Extended Payment Plan
According to the Community Financial Services Association of America(CFSA), a client who is not able to repay a payday loan on its due date has the alternative of applying for the Extended Payment Plan (EPP) program. EPP allows clients to pay back the loan in a few installment payments over several weeks. This alternative is provided by CFSA-member companies to their clients for any reason with no other costs. In the event that a borrower skips one of the four payments, extra fees and penalties may be applied.
How does the Extended Payment Plan work?
1. Apply for EPP. A client may ask for the Extended Payment Plan on the last business day before the payday loan’s due date. The borrower must contact the lender the same way as he applied for the loan. The borrower has to sign an amendment to the loan contract describing the new payment schedule.
2. Confirm the new payment schedule. Under the provisions of an EPP, the consumers have the opportunity to pay the transaction balance in equal payments matching periodic payment dates. They must agree to the new repayment plan. Most lenders do not allow any changes once the borrower has agreed to it.
3. Make payments to avoid penalties. There are no charges for applying for this program. Still, if a client fails to abide by the conditions set out in this Plan, a lender may charge an Extended Payment Plan fee and accelerate payment on the remaining balance, as allowed by law.
4. Respect all obligations. The lender will not perform any debt collection actions as long as the client complies with all the obligations in the EPP. However, in case the client does not pay the installments as determined in the EPP, the lender will take action to collect the outstanding balance. This may incur extra fees and charges.
5. Use only once a year. The borrowers are allowed to apply for a payday loan EPP once in a 12-month period.
EPP and The State Laws
The Extended Payment Plan terms differ depending on the state and lender. CFSA members provide this program as a form of financial assistance to clients in states where laws regarding EPP do not exist yet. In states that do allow the EPP, a borrower may still apply for the Plan even if his lender is not a member of CFSA.
References and Sources
1. ABOUT CFSA. Retrieved from https://www.cfsaa.com/about-cfsa
2. Lisa McQuerrey, (January 24, 2010). How to Get an Extended Payment Plan If You Can’t Pay a Payday Loan. Retrieved from https://www.sapling.com/5906522/extended-cant-pay-payday-loan