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How do I repay a payday loan?

To obtain a payday loan, you typically must either provide a personal check to the lender or an ACH (Automated Clearing House) authorization to electronically withdraw money from your bank, credit union, or prepaid card account when your loan is due. Carefully read your loan documents so you know exactly how repayment works.

If you visit a store to get a payday loan, some lenders strongly encourage or, in some cases, require you to return to the store when it’s due so you can “redeem” your check and repay the loan in cash. Encouraging or requiring borrowers to return to the store on the due date provides lenders an opportunity to offer borrowers the option to reborrow or renew the loan after it’s been repaid.

If you don’t finish paying the loan or return to the store when the loan is due, your lender will likely repay itself by cashing a post-dated check or withdrawing the funds electronically from your bank or credit union account. When you first get the loan, the lender will generally require you to provide one of these alternative forms of payment in case you default on the loan.

If you take out a loan online, you will likely be required to provide an ACH authorization for the lender to electronically access your checking account for repayment on the loan due date. Some lenders might set up payments assuming you only want to pay a renewal fee on the loan’s due date. This requires you to take action several days before the due date to pay off the loan in full. If you don’t pay it in full, you may end up paying several rounds of renewal fees while still owing the entire original loan amount.

Before you agree to a payday loan, make sure you fully understand how your loan will be repaid and how much the loan could ultimately cost you.

If you have problems with a payday loan or payment authorization, such as an unauthorized ACH, contact your state regulator or state attorney general . You can also submit a complaint to the CFPB online or by calling (855) 411-2372.