How to Stop Payday Loans From Debiting My Account

Take charge of your finances by learning how zaving can help halt payday loan withdrawals from your account.

Last updated by Zaving Editorial Team, on January 18th, 2024

Are you looking for a way to stop payday loans from debiting your account? Learn more here. If you need some urgent cash to get you through a tight spot, you can turn to zaving to help you explore your options. Our online service makes applying for a loan quick, easy, and hassle-free. If your loan is approved, cash can land in your bank account straight away – it's as simple as that! Start the application process right here today with zaving.

What are payday loans and how do they work?

“Payday loans are short-term loans designed to provide quick access to small sums of money, typically a few hundred dollars, to cover immediate expenses until the borrower's next paycheck. These loans are meant to be repaid within a short period, usually by the borrower's next payday, which typically occurs within two to four weeks. To secure a payday loan, individuals generally provide proof of income and identification to the lender. Once approved, they receive the loan amount and agree to repay it, along with fees and interest, by a specified due date. 

Repayment methods often involve an electronic withdrawal from the borrower's bank account or a post-dated check. While payday loans are accessible to individuals with various credit backgrounds and generally don't require extensive credit checks, they're known for their high fees and interest rates. Failing to repay the loan on time can result in additional charges and may lead to a cycle of borrowing, causing long-term financial challenges.”

How can I stop payday loans from debiting my account?

“When a payday loan debits your account, it means that the lender has the authorization to withdraw funds directly from your bank account to collect the repayment of the loan.

This authorization is typically provided when you agree to the loan terms. This setup is convenient for lenders but can sometimes cause challenges for borrowers, especially if they're unable to repay the full amount on the specified date. Stopping payday loans from debiting your account involves revoking this authorization, commonly done through a “”stop payment order”” issued to your bank. 

To do this: 

  1. Contact your bank: Notify your bank that you're revoking authorization for the payday loan company to withdraw funds from your account.
  2. Provide details: Inform the bank about the specific payday loan company and the scheduled withdrawals. Some banks may require written confirmation or a phone call to initiate the stop payment.
  3. Keep records: Document all communication with your bank, noting dates, times, and the names of representatives you speak with. This documentation can be useful if there are any discrepancies or further attempts to withdraw funds.
  4. Monitor your account: Regularly check your bank statements to ensure that no unauthorized withdrawals occur after you've requested the stop payment. 5. Consider closing the account: If the withdrawals persist despite the stop payment order, you may consider closing the account and reopening a new one to prevent further debits.”

What happens if I cannot repay my payday loan?

“If you're unable to repay your payday loan, several potential consequences may arise:

  • Accrual of additional fees and interest: Late or missed payments often result in additional fees and increased interest rates, significantly elevating the total amount owed.
  • Debt collection procedures: Lenders might initiate debt collection procedures, involving persistent calls, emails, letters, or visits from debt collectors urging repayment.
  • Adverse effect on credit score: Non-payment or late payments can negatively impact your credit score. Lenders may report delinquent accounts to credit bureaus, affecting your creditworthiness and making future borrowing more challenging.
  • Potential legal actions: In severe cases of non-payment, lenders might take legal action, such as filing a lawsuit, obtaining a court judgment, or pursuing wage garnishment to recover the outstanding debt.
 

To mitigate these consequences, it's vital to contact your lender immediately if you're facing difficulties in repayment. Many lenders are willing to work with borrowers and might offer alternatives, like setting up a payment plan or extending the repayment period, to help manage the debt effectively and avoid severe repercussions.”

More of your frequently asked questions about payday loans

Can I pay off my payday loan early?

Yes, in most cases, paying off your payday loan early doesn't mean dealing with penalties. Settling it ahead of schedule might actually lower the amount you pay in interest since payday loans tend to tack on interest every single day. Still, it's super important to touch base with your lender directly to confirm this because different payday loan providers have different rules. Before you rush into early repayment, take a good look at the details in your loan agreement and have a chat with your lender to make sure there aren’t any sneaky prepayment penalties or extra fees waiting for you.

Can payday loans be included in bankruptcy?

Yes, you can include payday loans in bankruptcy, allowing you to discharge them as unsecured debts. Chapter 7 usually wipes out this debt entirely, while Chapter 13 might necessitate a partial repayment based on your income and expenses. However, exceptions might exist, particularly regarding loans taken shortly before filing for bankruptcy. Seeking legal guidance is essential to understand your specific situation and choose the most appropriate path forward.

Do payday loans affect my credit score?

Yes, payday loans can influence your credit score if you face difficulties repaying them. When managed well and paid on time, they might not directly impact your credit score. However, late payments or defaulting on these loans can lead to a negative impact. If the lender reports your late payments or defaults to credit bureaus, it can significantly lower your credit score. This could potentially hinder your ability to secure credit in the future. Responsible repayment practices are crucial in preventing any adverse effects on your credit score due to payday loans.

Can I get a payday loan if I am unemployed?

Obtaining a payday loan without employment can pose difficulties because lenders typically require proof of income as part of the application process. Payday loan providers usually prefer borrowers with a steady income stream, which could encompass regular employment, social security benefits, or other verifiable sources of revenue. Although some lenders might entertain alternative income options or assistance, their approval criteria may fluctuate, and the associated terms might not be as favorable. Before pursuing a payday loan while unemployed, it's vital to carefully assess the terms, potential risks involved, and consider exploring alternative financial avenues.