Generally, the method of repayment should be specified in your payday loan contract. The usual options are handing the lender a post-dated check or an Automated Clearing House (ACH) authorization to automatically withdraw money from your credit union, checking account or prepaid card account. The latter is often the case with many online payday loans.
Automated Clearing House (ACH)
It’s best practice to ask your lender what repayment method they are most comfortable with. And if ACH is their most preferred option, learn how it is set up. That is, how much the lender will withdraw and when, as well as how much you will need to pay in renewal fees if you choose to renew the loan.
You can contact your state regulator or attorney general, submit an online complaint to the Consumer Financial Protection Bureau (CFPB), or call (855) 411-2372 if you have any problems with ACH authorization. For instance, if ACH was initiated without your consent and you want it revoked.
Post-dated Check
If they prefer a post-dated check, ask them if and how much they charge for bounced checks. A lender may charge a one-time fee if the check bounces or you don’t have enough money in your account. Some banks also charge for failed transactions, in most cases, higher than a payday lender would charge.
Walk-ins
There are also a few lenders who prefer the traditional way of paying. They require borrowers to walk into their stores to redeem the check by their due date. Walk-ins afford the borrower an opportunity to request a loan rollover or borrow after the initial payment deadline.
Payment options are not the only factors to look into when repaying your loan. When to pay is equally important. Some lenders charge a fee for paying a loan before the repayment deadline. It's a good idea to ask the lender if they charge any prepayment fees. If so, you should work towards paying on the deadline day.