Payday Loans can sometimes help you out of a tight financial spot but sometimes things can go wrong and you end up in a situation where you can’t pay it back.
This article takes a look at how you can set up a repayment plan for your payday loan so that hopefully you can sleep a little easier.
First things first
If you know that you won’t be able to repay your payday loan then contacting the payday lender to ask them what they can do to help is a good place to start. Sometimes they will offer to extend your loan but that means only paying the interest. If your problem repaying the payday loan is likely to last a long time then that isn’t the most appropriate solution for you as you could be repaying it for a long time and that will only cost you money.
Some payday lenders are helpful and others can be more difficult to deal with. However knowing what you are up against will at least let you know how you can proceed.
Making an offer to repay your Payday Loan over a period of time
Let’s say you make an offer to pay off your payday loan over three months. A number of Payday Loan lenders would be happy to do this and freeze the interest. You can make your offer of repayment and then clear the balance and be done with it.
Some lenders such as Wonga have an area of their site you can click into for repayment difficulties. Filling in the requested information is a bit of a chore. However when I recently helped a friend with this we managed to set up a repayment plan over 12 months.
QuickQuid can do something called a pre default arrangement. Instead of defaulting on your loan you agree to repay it over four months. If that is possible then it is worth looking into. They freeze any additional interest and so long as you maintain your payments they won’t bother you.
– Read this post about a QuickQuid Payday Loan Pre Default Arrangement to find out more.
E-mail the Payday Loan lender or call them and make the offer. They may accept it or they may not but it is worth a try.
A longer term repayment plan for your Payday Loan
If the lender is unwilling to let you repay over three months or repaying in that time is just not possible then you can make an offer to repay that account over however long it will take you.
Again it is likely that if they don’t accept your first payment offer then the second one probably won’t get very far either. However you can only try.
What happens next if a repayment plan cannot be agreed
Typically the payday loans lender will sell the account to a Debt Collection Agency. In my own experience these debt collection agencies are easier to deal with and will typically accept what you offer them. It is best to make your offer in writing rather than on the phone though as they will most likely try to get you to agree to a repayment that is not affordable to you. Plus you have a written record of your correspondence which is always a good idea in these types of situation.
Important things to remember
When you took out a payday loan, if you make repayment by Debit Card then this was set up using Continuous Payment Authority. This means that even if you are experiencing problems repaying, the payday loan lender may attempt to collect what you owe leaving you without any money. This is not an ideal situation to be in. You are within your rights to cancel this Payment authority.
You should contact your bank and also the payday loan lender to tell them you are withdrawing this consent. That way if they do empty your account you can request a refund. The other option is to move to a completely different bank which is a little extreme but means your money should be safe.
Payday Loan Repayment Plans Concluded
If you are struggling to repay your loan then a repayment plan could help you. However they can be difficult to set up, especially when you cannot pay your loan within a short space of time. You will get through it though.
Your Payday Loan Experiences
Please share your own experiences of setting up a payday loan repayment plan in the comments box below. It is appreciated.