How do I repay my payday loan?

Representative Example

Total amount of credit £80, duration of the agreement 29 days, rate of interest 292% per annum (fixed), total amount payable (in one repayment) £98.56. Representative 1281.8% APR.

What is a Continuous Payment Authority?

Whilst Direct Debit is relatively well understood, collection by a Continuous Payment Authority or CPA is not so well known. Reasons for this are varied but traditionally recurring payments were collected using Direct Debits and habits persist.

One way to think of CPA is that it is a Direct Debit alternative for lenders and other firms that want to collect recurring payments from their customers. Essentially a customer gives a third-party permission to collect funds from your account at a pre-determined point (or points) in the future. One criticism from often levelled at CPA is that customers often confuse the rights that they have with a CPA to those accorded to a direct debit or standing order.

Firms that use CPA include:

  • Gyms
  • Utilities firms
  • Mobile phone contract providers
  • Magazines
  • Funeral costs
  • Payday lenders and lenders like them

Gyms use CPA to collect their fees

How does a CPA work?

This payment method works by using your debit or credit card details as opposed to your bank account. Once you give a firm your debit or credit they will be able to set a regular payment using their banking partners. Giving your card details to the company can be done in many ways. This can be done over the phone, in person or online. In most cases you will receive an email or text confirming that the CPA has been set-up.

Once you have given your card details over and agreed to a CPA being set-up the firm will then use what is known as a payment gateway to let your card issuer know that they wish to debit funds at various points in the future. The payment gateway communicates this to the firms acquiring bank who in turn pass this message on to your card issuer. Whether your card issuer accepts the CPA or not is communicated back down the same chain to the firm. If the CPA is rejected by your card issuer then the firm will be notified. They will then, most likely, reach out to you for an alternative method of repayment or perhaps to seek up-to-date or alternative card details.

How to cancel a CPA

If you need to, you can cancel a CPA by either by informing the actual firm that you had previously given permission to, or by telling your card issuer. If you tell your card issuer to stop the payment being taken, it has an obligation do so. However, what is also important is that you let the firm know as well. That way you can make alternative arrangements. This is especially important where you have a contract or credit agreement in place as you do not want to fail in your contractual obligation as that could lead to more serious consequences. For example, if you cancel a CPA for your loan repayment, you may still need to make any remaining payments to clear the outstanding balance.

Where our payments are concerned, if you ask your bank or card issuer to stop permission for the payments to us you should also notify us. If you wish to cancel directly with us you can do so by contacting us and we can discuss alternative ways of paying. If you cancel you will still be responsible for paying the outstanding balance (inclusive of any interest, fees and charges accrued), including any interest, fees and charges which may accrue in the future.

Switching bank accounts

It is important to remember that if you switch your current account to a new bank or building society using the Current Account Switching Service, your new account will be set up with all of the Direct Debits and standing orders that applied to your previous current account. However please be aware that any CPAs that you might have are not transferred over, so you may discover that the holders of the CPAs attempt to collect funds from a debit or credit card that you no longer have. The result being the payment fails. This may have a serious impact. For example, if an insurance premium goes unpaid and you need to make a claim, the insurer may not pay out.

How does collections work?

We set out exactly how our collections mechanism works in your loan agreement. What is important to note is that before any attempt to collect funds we will check that:

  • You have an outstanding balance and that we have not permitted you to repay on a different date(s); and
  • We have not exceeded the cap of two unsuccessful attempts to collect the outstanding balance (inclusive of any interest, fees and charges accrued).