Q. What can be arranged if your loan repayment day falls on the day before your income arrives? We’re about to sign on the dotted line for the loan contract.
A. The answer depends on your lender. Regardless of how often you make payments, many lenders will charge interest on your loan once a month. If we understand your question, you are asking what happens if it charges interest before you deposit income into your loan account. This can be a problem and you need to determine what action it would take and what penalties would apply.
Assuming your income is paid to you monthly, you should check with the lender to determine exactly what day they charge interest against your loan. This may be a fixed day every month, or the first business day after a set date each month. To ensure you don’t miss a payment, you should have at least one extra payment made towards the loan at all times, and check with the lender that they are able to access this money if you are a day or two late with your regular repayment.
We understand that this could be difficult to achieve when you first apply for your loan, but your first repayment is usually due a week or so after you sign for the loan, use this time to save the extra amount required and put it towards your loan as quickly as possible. This can also save you interest in the long term.