Payday Loan Terms: What is a Cool Off Period?

According to a recent survey, more than half of Americans admit they wouldn’t be able to cover a $1,000 emergency expense using money they have stashed away in their savings accounts. This can make it very difficult for people to pay for things like unexpected car repairs and medical bills.

If you ever find yourself in this situation, personal loans or, better yet, payday loans might be the answer. But you will need to make sure you aren’t in the middle of a payday loan cooling-off period when you apply for one.

So, what is a cool off period for a payday loan? That’s a great question, and you should know the answer to it prior to putting in an application for a payday loan. You might come across information about a cool off period in a payday loan contract, and it’ll be important for you to know what it is.

Learn more about payday loans and the cooling-off period associated with them below.

To Start, What Exactly Is a Payday Loan?

In a moment, we’re going to set out to answer the question, “What is a cool off period for a payday loan?” But before we get around to doing that, it’s imperative that you know what a payday loan is.

Payday loans are special types of personal loans that are designed to be taken out for short periods of time. Often, people will apply for payday loans, get approved for them, and then fulfill their loan repayment obligations within a matter of just months, if not weeks.

The total time that it takes a person to repay a payday loan will depend on the specific loan terms they were able to obtain. The interest rate on a payday loan, in particular, will play a big part in how long it’ll take for you to pay back a payday loan.

What Is a Cool Off Period for a Payday Loan?

Now that you know what a payday loan is and how one works, let’s get into discussing the answer to the question, “What is a cool off period for a payday loan?”

The Consumer Financial Protection Bureau introduced the concept of a cool off period for payday loans about five years ago. This concept called for all payday loan lenders to ask people to go through a 30-day cooling off period after taking out three payday loans one right after the other.

Following this 30-day period, those who wished to go back to taking out payday loans are allowed to do it. But for at least one month, the cool off period for payday loans requires payday loan lenders to abstain from dishing out loans to certain borrowers.

Why Was a Cooling-Off Period for Payday Loans Put in Place?

The CFPB came up with the payday loan cooling-off period concept after many people started to fall into so-called debt traps. They would take out one payday loan after another and use them to make it from paycheck to paycheck without actually making a dent in their debts.

The hope was that the cool off period would force people to rethink their approach to money and stop relying solely on payday loans. Since the cool off period is still relatively new, it remains to be seen whether this rule will pay off over the long run for both borrowers and lenders.

Is a Cool Off Period a Good Thing for You?

Initially, you might look at the cool off period that has been put into place by the CFPB and think it’s a bad thing for you. But in reality, it’s not necessarily the worst thing in the world.

Payday loans should be used responsibly by those who choose to take them out. Whenever possible, people should try to steer clear of relying on payday loans too much to get them through each month.

By instituting a cool off period for payday loans, the CFPB has put people in a position where they’ll need to spend at least a month every so often thinking about how they’re handling their money and using payday loans. As a result, this period could benefit many people over time.

Should You Take Out a Payday Loan After a Cool Off Period?

If you take out a series of payday loans and have to go through a cool off period because of it, you might be wary about going back to payday loans after this period is over and done with. But when you use payday loans in the right way, they can be extremely beneficial to you, especially when you need to obtain cash fast for one reason or another.

With this in mind, you should take the time to think about how you’re using payday loans during a cool off period. But you shouldn’t discount the idea of continuing to use payday loans properly. You can still utilize them to your advantage as long as you’re smart about it.

What Are the Benefits of Taking Out Payday Loans?

Since there is now a cool off period for payday loans, some people might be under the impression that taking out these kinds of personal loans must be a bad thing. But this couldn’t be further from the truth!

Just like any other type of loan, you can put yourself into a tough financial spot if you take out payday loans without thinking about what you’re doing. You might get stuck with payday loans that come with very high-interest rates if you don’t do your due diligence.

But when you shop around for the best payday loans in the business, you should be able to find ones that come with reasonable interest rates attached to them. Here are the benefits of taking out payday loans like this:

• You’ll be able to get your hands on cash that you need for emergencies in no time
• You’ll have the opportunity to repay a payday loan as quickly as you want in most cases
• You’ll get the peace of mind that having a little extra cash on hand can provide

You shouldn’t allow the payday loan cooling-off period to scare you away from trying to secure this kind of loan. It can work wonders for some people and provide them with more hope for the future as far as their finances are concerned.

What Can You Do to Make Sure You Can Repay a Payday Loan?

If you’re worried at all about being able to repay a payday loan, there are some simple steps you can take to make it a possibility. You won’t have to worry about not being able to pay back a payday loan when you take the correct approach to it from the start.

Here are several steps you should take when you’re in the process of applying for a payday loan that will make it easier to repay it later:

• Search for the best payday loan lender you can find
• Work to get the lowest interest rate possible on a payday loan
• Read through a payday loan contract from start to finish before accepting a payday loan
• Make sure you understand how long your payday loan repayment period will be
• Skim through any other payday loan terms that could impact your ability to repay a loan

At the end of the day, you might not even have to worry about going through the payday loan cooling-off period when you make it your mission to repay a payday loan fast. You’ll be able to pay back payday loans so quickly that you won’t be in a position where you’ll be taking out one payday loan after another in a short period of time.

But just in case, you should remember what the cool off period is and keep it in the back of your mind when applying for payday loans. It’ll ensure that you understand why you aren’t able to get approved for numerous payday loans within a span of just a few months in most cases.

Contact Us Today to Apply For Personal Loans

Knowing the answer to the question, “What is a cool off period?”, prior to applying for a payday loan is important. You won’t have to be concerned about this period sneaking up on you when you know what it’s all about.

Would you like to get more information on applying for personal loans like payday loans? We would be more than happy to talk to you about how to apply for one today.

Get in touch with us now to see how a payday loan can work in your favor and browse through our blog for more personal loan tips.