Can you repay your payday loan early?

Find out which lenders will let you repay your loan early and how much you can save.

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If you're in a position to repay your payday loan off ahead of schedule, great! Repaying early can save you money in fees and make your budget easier to manage. However, not all lenders have the same rules in place when it comes to repaying your loan early. This guide will take you through what you need to know.

How do you repay a payday loan early?

There are a few things you need to do when you want to make early repayments to your payday loan or repay the entire loan early. This includes:

  • Checking your loan contract for early repayment terms and conditions. Your loan contract will establish any fees or penalties you might have to pay as well as any stipulations regarding early repayment of your loan. It's best to be aware of these before you get in touch with your lender.
  • Get in contact with your lender. You'll be able to find your lender's contact details on their website, on emails they have sent you or on your loan contract. Ask how you are able to repay your loan early, what fees apply and if any savings or discounts are available. You should also ask how quickly you can settle the loan because the more quickly it can be settled the more you can save.
  • Follow your lender's instructions. Follow the instructions given to you by the lender to ensure the loan is paid out correctly.
  • Make sure the payment has gone through and the loan is closed. After you pay the loan out, make sure you can see the account is closed to avoid mistaken charges.

How much can I save by paying out my loan early?

This depends on how early you repay the loan. If your loan was for an amount less than $2,000, you will be charged an establishment fee and monthly fees. If you time it right and repay your loan a month or even a couple of months early, you could save that much in monthly fees.

For example, if you have a loan term of 120 days and your monthly fee is 4%, you will be required to pay that fee four times. However, if you repay your loan within 90 days you will only pay the 4% fee three times. If you repay the loan in 60 days you will only pay the 4% fee twice.

If you borrowed over $2,000 you will be charged an annual interest rate. These repayments will generally be weekly, fortnightly or monthly and structured around when you get paid. By paying your loan early you will be charged less interest on your loan.

Which lenders let you repay your payday loan early?

Take a look at the list below to see which lenders allow early repayments and how you can organise your early repayment.

LenderAre early repayments allowed?Loan rates and fees
Cash ConvertersYes and you may receive a discountReview
Cash TrainNo. You can request changes to your repayment dates if you need to defer a repayment.Review
Credit24Yes. Email with the date you want to pay out your loan.Review
Fair Go Finance YesReview
Ferratum NoReview
MoneyMe YesReview
NimbleYes. Call 133 156 or email to discuss your payment options and receive a payout figureReview
Speckle Yes. You can make extra repayments and repay the loan early using the BPAY reference number in the online loan portal.Review
Swoosh Finance NoReview
Sunshine Loans Yes. Contact Sunshine Loans to arrange payment.Review
Wallet Wizard Yes. You can make additional repayments outside of your scheduled direct debit to pay off your loan faster. Do this within the Member's Area.Review

How do I make sure a payday loan's repayment structure is fair?

There are a number of factors to consider around payday loan repayments. Here is what to look for:

  • How frequently do you make repayments? Usually, payday lenders will set up direct debit repayments on whatever date you get paid. However, other lenders may let you select the repayment frequency, with choices between weekly, fortnightly or monthly. Just ensure whatever option you select or what the lender offers will put you in the best position to have sufficient funds in your account when the direct debit is taken out.
  • Are the late repayment fees excessive? Payday lenders are legally allowed to charge late payment fees but there is no cap on how much they can charge. So, some lenders charge more than others. It only takes one late payment or failed direct debit to see multiple charges stack up. For example, a lender may be able to charge you a failed direct debit fee, a daily late fee, a collections letter fee and other fees. Your bank can also charge you a failed direct debit fee. This could see you charged $100 or more for one late payment if you don't contact the lender. Remember to check every fee you might be charged before applying for a loan and choose a lender with fewer fees. If you think you might have trouble making a payment, contact the lender to reschedule the payment.
  • Is the lender easy to contact? Ease and flexibility with repayments depend a lot on the lender being easy to contact. See if the lender displays its contact number on its website and answers the phone, check if it has a live chat service and you can also test how long it takes for it to respond to an email.

Repayments are an important part of any payday loan as they can either help keep your loan costs manageable by being flexible or cause the loan to become unmanageable by being too rigid. Among other things, make sure you check if you can repay your payday loan early before you apply.

Image: Shutterstock

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