Rolling loans involves extending the repayment deadline. Most often, this option is used by debtors who were unable to pay the payday payday loan in time. To avoid problems with creditors, borrowers decide to pay extra to the commitment in exchange for the possibility of settling debts later. Rolling out loans can be very dangerous and lead to a large debt if you do not exercise proper caution.
Rolling loans restricted by law
Only a few years ago, loan companies were covering the costs of commission for rolling out loans. This changed in 2016 with the introduction of an amendment to the Anti-Laundering Act. From that moment, the cost of extending the repayment date may not be greater than 25% of the total amount of the liability. At the same time, loan companies may not charge customers additional fees that would be higher than the amount of the cash loan granted in the full financing period.
Is it worth to opt for such a solution?
Before deciding whether to roll out a loan, it is worth thinking about whether this is the only solution. Let’s remember that 25% of the loan amount is still a lot. In addition, if we are not sure whether our financial situation will improve in the near future, we risk considerable debts. Perhaps a more beneficial option would be borrowing money from loved ones? If you have several sources of debt, you should go to the bank and ask about the possibility of taking a consolidation loan.
Generally, renewing or rolling over a payday loan means you pay a fee to delay paying back the loan. This fee does not reduce the amount you owe.
Refinancing and rolling out loans
Non-bank companies sometimes offer their clients refinancing loans. This involves making another commitment at another loan company to repay the debt. This is a very dangerous phenomenon that bypasses the limitations of the Anti-Launch Act. Another company may charge all non-interest costs without taking into account the client’s open obligations. It is worth remembering that some loan companies work together for this purpose. Usually refinancing will therefore be much more expensive than rolling over a loan.