What does it mean to renew or roll over a payday loan?

Some payday lenders give borrowers the option to renew or rollover their loans if they can’t afford to pay off the loan when it’s due. However, many states limit or ban these renewals or rollovers.

If your loan is renewed or rolled over instead of being repaid in full on its due date, you are paying a fee to extend the loan due date. Renewing by paying just the fees does not reduce the principal amount you owe.

For example, on a typical payday loan, if you borrowed $300, you may owe $345 in 14 days – $300 plus the $45 interest or finance charge. If you roll over the loan and pay only the $45 interest, you have to repay the $300 plus another $45 charge 14 days later. That means the cost of the original $300 loan, due to the rollover, has gone from $45 to $90. If you roll over the loan multiple times, you may pay several hundred dollars in fees and still owe the amount you borrowed.

If you are having trouble paying off your payday loan, contact your lender and ask for an extended repayment plan. If you experience an issue with a payday loan, you can submit a complaint to the CFPB online or by calling (855) 411-2372.

Where this page came from

This page was imported from Consumer Financial Protection Bureau. Published by the Consumer Financial Protection Bureau and, as a work of the United States government, in the public domain.

Nobody has written it yet — it is the source material at a new address, which is why search engines are asked to skip it and why no one earns from it. It is up for grabs: take it on, and it is yours to rewrite and to earn from.