John Lowrie

How to Defer a Payday Loan

Author: , Published: December 3, 2012
0 Flares Twitter 0 Facebook 0 Google+ 0 StumbleUpon 0 0 Flares ×

Payday loans are borrowed in the short term in order to pay for financial emergencies that arise before a person is paid by an employer, but sometimes the borrower needs to request a payment extension. Approximately one out of every four people who have a payday loan in the UK are not able to repay it on time.

Understanding the correct way to request a deferral on a payday loan is key to avoiding any negative credit consequences.

SAF#2

If only you could slow down time. © Roberto Ferrari via Compfight

 

Timing of Deferral Requests

An inability to pay back a loan can be a stressful situation, and many people deal with this stress by avoiding the situation completely. Unfortunately, avoiding the fact that a payday loan cannot be repaid on time will result in penalties, fees and negative credit reporting.

Payday loans are short term, so it is likely that the borrower will not have much time to notify the lender about an inability to pay. This makes it especially important for the borrower to notify the payday loan company immediately when the inability to pay as agreed upon is realised.

If possible, borrowers should give a payday loan company notice about payment difficulties a minimum of five days before the loan is due.

Knowing the Options

Deferral is a topic that is likely to be outlined in the initial loan agreement. Reviewing this agreement before contacting a payday loan company gives the borrower the benefit of understanding any options that may be available. A representative may not be properly aware of the specific loan terms that one borrower may have, so it is important for the borrower to understand their rights and responsibilities when it comes to a deferral request.

Phone Requests

Calling immediately after the realisation regarding an inability to pay is the best method of notifying a payday loan company. This allows the company to be aware of the situation as soon as possible, and speaking directly with a representative gives the borrower the ability to discuss deferment options.

i❤phone

Just pick up a phone – payday loans companies don’t bite! © Fatma .M via Compfight

Post Requests

Sending a request by post has some benefits, but it is the slowest method of requesting a deferral. This option would need to be done almost immediately after taking out the payday loan. However, post deferral requests have the benefit of allowing the borrower to request a record of receipt of the letter. Proof that a request was sent to a payday loan company could be helpful if the lender claims that the request was not made.

In-Person Requests

A request for a deferral may be made in person if the lender is a local financial institution. Most payday loan companies only operate online and cannot be visited in person, but some banks do offer these types of loans. A benefit to in-person requests is that the borrower can discuss options and provide proof of an inability to pay much more easily than during a request on the phone or by post.

Qualifying for a Deferral

Whether a deferral request is granted is at the discretion of the payday loan company. The lender is urged to use recommendations related to fair credit practices as dictated by the Office of Fair Trading. Areas that the payday loan company is likely to examine when determining whether a borrower can be granted a deferral include current financial status, level of total debt and credit history.

How a Deferral Works

The exact setup of the deferral will depend on the company, but there are some common ways for a payday loan company to allow a borrower to defer their loan.

One method of deferring the payday loan is by paying the associated fee and deferring the balance of the loan. The deferral will be short term, but it will give the borrower more time to get the funds together to pay for the loan. For example, a loan that was intended to last one week may be extended to 30 days.

If the borrower is unable to pay any amount on the loan, the due date may be extended. However, this method of deferral often results in a second loan fee. Deferring the loan without paying anything at all can become very costly, so it is best to find a solution that avoids high fees.

While the intention of a payday loan is for it to be short term, borrowers may find themselves in a financial bind once the due date comes around. Notifying the lender as soon as possible and working to find a payment solution is essential to avoid negative consequences of failing to repay a loan.

0 Flares Twitter 0 Facebook 0 Google+ 0 StumbleUpon 0 0 Flares ×

Leave a Reply

Check Cost of Borrowing:

£

Discussion

Have You Got The Ambition To Be A Budget Globetrotter?

It was once said that 'travel is the only thing you can buy that makes you richer.' The author of this particular sentiment remains unknown, but th...

How To Buy A New Car In A Post Recession Climate

Have you heard the news ? The recession is over, or so we're being told. It's hard to tell when the effects are yet to reach the v...

Do You Want To Survive In A Tough Job Market?

The recession might technically be over, but times are still very hard. It was recentl...

OUR TEAM

Adam RyderAdam Ryder
NCTJ-Accredited journalist, Adam Ryder has covered a range of topics from politics to human interest in both print and online publications.

Muhammad FaridMuhammad Farid
Muhammad Farid, is our personal-finance journalist focusing on economic news. Now in his Post Graduate degree on his way to a PhD in Economics!

John LowrieJohn Lowrie
Money saving and payday loan writer for Payday Angels. Specialist subject is debt management.

John EdwardsJohn Edwards
John is head of content, so read his articles and blog posts to check out what we're up to. He often helps out with Elise and Dan in terms of getting the writing they've done uploaded nicely into the website. He's the best person to contact if you see any spelling mistakes or similar!

Ellie BoydEllie Boyd
Video journalist extraordinaire, Ellie's passion is helping people understand in clear terms we're they're going wrong financially so they can get put back on the right track.

Samantha HamesSamantha Hames
Samantha Hames is a professional freelance journalist, and knows what it's like to live on a budget - read her articles for finance news coverage with a personal twist.