A major risk of short-term lending is the **debt rollover cycle**, where a borrower unable to repay a balloon balance pays an additional fee to extend the due date. Many states legally prohibit rollovers and mandate **Extended Payment Plans (EPPs)** that allow borrowers to pay down balances over several months with zero extra fees.
1. How Extended Payment Plans (EPP) Work
Under CFSA best practices and state statutes (e.g. California, Florida, Washington), a borrower who cannot meet their scheduled balloon payment can request an EPP before the close of business on the due date. The lender divides the outstanding balance into four equal installments over at least 60 days without adding interest or service fees.