Taking a payday loan can be beneficial only if a borrower pays a loan in time. If a borrower does so, he will enjoy cheap microbanking. If he fails, the price of taking a loan will become far too high.
Payday loans are distributed to American households. These are people with moderate income. Very often they are able to return a payday loan ahead of time.
When To Return A Payday Loan
A date when a borrower returns a loan is very important. It will define how beneficial a loan taking was. A return date is indicated in a loan agreement. A borrower can always negotiate with a lending company on a loan date.
When a return date comes, a financial institution will withdraw body of loan plus interest rate from a borrower’s account. In this case a personal loan taking will still be beneficial. There is a way to make microbanking even more advantageous. In this case a lender has to return a payday loan ahead of time. Here are several idea how to do it:
- Cover a loan body from savings. It is one of the best ways to pay a payday loan back beforehand. People often do not want to spend saved money to buy particular goods or services. They may need a saving to cover other needs. In this case, they apply for a short-term loan. If before certain date, a borrower has spare money he can make a request to a lending company. He can state he is able to return a payday loan back quicker.
- Cover one costly loan taking by another cheaper loan. People often do so. They cover one loan by the financing derived from another loan . If one loan is cheaper than the other one, it is very rational decision.
These are the most efficient ideas to return a loan sum ahead of time. It is important that a legal procedure of loan return is stated in the contract. Here are several clauses that a loan agreement has to contain:
- An exact return date. Each lending company defines an exact date when a personal loan has to be returned. It is possible to negotiate on this date until a loan agreement is signed.
- An interest rate. This is a very important clause. An interest rate percentage will depend directly on the return date. The sooner a date comes after loan issuance, the lower will be an interest rate.
These clauses have to be discussed between two parties. If a person returns a payday loan beforehand he has to be offered a discount for a loan.