How do payday loan payments work
When you apply for a payday loan you must state how long the cash advance is for. Usually you just put down when your next payday is. Typically payday loans are 7 to 14 days in length. Then when you receive your paycheck your payday loan finance charge is taken from your checking account automatically. Now you have the option to either pay the loan down or pay the payday loan off altogether. Payday loans can be flexible that way so you can make the decision how much you will pay. The only amount automatically taken from your checking account is your interest on your payday loan.
Some payday loan lenders let you pay nothing on the loan just that interest payment. This is called renewing your payday loan. If you choose to do this your interest is deducted but you keep the rest of your paycheck. The next time you have a payday you can then decide whether to pay the cash advance loan down or pay the payroll loan off entirely. Usually you are limited to 4-5 payday loan renewals and then your cash advance center will want a small principal payment on your payday loan. After all they have to get their money back sometime.
It is always a good idea to make some sort of principal payment on your payday loan. This ensures it isn't a loan you have for more than a short time and enables you to get another payday loan should expenses or emergencies come up.
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