What happens if you can’t pay back a payday loan on time??

Posted in Finance

What happens if you can’t pay back a payday loan on time??

Payday loan is that sort of credit where you can borrow a small amount (maximum $1500), and pay it back in your first payday(maximum 62 days). Approvals on this these kinds of credits are easy, and usually it will be issued against a post-dated cheque to cover loan and fees; or a pre-authorized debit which is a permission from your side to the lender agency to debit the total amount owing out of your bank account on the due date.

Actually payday loans are very common type of credits, especially among those who has no access to regular bank financial services. Although it`s high cost, but a lot of consumers believe it as a the easiest way to deal with the urgent financial difficulties.

If you already decided to go through a payday loan, so you must be confident from your ability to pay the borrowed amount on due date, otherwise you may face a lot of serious financial troubles. The following is what usually happen in case on inability to pay the borrowed loan on the due date.

  • If you decided to pay using pre-authorized debit, payday loan lender agency will charge you a fee if there isn’t enough money in your account to cover the due borrowed loan.
  • You may be charged for administrative fees by your financial institution if there isn’t enough money in your account in due date to pay the loan.
  • The interest will be applied in the entire amount you owe (Principal amount + fees)
  • The payday lender agency will start to call all of your relatives, friends, employer, etc. asking them to contact you to settle the due loan.
  • The lender agencies may also sell the due payday loan to a collective agency, which is bad for you because this could be shown on your credit report.
  • Payday lender may sue you for the due loan
  • Finally, Payday lender could seize your property

 

As we see, there are a lot of troubles wait for borrowers in case of inability to pay due loans, and that`s why we have to be certain from our ability to settle our debts.