Since many people take out payday loans each year, it is understandable that some may find it difficult to pay back the money in full. If this is the case, you can lessen your outstanding debt by making partial payments on your payday loan, but you will almost surely experience some consequences. However, they are very minor and you can easily avoid it.
Before you do anything, make sure to ask your lender if they accept partial payments as you might also need their express permission. We at Money Wise do the exact same thing. You will get to know more about us as you read further!
What is a Payday loan and how do Payday Loans Work?
Payday loans are short-term, unsecured loans where the borrower receives quick cash from the lender to cover expenses until their next paycheck. Usually, they are used to pay for unforeseen emergencies like car repairs or medical expenses.
What is a Partial Payment ?
A partial payment is when a borrower makes a payment that is less than the full amount due on their scheduled loan debt. Almost always, partial payments occur as a result of borrowers’ inability to complete their full payments within the required timeframe.
How to make a partial payment ?
Partially paying a loan is only permitted when the lender agrees to it. Different lenders will have different levels of understanding. In some cases, a lender would even set a deadline for the borrower to finish their payments later on with little or no penalty.
Partial payments, however, almost always have a negative impact on borrowers’ credit scores and may even incur late payment fees. Because it can be better than nothing and will still be deducted from your total debt, many borrowers choose to do so.
Making a Partial Payment: The Process
If you have no other options, this shouldn’t be your first choice because it will probably lower your credit score, but if you have no other choices, it may be preferable to not paying anything at all.
Ask your lender if they will accept a partial payment when you get in touch with them. They might even waive your late fees if you’ve been making all of your prior payments on time and in full and have a good working relationship with your lender. Lenders typically make repayment easier by allowing you to skip a payment or modifying your due date.
Ask if there will be a late report for this partial payment and if there will be any fees associated with it. Whether a challenging event in your life is the reason you are unable to make your entire payment, you might even see if your lender offers consideration plans for unique situations.
If your lender grants your request to make a partial payment, make sure to have a plan in place to make up the difference so that you don’t fall behind each month. If you get behind on your payments, you risk being listed as being past due each month, and the late fines may mount to an unmanageable level.
You can obtain this extra money in a few different methods without taking out another loan. You might temporarily take on a second job or borrow money from friends or family. Even though it’s challenging, it might be worthwhile to avoid incurring late fees every month.
Should I make a partial payment?
This depends on the cause of your inability to pay in full. Partial payments might be a smart move if the situation is brief and you believe you can make up for the missed payments the following month.
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 may affect your credit score, but this depends on your lender. You can double check with them before making a partial payment. Taking precautions before will help you to get out of this problem.
This is due to the possibility that a partial payment will be noted as missed or late on your report. This is really a last resort as a late payment might remain on your credit report for up to seven and a half years.
What Takes Place If I Can’t Repay My Payday Loan?
You can receive help from a debt counselor, your lender, or family members if you are having trouble paying back your payday loan. There is no need to panic because assistance is accessible.
Your initial course of action should be to get in touch with your lender because they are legally obligated to assist you if you do. They must point you in the direction of resources offering free debt advice. Additionally, they must stop trying to collect the debt as long as you are creating your own debt repayment strategy. Last but not least, they must treat you fairly and give you enough time to repay your loan.
These free advisors’ debt advice can assist you in creating a strategy to control your debt. Additionally, these advisors for charities will represent you in negotiations with your lender.
Lenders are required to offer you a fair amount of time to create your repayment plan if you inform them that you are working with a debt counselor. Your lender cannot hire debt collectors right away. They are not allowed to bother you during this time while you are working with your debt advisor, so they must continue to stay away from you.
Talking about your problem with your closest friends and family members can be your next move. This isn’t simply to acquire a loan from them; it’s also to get some emotional support and assistance during these trying times.
If you are going through those debt situations, you are anxious and are unable to leave the building? Money Wise helps you avoid debt by putting you in touch with the most cheap direct lenders out there. We provide you best and cheap lenders that will contact you directly so you do not have to take tension regarding your debt. Reach us today and get your payday loans issues solved.