Short answer: contact the lender before the due date and ask for an extended payment plan instead of a rollover. Rolling the loan over means paying another fee to delay repayment, and the fee does not reduce what you owe (CFPB). If the lender takes payments from your bank account, you have the right to revoke that authorization (CFPB).
Why a rollover is the expensive option
The CFPB example: on a $300 loan with a $45 fee, rolling over means you pay $45 and, 14 days later, still owe the $300 plus another $45. Roll over several times and you can pay several hundred dollars in fees and still owe the full amount you borrowed (CFPB). Many states limit or ban rollovers; see small loan rules by state.
| Times rolled over | Fees paid on $300 ($45 each 2 weeks) | Still owed |
|---|---|---|
| 1 | $45.00 | $300.00 plus the next fee |
| 2 | $90.00 | $300.00 plus the next fee |
| 4 | $180.00 | $300.00 plus the next fee |
| 6 | $270.00 | $300.00 plus the next fee |
Step by step if you cannot pay on the due date
- Call or write the lender before the due date. Ask for an extended repayment plan rather than a rollover (CFPB). Ask what your state allows.
- Get any new plan in writing, with the amounts and dates.
- Check the payment authorization. An ACH authorization lets the lender take money from your account when a payment is due. You can revoke it by contacting the lender, your bank or credit union, or both (CFPB).
- Watch for bank fees. If a withdrawal fails for lack of funds, the lender may charge a late fee and your bank may charge a non sufficient funds fee (CFPB).
- Revoking the authorization does not cancel the debt. You still owe the loan, so pair it with a payment plan you can keep.
Ways to cover the gap
- If you belong to a federal credit union, ask about a payday alternative loan, capped at 28% APR (NCUA).
- Ask the companies you owe (rent, utilities, phone) for more time on those bills to free up cash for the loan.
- Talk to a nonprofit credit counselor about a budget.
- If you are active duty military or a dependent, special limits apply; see our Military Lending Act guide.
If a lender or collector treats you unfairly
You can submit a complaint to the CFPB online (consumerfinance.gov/complaint) or by phone at (855) 411-2372 (CFPB). Threats of arrest, or demands to pay by gift card, are signs of a scam; see our guide to fake loan calls and texts.
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Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.
Sources
- CFPB: What does it mean to renew or roll over a payday loan?
- CFPB: I was asked to sign an ACH authorization to allow electronic access to my account to repay a payday loan. What is that?
- CFPB: What are the costs and fees for a payday loan?
- MyCreditUnion.gov (NCUA): Payday Alternative Loans
- CFPB: Submit a complaint