How much time do you have to pay back a payday loan?

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A payday loan refers to a short term loan in which the lender leases a small amount of money to those who are employed at a security based job, and have a regular flow of income coming to their bank account. In a payday loan, the lender gives the borrower the cash for a period as short as two weeks to maximum one month. In several states, the cost of interest is established to be less than $15 for every $100. A borrower must be able to repay the amount of loan on the decided day, or the lender electronically withdraws through his bank account. If the check bounces, or the account of borrower does not contain enough cash, the borrower would have to pay another finance charge and rate of interest along with the total amount of loan.

How do you repay?
The repayment system of a payday loan varies from state to state as well as from lender to lender. Most of the storefront lenders accept the payment during business hours, in person. On the other hand, the online lenders make use of internet services for the repayment of the amount. If you have ever worked online, or received payments electronically, you would know how the process works. Online lenders some time require access to your online accounts that are credited with the amount you have to repay. If not that, they keep your credit card number as a security. A withdrawal is make on the decided day.

Depending on the situation of each borrower and the regulations of the state, the repayment methods differ. There are basically three types of repayment options.

Full payment
Full payment is basically the best option of paying back a payday loan. In such cases, the amount that is borrowed is repaid with the total interest rate and fee. The lender either withdraws it directly from your bank account or the borrower gives this amount to the lender in person. Paying the entire amount at once is the safest and the best option available to a borrower as it reduces the rate of interest and additional charges. By getting extension, you basically split your payments and increase the total interest.

Partial payments
Another option of paying back the loan is partial payments. Partial payments reduce the principal and loan fees over time, and as a result the total interest rate accumulates.

Payday loan extensions
Payday loan extensions are taken when the borrower is unable to repay the amount on the provided day. In such a case, the borrower has to bear the burden of additional costs. It is also a last resort for many and a convenient method as well. In majority of the cases, loan extensions lead the borrower towards bankruptcy.

How long does it take to repay?
The time of repayment entirely depends on the lender and the borrower. If you apply for a loan for less than two weeks, then you are able to repay within two weeks. In most states, the duration of a payday loan is 8 days in average and 35 days maximum. Only a few states take it up to two months, and that is mostly in the case of loan extensions.

Is installment an option?
Again, it depends on the lender. Several states prohibit the way of installments in payday loans. It is only a case when the borrower proves an emergency expenditure, like an accident. In such cases states allow the borrower to pay in installments. If you are applying for a loan through a private lender, then installments may be an option.

Legal Duration
Legally, there are many restrictions on a payday loan. For example, some states protect the rights of borrowers by restriction the amount of interest of $15 for every $100 borrowed. In such cases, the duration of the loan is also restricted, to benefit the lender. The legal duration remains restricted between 14 days to a maximum of 30 days. If the borrower exceeds this duration, the lender, by the state of law can file for a higher interest rate and the borrower cannot apply for any type of exemption.

Similarly the online payday loans inn such states also work under provided rate caps to ensure protection for both the lender and the borrower. If a lender is working privately online and is not following the rules of law, then a borrower must confirm this beforehand. If a borrower files a case later on through legal sources, the state would be able to help.

Recommendations
It is the best to apply for a payday loan that is for the shortest duration possible. That is because the longer the duration of a payday loan, the higher the interest rate would be. Double interest rate means double the cost, the total amount and the finance charge which makes it even more difficult for the borrower to repay with the same income.

Note: You cannot legally apply for another payday loan while you still already have taken a payday loan.

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