What can you do if you can’t afford to repay your payday loan? Most borrowers “roll over” their loan into a new loan – with new fees. But there’s a better option.
Instead, ask if your payday lender offers an extended payment plan, also known as an EPP loan.
Table of Contents
Key points
- A payday loan extended payment plan allows borrowers to spread out loan payments over an extended period
- This can be a less expensive option than renewing or rolling over a payday loan
- 16 states require payday lenders to offer extended payment plans, but there may be some strings attached
- Any lender who is a member of the Community Financial Services Association of America (CFSAA) is required to offer EPPs
- Most lenders that offer EPPs can’t charge borrowers a fee for choosing one (Michigan and Oklahoma are the only exceptions)
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Everyone should have access to an EPP – if they choose the right lender
Payday loan extended payment plans (or EPP loans) are a no-cost alternative that allows payday lenders to repay their loans in installments over time.
Just like it sounds, instead of repaying your payday loan in one lump sum on your next payday, it’s divided into four or more equal installments and repaid over time, sometimes biweekly and sometimes monthly, depending on your state’s regulations.
They’re the ideal fix, preventing borrowers from committing to an expensive payday loan rollover when they can’t repay their loan in full from their next paycheck.
Not all states are required to offer EPP loans, sometimes called “offloads.” However, if you have any suspicion that you may not be able to repay your payday loan in full, find a lender who is a member of the Community Financial Services Association of America (CFSAA). CFSAA is a trade association that requires members to offer EPPs to all borrowers.
Sixteen states require payday lenders to offer extended payment plans. The states are Alabama, Alaska, California, Delaware, Florida, Idaho, Indiana, Louisiana, Michigan, Nevada, South Carolina, Utah, Washington, Wisconsin, and Wyoming.
Seven states require lenders to disclose that EPP loans are available before the borrower signs a loan contract. Those states are: Florida, Idaho, Louisiana, Michigan, South Carolina, Utah, and Wisconsin.
Different states have different eligibility requirements, and Michigan and Oklahoma allow borrowers to be charged a fee. According to the Consumer Financial Protection Bureau (CFPB), Florida residents must enroll in credit counseling to be eligible, while residents of Washington State have no requirements to enroll.
Is your payday lender refusing an extended payment plan?
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State-by-state EPP regulations
There may be other rules and requirements. Please check with your state’s banking regulator if you request an EPP and are denied.
- Alabama: Lenders are required to offer you an EPP if you fail to make your payday loan payment
- Alaska: EPPs can last up to 180 days, and borrowers must pay 5% of the total loan amount when starting an EPP
- California, Mississippi: Lenders are not required to provide EPPs
- Delaware: Payment plans must be a minimum of 90 days and there is no cap on the number of installments
- Florida: Plans last 60 days and the borrower is required to complete credit counseling sessions
- Idaho, Louisiana, New Mexico, South Carolina, Utah, Virginia and Wyoming: Payment plans must be four or more installments repaid over a minimum of two months. In addition, borrowers can only have one EPP per year and the agreement must be signed on the loan’s original due date
- Illinois: EPPs must be offered if you go 35 days without repaying your payday loan, and the loan term must be at least 55 days.
- Indiana: Lenders are required to offer EPPs if you’ve rolled over a payday loan twice; the term must be at least 60 days over four or more installments
- Kansas: Payment plans must be no more than four installments
- Michigan: Standard EPPs have three installments and must be repaid over the time it takes for the borrower to earn three paychecks; lenders are allowed to charge a fee of about $20 for an EPP
- Missouri: EPPs must be repaid over a minimum of 60 days; installments are due on the borrower’s payday; borrowers are limited to one EPP per year
- Nevada: Loan term is 90 days
- Oklahoma: EPPs must be repaid in four installments; a fee of 10% of the loan amount (or $15 maximum) is allowed; lenders are supposed to offer EPPs after two consecutive loan rollovers
- Ohio: The repayment term is 60 days
- Oregon: Borrowers are entitled to EPPs after three rollovers
- Washington: EPP repayment terms are three months for loans of $400 or less and six months for loans over $400; you must pay a fee of $25 for missed payments; you must inform the lender about your inability to repay your loan no later than your loan’s original due date
- Wisconsin: Must be repaid in four installments; borrowers are limited to one EPP per year
Pro tip: EPPs are much better than renewing or rolling over a payday loan and can save you significant money on fees.
READ MORE: Don’t know if you have outstanding payday loans? Here’s how to find out
EPPs require a new loan agreement
Unless you live in one of the seven states where EPP loans must be disclosed before signing a lending contract, payday lenders won’t automatically offer an extended payment plan. Borrowers will need to ask for one. According to InFiN, a Financial Services Alliance, borrowers have until the end of the business day the day before their loan is due to request an extended payment plan.
To make the request, a borrower either needs to visit the lender in person or contact the lender online, depending on the method they used to get the loan in the first place. When they request an EPP, the borrower must sign a new loan agreement that breaks up the payment schedule into installments.
Once committing to an EPP, borrowers can make payments as scheduled or pay the loan off early with no prepayment penalty. Though lenders in most states can’t charge a fee for using the plan, lenders can charge fees if a borrower misses payments on the new plan.
Pro tip: If you suspect you might need an EPP, ask for it before your payday loan due date. It’s better to have the extension and repay your loan early than to miss the EPP deadline and have to roll your loan over instead.
READ MORE: How to legally get out of payday loan debt in 8 practical steps
Other repayment options
A payday loan extended payment plan can help borrowers avoid the payday loan cycle but might not be available to everyone. A lender might not offer it or a borrower might have already fallen behind on paying. Fortunately, other repayment options are available to help people free themselves from the payday loan trap. These options include:
- Payday loan consolidation
- Debt settlement
- Debt Management Plan
- Cash advance apps
- Payday Alternative Loans
- Buy Now Pay Later plans
- Credit card cash advance
READ MORE: Can you have multiple payday loans at once?
The bottom line
Borrowers can end up trapped in a cycle of borrowing and borrowing again, filled with regret and never really paying off their loan. An extended payment plan can help borrowers break the payday loan cycle, but is it the best option?
If you find yourself trapped in the payday loan cycle and want to get out, DebtHammer can help. Contact us today to request a free quote and get on the path toward becoming debt-free.
