No Partial Payment
If you have an outstanding balance on your credit card, paying off half the principle will reduce monthly interest fees significantly.
If you have an outstanding payday loan, on the other hand, it is all or nothing.
Many online payday lenders do not accept partial payment.
Although this might not seem like much, no partial payment is a dangerous pitfall of payday loans…
Many payday loan transactions are based on personal checks.
Borrowers write a personal check to the lender for amount borrowed plus fees and receive cash. Lenders hold the check. At the next payday, borrowers can:
- pay only the finance charge to extend the loan (principle remains the same)
- pay the full amount in cash to redeem the check (the key words here are full amount)
- allow lender to deposit check at bank (identical to previous option – you will need to have the full amount plus interest in your bank account)
If you extend (or ‘flip’ the loan), you will be charged interest on every extension. In effect, your interest fees will double if you flip it once, triple if you flip it twice, and so on.
This is not a good place for you to be. It is a shortcut to the debt treadmill.
From an unethical payday loan company’s perspective, however, this is exactly where they want you. Every time you flip the loan, you increase the lender’s profit substantially (at your expense).
That is why unethical payday lenders will not accept partial payment. They have no incentive to do so – it would only reduce their profits. Most money is made when borrowers flip their loans. (It is also why unethical payday lenders will give loans to people they know will be unable to pay the full amount on their next paycheck.)
Ethical payday lenders who care about their customers, on the other hand, will want to work with you. If it looks like you will not be able to pay the full amount, please contact them and be honest about your situation and your plans to repay the loan as quickly as possible.
Whenever possible, consider highly rated payday lenders or seek payday loan alternatives that accept partial payments on the principle to reduce your interest fees.
If you must use a payday lender:
- borrow only the minimum amount necessary and no more
- have a concrete plan to repay the loan in full on your next paycheck
- have a survival plan for the month after
- avoid unlicensed lenders or loan matching services
Recent Posts:
- 07/12/2011: Expanded Contact Info Page
- 06/11/2011: Internet Crime Complaint Center (IC3)
- 05/18/2011: Added Full Contact Info Page
- 05/15/2011: Payday Loan Site Traffic Comparison Update – May 2011
- 05/10/2011: IP Ban for Ratings Abuse
Random Posts:
- 07/30/2006: Jordan Ash
- 10/05/2006: Twelve Differences Between Payday Lenders and Credit Card Companies
- 07/26/2006: Use Only for Emergencies
- 08/15/2006: Justice Brenda Brown
- 07/11/2007: John Ruoff
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