Yes, you are usually permitted to pay off your payday loan earlier than you originally agreed with the lender. There may however be conditions involved with paying off your loan early, such as being charged an additional fee.
In order to pay off a payday loan early, you need to contact your lender to arrange an early collection. This will not always reduce the interest rates or fees you agreed to pay to the lender upon taking out the loan.
What Is a Payday Loan?
A payday loan is a high risk and short term loan which is designed to be used to cover any emergency loans that you have not budgeted for. Payday loans tend to be for between $300 and $1000 although some lenders are prepared to offer more funding.
As payday loans are only designed to last until the upcoming payday, the agreement involves repaying the loan in full in between two and four weeks of taking out the loan. This means that the loan with the fee for borrowing it should be returned to the lender within a month.
It is always important to check the impact a payday loan can have on your credit score in advance of taking one out.
What is an Early Repayment?
An early repayment is when a borrower decides they are able to pay their loan off earlier than they had originally planned to with the lender. This can include paying off part of a loan or making an entire repayment.
Lenders do usually permit borrowers to make early repayments on loans, but it is always important to check the details of your agreement in advance.
Can I Pay My Payday Loan Off Early?
You can always pay a payday loan off earlier than you originally agreed with the lender. Most lenders will not charge you a fee for trying to repay off any money borrowed earlier than they originally anticipated. In spite of this, all lenders do operate with different policies and so it is always important to check if you will be charged for repaying your loan at a different date.
Alternatively, some lenders offer reduced interest if your loan is paid off earlier than was originally agreed, meaning that you will end up paying the lender less money than if you were to repay your loan on your actual payday.
Paying a payday loan off early is not what a payday loan is designed for, as it is supposed to last you as a source of emergency funding until you receive your upcoming monthly income. Even if you feel you are able to pay off your payday loan in advance, the interest rate and fees may still be the same if you wait until your official payday to do so.
How Do I Repay My Payday Loan Early?
You can repay your payday loan earlier than you planned to by contacting your lender and arranging a direct debit. This should not be difficult as your lender will normally collect the full amount of your payday loan alongside any interest or fees calculated in one payment on your arranged payday.
The lender should then provide you with a settlement quote which should highlight any differences in payments which you were not originally aware of.