You are able to make a partial payment on your payday loan. However, before you do so, you must get approval for this from your lender. Therefore it is important that you call your lender before deciding to take this route.
You should also be aware that there are often negative consequences to submitting a partial payment on your loan, such as negative impact on your credit score and late payment fees. A partial payment will help in lowering the balance that you owe, but it is often not the optimal route to take when dealing with a payday loan.
What is a Partial Payment?
Partial payment for a payday loan is when a borrower agrees to pay only a part of the outstanding debt as opposed to the total owed. Partial payment usually occurs when a borrower is unable to make their payments in full and on time.
A borrower may decide to submit a partial payment as a way of providing proactive communication with a lender. It is often used as a way of communicating that the borrower is not ignoring the debt, and intends to pay back the rest of the loan when they can, but they are unable to fulfill their debt obligations in full at the time.
The consequences of a partial payment will vary from lender to lender. Some may be more understanding of the situation, and be happy to allow the borrower to defer full payment of the remaining balance to a later date with little-to-no penalty. More often than not, however, partial payment will mean a negative impact on your credit score, as well as a late penalty fee.
Though it is important to note that, despite late fees, the partial payment that the borrower submits will be subtracted from the overall balance owed.
Does Partial Payment Affect Credit?
Yes, partial payments may result in a negative impact on the credit score of the borrower. If a borrower submits less than the minimum payment required, the lender could mark the payment as missed or delinquent on the borrower’s report. And it is important to note that a late payment will remain on your credit report for up to 7 and a half years after that account is first reported late.
How to Make a Partial Payment?
If the borrower has decided to repay less than the amount owed on an upcoming payment for a payday loan, perhaps because they cannot make their repayments on time and in full, there are several steps that they must first take:
- Contact the lender. The first thing that a borrower has to do when considering a partial payment is contact their lender to ask if they will accept a partial payment. If the borrower has a good relationship with the lender, the lender may be understanding and accept the partial payment without charging late fees. They may allow the borrower to skip a payment, or change the repayment date. The borrower should always ask if the partial payment will be recorded as late. The borrower may also ask if the lender has any ‘special circumstances’ plans if the borrower’s situation has become particularly difficult.
- Make arrangements to pay the deficit. A lender may be understanding of the borrower’s situation at first, and allow only partial payment of the debt owed. However, if the borrower does not catch up with the repayments, it is likely that they will be reported late each month. This will result in recurrent late fees and a negative impact on the borrower’s credit score. Therefore it is incredibly important that the borrower makes arrangements to pay back the deficit. This might be achieved through finding extra income through a second job, or borrowing money from friends and family.
- Consider options such as debt management and debt relief. Partial payments are only a temporary, and short-term solution to debt repayment. They can result in more debt and more financial issues if the repayment situation is not eventually resolved. If the borrower is in a situation where they cannot see themselves being able to eventually repay their loan, they should not panic. There are options available to them.. They should begin to explore debt management and debt relief options, such as speaking to a debt advisor.