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Approximately 12,000,000 Americans borrow payday loans each year so it is not surprising that some may struggle to repay the money back in the full. If this is the case, you can make partial payments on your payday loan, which will help you lower your owed balance, but you will almost certainly face some repercussions. This could be in the form of late payment fees, or bad credit.

You may also need specific consent from your lender, so before anything, be sure to check with them first that they allow partial payments.



What Are Payday Loans?


Payday loans are short-term unsecured loans in which a borrower receives immediate cash from a lender to tide them over until their next payday. They are typically used to cover unexpected emergency expenses such as car repairs or medical bills.


What is a Partial Payment?


A partial payment is when a borrower pays only part of their scheduled loan debt instead of the full total. Partial payments are almost always the result of borrowers not being able to make their full payments in the timeframe necessary.

Partial payments are only possible in cases where the lender agrees to them. Some lenders will be more understanding than others. There are even some situations where a lender will set a date for the borrower to complete their payments at a later date with little or no penalty. 

However, partial payments will more often than not end up affecting borrowers’ credit scores negatively, and could even result in a late payment fee. Many borrowers take the option because it can be better than nothing, and will still be subtracted from your overall debt.


How To Make a Partial Payment


First, consider whether this is your only option, then contact your lender. If you are in a position where you absolutely cannot make your payday loan repayments on time and in full, your best choice might be to make a partial payment. This should not be your first choice, as it will likely damage your credit score, but if there are no other options then this can be better than not paying at all.

When you get in touch with your lender, ask them whether they would be willing to accept a partial payment. If you have a good relationship with your lender and have been meeting all your previous payments on time and in full, they might even waive your late fees. Lenders usually facilitate repayments by changing your due date or letting you ‘skip’ a payment. 

Be sure to ask whether this partial payment will be reported as late, and whether you will be expected to pay any fees on it. You could even check whether your lender offers consideration plans for special circumstances if the reason you are failing to make your full payment is due to a difficult situation in your life.

If your lender approves your request to make a partial payment, be sure to have a plan to make up for it to avoid being behind every single month. If you do not catch up with your repayments, you could end up being reported as late every single month, and the late fees can end up stacking up to an unaffordable level.

There are a few ways to get this extra cash without taking out an additional loan. You could borrow money from friends or family, or get a second job for the time being. Although this is difficult, it can be worth it to avoid month after month of late fees.


Should I Use Debt Relief or Partial Payments?


This depends on the reason you are not able to make your full payment. If it is something temporary, and you think you can catch up with your payments the next month, then partial payments could be a good choice.

However, if you have an ongoing hardship that is preventing you from making your payments, partial payments may not be the best solution for you. In this case, your late fees will end up building, and you might end up in a spiral of debt.

In these more long term situations, you should consider debt relief and debt management options. This option is usually for people who owe less than £30,000, do not have much spare income and do not own their home.


Does Partial Payment Affect My Credit?


Making a partial payment could negatively affect your credit score, but this depends on your lender. You can double check with them before making a partial payment.

This is because a partial payment may be marked on your report as missed or delinquent. A late payment stays on your credit report for up to seven and a half years, so this option is really a last case scenario. 



What Happens If I Cannot Pay Back My Payday Loan?


If you cannot repay back your payday loan, you can contact your lender, reach out to loved ones for help, or get help from a debt advisor. There is no need to panic, as help is available.

Contacting your lender should be your first step, as they are required by law to help you if you contact them. They are obligated to direct you to sources of free debt advice. They also have to suspend recovery of the debt so long as you are figuring out a debt repayment plan on your own. Finally, they are required to treat you fairly and give you a reasonable amount of time to repay your loan.

The debt advice provided by these free advisors can help you to make a plan to manage your debt. These charity advisors will also help you by negotiating with your lender on your behalf.

If you tell your lender that you are working with a debt advisor, they must then give you a reasonable amount of time to make your repayment plan. Your lender cannot immediately go to debt collectors. They must continue not to contact you while you are working with your debt advisor, as they are not allowed to bother you in this time period.

Your next step can be to reach out to your closest friends and family and talk about your issue. This is not just to borrow money from them, but to get some emotional reassurance, and some help during these stressful times.

Having said that, loans from friends and family will not negatively impact your credit score, so if this is necessary, it could be worth reaching out. 



Justine Gray

Justine is a full-time writer, specializing in household income and consumer finance across the US.