Yes, it is possible to cancel your payday loan at any point, but just know that you could be charged interest for any days that your loan is open.
The terms and conditions of a payday loan agreement state that you have the option to cancel your loan at any time, which may be on the same day your loan was completed or maybe a week or two after it was taken out.
To cancel your payday loan agreement usually means calling or writing to the lender and typically paying off your loan in full – or however much interest has accrued up to that point.
Some lenders may offer a ‘cooling period’ where you have 24 or 48 hours to be able cancel your loan with no payment or interest accrued. To do this you will need to check the terms and conditions of your loan agreement which is presented to you during the application and approval process.
- It is possible to cancel your loan at any time, but you may have to pay interest for the number of days that it is open
- Your loan is cancelled if it is paid off in full
- Some lenders will offer a cooling period of up to 48 hours which means there are no fees if you wish to cancel
- You can ask your bank to cancel payments to a payday lender, but you must also contact the lender for your account to be closed, otherwise you will still be required to pay off any interest outstanding
How To Cancel Your Payday Loan
Step 1: Contact your lender by calling, emailing or writing to them. The contact details will be presented on their website. There may be a login or ‘my account’ section where you can cancel your loan or pay it off in full.
Step 2: You may be required to pay off any interest that has been building up – since payday loans accrue a daily interest. So if your loan is open for 3 days, you may have to pay 3 days worth of interest for the loan to be cancelled or no longer active.
Step 3: Once you have confirmation from the lender, your loan will be cancelled and you will no longer be eligible for further payment.
Why Might I Want to Cancel My Payday Loan?
You have found funds elsewhere: Very often, someone looking for emergency cash might have made a number of applications on the day that they needed funds and maybe it has resulted in having numerous loans funded at once. However, if you only need one loan open, you may wish to cancel the others.
In addition, you may have found a loan or money elsewhere, such as from a family member or friend and therefore no longer need the loan.
You wish to clear your account early: Payday loans are typically used to help with a shortfall of cash, such as paying for an emergency expense or pressing bill, but once you have paid this off, you may find that you no longer need a loan. Hence, you can save on interest by paying off the loan early and maybe only pay 5 days worth of interest, rather than 30 days.
You cannot afford it: Payday loans are an expensive type of finance, usually because they are quickly funded and only used for short term purposes. But you may find that you needed the loan initially but it is getting too expensive to manage and with other debts pilling on, this will put you under further financial difficulty.
The loan is not what you were looking for: If you need money fast, you may find that a payday loan is the easiest solution, but with a little more research, you may find that there are other alternatives out there that are cheaper such low interest credit cards or using a credit union.
Can a Payday Lender Still Charge Me if I Cancel After 1, 3 or 5 Days?
Yes, a lender can charge you interest even if you wish to cancel your payday loan after just a few days. Usually, from the moment that the loan is approved and funded into your bank account, you will start to accrue interest each day of around 1%.
There are exceptions in that some lenders offer a cooling period of 24 or 48 hours where you can return and cancel the loan with no fees applicable. You will have to check the terms and conditions to see if you are eligible for this.
It is not unfair for a lender to charge you fees, even if the loan is open for just a few days. To process, underwrite and credit check your loan application will cost the lender a few dollars and even a small payment can help recover their costs.
Will Cancelling a Payday Loan Impact My Credit Score?
Provided that your loan has been repaid or cleared and is not overdue or in arrears, there will be no negative impact to your credit score.
Can I Ask My Bank To Cancel My Payday Loan?
Yes, you can ask your bank to stop accepting repayments from a payday lender, but you will also need to contact the lender and cancel or close the account.
Can I Get My Bank to Stop Payments to a Payday Loans Company?
Yes, if you want to stop payday loan repayments from coming out of your bank account, you can contact your bank to stop payments from being taken out automatically.
When your loan is approved, there is a process called ACH authorisation which collects payments from your account each month – and you can call your bank to stop these payments. However, if your loan is still open, you may be liable for any interest accrued and any outstanding repayments.