Payday loans are, in almost every regard, the most flexible form of borrowing currently on the market. Whilst they might not enable you to receive thousands of pounds or repay debts over a number of months, they also don't have the same level of restrictions that you would generally find on long-term lending options. This includes the ability to repay the loan off earlier.
The majority of payday loan companies aren't worried about customers paying off their loans early. In fact most would welcome it. There shouldn't be a charge for doing so either, which is where they differ from banks and other lenders.
If you were to apply for a personal loan, mortgage or any other form of long-term borrowing, you are usually tied into prolonged contract with the lender. This means that you need to adhere to the monthly repayment schedule, with any deviations punished by a standard charge. This isn't just restricted to late payments either.
Paying a loan off early can be a costly experience .Obviously this should still be cheaper than the remaining interest and charges, but there will be a processing fee to pay. With payday loans, this simply isn't the case.
When you apply, the lender will simply ask you for the date on which you are next paid and this will generally be used as the repayment date for your loan. But rather than setting this as the first available time to settle the balance, it should actually be viewed as the final day.
Unless you're paying interest on a daily basis, there isn't a great deal to be gained by paying off your loan early. Okay, so the debt would be wiped out and therefore any credit related issues could be addressed (the more debt you have outstanding, the more difficult it is to borrow), but there would be very little in terms of a tangible, financial benefit. Of course, if you are paying a daily rate of interest, then you can save yourself a fair amount of money by reducing the borrowing time by a few days.
So how quickly can you repay a payday loan?
Well, theoretically, as soon as you have the money available to do so. You will still be charged interest and any other charges that the lender may have implemented when you applied for the loan, but if you have had a change in fortunes, then you could pay off your payday loan within days.
The bigger issue obviously lies when you fail to pay it off within the allotted timeframe. If you don't have the money available when the automated payment to the payday loan company is scheduled, this can cause all sorts of problems. First and foremost of these is that you will be charged a standard fee for defaulting your loan. This can be anything up to around 50, so is worth avoiding in itself. However, the problems don't end there and neither do the charges.
You will also be liable for another month's worth of interest. So even if you roll over by a few days, you could be looking at paying hundreds of pounds extra. This can get quite expensive, quite quickly. So it almost goes without saying that you should do anything in your power to avoid getting into this situation.
So if you have the money and want to pay off your payday loan early, you don't need to hold back from doing so. There may not be any financial reward for doing so, but you shouldn't face any penalties or indeed encounter any difficulties with doing so.
Vincent Rogers is a finance writer who writes for a number of finance businesses. For reliable payday loans, he recommends Paydaypower.co.uk
Vincent Rogers is a finance writer who writes for a number of finance businesses. For reliable payday loans, he recommends