If you’re asking, ‘Is It Possible to Cancel My Payday Loan Now?’ then the answer is YES! But… there are things you should know and certain ways to go about it.
Never cancel a direct debit before talking to your payday lender. Just check their website to see the best way to communicate with them to cancel your payday loan or pay it off in full. The usual choices will be a call, email or sending a letter to them instructing them how you’d like to proceed.
Alternatively, on the website, look for the section marked ‘my account’. Often the options for canceling your loan will be there.
Remember that payday loans build up daily interest so be aware you will need to pay that off as well as the balance of the loan before canceling it. Even if you’ve only had the loan for 5 days you will have interest to pay off for those days. The lender will then confirm the cancellation by email or letter and at that point they will no longer take payments from your bank account.
Key Factors:
- You can only have 1-2 payday loans at a time
- Check Cashing & Payday Loan Services market in the US in 2022 is just over $19billion
- Predictions show a 5.1% growth in 2022 double that in the 5 previous years
- The average payday loan is for $375 on a two-week term with an average of $520 in fees.
- Only 14% of Americans can pay back their loan
What’s the Difference With and Without A Cooling-Off Period?
A cooling-off period can make a big difference. Lenders who offer them usually make them 1-2 days where you can tell them you want to cancel your loan and they won’t charge you any interest or take any payments. Read your agreement with your payday lender to see if this is an option for you.
It gives you a little bit of time to re-think the loan and if you decide you don’t really need the money or have found it elsewhere you won’t be liable in that 24-48 hour period.
Will My Credit History Be Hurt If I Cancel Early?
Sometimes canceling early can work in your favor. If you’ve paid off the loan and all interest, then this could help your credit score. When lenders consider you for a loan they look at your credit history. If your history shows that you have paid off debts on time and in full then that shows that you are a good credit risk for their loan.
On the flipside if you cancel early and don’t pay your loan off in full then your credit history can be damaged. When lenders see unpaid loans when you apply for a loan in the future there are a couple things that could happen.
They could…
- Turn you down for the loan because you are a poor credit risk.
- Offer you a smaller loan amount than you’ve requested
- Offer a much higher interest rate
- Require that you secure the loan with some sort of collateral i.e. valuable jewelry, your car or house which you could lose if you default on that loan
What Are Reasons to Cancel a Payday Loan?
You’ve Found the Money Elsewhere
Payday loans are great for getting money fast but you may find solutions that work better for your situation. You may have found a credit card with a favorable interest rate, or your credit union may have extended a loan at a better rate or very often people end up borrowing from a friend or someone in their family.
Try These Alternatives for Emergency Funding If You’re Turned Down for a Payday Loan
- Consider a “Bad Credit” Personal Loan
- Borrow From Family or Friends
- Ask creditors to give you a payment plan. …
- Consult a Credit Counselor to help manage your debt
- Get a Side Hustle
- Low-Interest Credit Card
You Decide to Pay off Your Loan Early
Generally, you’d take out a payday loan when you need money fast for an unexpected bill or expense like a broken-down car or medical bill. The loan helps you cover these expenses for the short term i.e. before your next paycheck. Checkout payday loans in Illinois, Colorado and Californa.
As a short-term solution, they are more reasonable as their interest rates can be quite high. For that reason, paying off the loan early makes all kinds of sense. It means you avoid paying more interest than you need to.
It’s Just Not Affordable
You may have found that the interest on your loan is so high that your debt is piling up to an uncomfortable level. In this situation, if possible, going ahead and paying off the loan can be the best solution.
How Much Interest Will I Owe If I Cancel?
The amount of interest you owe depends on the terms of your financial lender’s agreement. Did they offer a 24-48 hour cooling off period? If yes, then if you cancel within their 24-48 limits then you may not have to pay interest.
But, read the fine print of your agreement before you sign. Every lender does things a little differently and you don’t want to get caught out thinking the last lender is like the next one.
Many don’t offer any cooling off and then you will be charged interest from the word go. That means interest starts building up the minute the loan starts. As mentioned above, this is a good reason to use your payday loan as a short-term loan and a temporary solution to a financial emergency.
Also, check your lender’s agreement to see if there are other fees associated with cancellation. While you may not be charged interest, you may be charged processing and cancellation fees.
You may be asking Can I Write-Off My Payday Loan?
Bottom Line:
If you’ve agreed to a payday loan, you can cancel it at any time. Just make sure you communicate with your lender via phone, email, or post that you want to cancel and find out the correct way to go about it. You’ll need to pay off the loan in full and the accrued interest. Not paying off the loan and interest can damage your credit history and your chances of getting any future loans.
