What Does Rollover Mean In Payday Loans?
Payday loan renewals or rollovers generally require you to pay an extra fee on your remaining loan balance. The fee does not lower the amount that you owe. The principal and interest associated with the rollover will remain the same.
When can payday loan rollovers apply?
Payday lenders offer borrowers the opportunity to renew or rollover loans if you are unable to pay the loan on time.
Are rollovers legal?
Many states have restrictions or banned these renewals and rollovers. You will be charged a fee to extend your loan due date if the loan is renewed or rolled-over instead of being fully repaid on its due date. The principal amount you owe is not reduced by renewing with only the fees.
An example of how payday loan rollovers work
If you borrow $300 for a payday loan, you could owe $345 within 14 days. This includes $300 plus the $45 fees. You pay the $45 fee and the $300 plus $45 fees if you roll the loan over. Then you must repay the loan the following 14 days.
The cost of the original $300 loan has increased from $45 to $90 due to the rollover. It’s possible to roll the loan over multiple times and still owe the amount borrowed.
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paying back the loan
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extend the repayment period