You have options, however:
If the payment is due the same day, call the bank and ask them to cancel the payment immediately.
If your payment is still several days away, consider sending them a Cancellation of CPA by email.
If you still have more than a week before the payment is due, post your bank a Cancellation of CPA letter.
It’s a good idea to keep your loan company informed as well, send them a copy of the letter (or notification of cancellation) after your bank has canceled the CPA.
Avoiding the payday loans advance trap
If you have problems repaying a payday loan, the payday lender might tempt you with an extension known as a deferral or rollover, or even a further loan.
However, they’re limited in how many times they can roll over a loan, and must give you an information sheet each time with details of free debt advice providers.
Rolling over your payday loan might seem like a great solution at the time.
But it can quickly lead to problems, because you’ll have to pay back much more in interest and other fees.
This could leave you struggling to pay for the essentials you need.
Read our guide Problems paying back a payday loan. F&Q
Look for a better alternative
Use our Payday loan advance tool to help you find better alternatives to a payday loan.
Don’t assume that you can’t get a more suitable loan elsewhere — even if you have a poor credit rating.
Don’t be swayed by payday lenders’ advertising
Payday lenders advertise their loans for every cash flow crisis you can think of. But a payday loan is likely to be the wrong choice for you if:
- You want to use it to pay off other loans
- You already have one or more payday loans
- You aren’t 100% certain you’ll be able to pay it back on time
- You want it to pay for things you don’t need that you can’t afford — such as nights out, new clothes or concert tickets
If you’re struggling to repay loans, credit cards and other bills, you can get free, confidential advice from a debt advice service. Payday loans advance official