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If You Don't Pay A Payday Loan - What To Expect

June 11, 2012 | Comments: 0 | Views: 204

Often times, payday loans seem to be the most logical short term solution to your immediate needs before your next payday. But though they are very easy to obtain, paying them off is quite as hard with its high interest rates. Before acquiring this type of loan, it is highly advisable to understand the consequences before getting into this type of loan.

What Are Payday Loans

Payday loans are unique short term loans that generally don't require collateral or good credit history, and just payment through your next payday. Some loan providers however require you to surrender your ATM cards to deposit the said amount on your next salary. Most individuals who have a hard time to make ends meet usually result to this type of loans.

Upon approval, payday loan providers usually ask for a postdated check equal to the amount of the loan plus its interest and fees. Upon your loans expiration, the borrower has the option to either pay the loan amount with included fees in full, opt for an alternative plan, or roll over the loan.

Payday loan Repayment

In other places, lenders are allowed to provide an alternative payment plan for borrowers who are unable to pay their payday on time. The repayment timeline varies by company, but usually it goes around 2 weeks to approximately 90 days. But keep in mind that these payment options involves high interest rates that are carried over into the new payment plan or terms agreed upon.

In other states however, rolling over of payday loans are legal, meaning the borrower should provide any form of payment for the necessary funds to repay the loan. The borrower then receives a new loan to be paid with next week's pay. In short, as long the borrower makes full payment each week, he/she may continue getting a loan, but the drawback is that some fees may be carried with every roll over, which means you get to pay more than you owed every time.

If I Default on a Cash Advance, What Happens?

If you fail to pay your payday loans on time, you will be given a default status. Having a default status can be serious for a short amount of time because the loan ensures a quick downturn for your credit and finances if not paid on time.

When you have a default status on a payday loan, your loan providers will attempt to deposit the post dated check with the amount plus fees of your first loan. If you don't have sufficient funds, the check will bounce which means you'll be charged with fees by your bank as well as your loan provider. Both of which will give you more problems and possible charges and neverending collection calls.

Failure to comply with the repayment agreement can result to you being sued. But in most cases, your loan providers will instead get hold of your next paycheck until the funds have been paid.

Cooper is both a writer, a freelance wedding photographer, and an occasional loan consultant. Now currently working as a blogger for several sites related to cash advance and payday loans online.

Source: EzineArticles
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