Getting approved for a payday loan online is fast and easy. However, are you familiar with the things to know about payday loans online after you get approved?
For sure, you may have read a lot of things about what a payday loan is or how it works. But, are you aware of the things that would make you a more informed borrower?
Here are some topics that may help you after you receive the loan:
How can I repay my loan?
If you applied for a loan online, you may have provided your lender an ACH authorization so they can collect the debt. Usually, you give them access to your funds for automatic payment.
You need to know how your ACH payment is done. You need to know the exact amount and date that they will take out money from your account.
In some cases, lenders only set up a renewal fee to be deducted from your account on the due date. Unless you give them permission to deduct the total amount, they wouldn’t do it.
When this happens, you’ll be trapped in the cycle of debt because instead of paying your loan and interest, you are only paying the interest. The principal loan remains unsettled.
Can I stop a lender from its authority to debit from my bank account?
ACH authorization or the lender’s authority to debit from your bank account can be canceled even if you have permitted them earlier. You can do it so they can stop debiting from your account by following these steps:
- Write and call the lender.
You need to inform the lender that you are revoking their right to make automatic debit from your bank account. The process is called revoking authorization.
- Inform your bank or credit union.
You may fill up an online form or write the bank or credit union that you are revoking your authorization for automatic payments.
- You can also request for a stop payment.
If you haven’t informed your lender that you are not allowing them any more automatic payment, you can give your bank a “stop payment order.” It instructs the bank that you are no longer permitting the lender to make deductions from your account.
You can give the order at least three days before your scheduled payment. You can provide the order in person, by writing or calling them.
For sure cancellation of your payments from the bank, you need to submit your request in writing within 14 days of your phone notification. There is a bank fee for this kind of request.
- Check your account.
You need to inform the bank right away if ever you notice that a payment has been made after you revoked the authorization. You may file a dispute for unauthorized payments made from your account.
After revoking your payment, you still need to pay your loan obligations to the lender. It doesn’t give you an excuse not to pay your dues on time.
Are there laws for payday lending?
Yes. Depending on where you live, there is a law or regulation that covers payday lending. In some places, it is banned to protect borrowers. If you are planning to get this type of loan, you must first check what regulations apply to your place.
Certain areas also place a cap on the interest rate imposed on loans. This is to protect borrowers from getting into the habit of borrowing and get out of the cycle of debt.
Payday lenders need to follow federal and state laws. To protect borrowers, Payday Rule and tight federal laws are applied. Lenders need to pass the affordability test.
What can happen if I can’t repay my payday loan?
There are many possibilities that can happen when you are unable to repay your loan. You may file a default, but it can cause you more pressure and greater financial difficulties. It can also bring your credit rating down and your ability to get a future loan can be harder.
Lenders may extract whatever amount is in your bank account. If you have authorized them previously, they may do the deductions from your account little by little until they have drained your funds.
If they fail to debit from your account, your bank may also charge you of a fee. This is called the non-sufficient fund.
In worst scenarios, they may begin sending a large volume of emails and call you many times in a day. They can also send letters from lawyers so you would be pressured to repay your loan.