Payday Loans are instant loans provided by lenders to wage earners. They have to be paid with a short period of time. What happens if payday loans are not paid?
If you default on a payday loan, you will definitely be charged with additional fees. You may be required to pay a higher interest rate on your loan. Moreover, your creditor is legally allowed to seek payment for liabilities through other methods.
A bigger debt is your consequence for not paying your payday loan aside from other charges. The penalties vary according to the contract that you signed. The terms are spelled out in detail and you have your signature marked in it.
Interest rates as well as finance charges are components of your
payday loan. These rates are usually high and they get higher if you are not able to deposit your payment in time. Most lenders provide you with an extension, but then again, these provisions can cost more money.
Payday loan companies have distinct policies for the repayment of loans. Some lenders may provide you with different options of paying back your outdated loan. You may write off the loan and replace it with a new but bigger one.
Other payday loan companies may give you the option of paying your loan in smaller installment amounts but definitely at a higher rate. This is convenient for you because you do not need to shell out big amounts of money to pay off your loan.
Still others will require you to pay the interest rate first and get a new payday loan in lieu of the old one. This is a more practical option since the principal amount of your loan will not be changed. Your debt will not multiply very quickly.
Ignoring your debt is not the solution to your problem. Should you fail to make a call to your loan provider for an agreement, your loaner may submit your account to a collection agency. Collection agencies are created solely to collect unpaid debts.
Collection agencies have the freedom to contact you however they have to adhere to the correct practices according to the law. They can not harass you by constantly calling your phone number, threatening harm on you, or use foul language.
Loan collectors must be truthful at all times. They should not pose as lawyers, credit reporters, or government agencies. Collection agencies are not permitted by law to place additional charges on your loan such as additional interest or other fees.
Collectors cannot threaten you y saying that your inability to pay your debt will lead to your arrest. They may be allowed for some time to withhold your wages and sue you, but arrest is out of the question. If they sue you, you have to be present when the court asks for you to appear.
The purpose of the trial is to make sure that you and your creditor agree to a payment scheme that is favorable for both parties. You must not ignore the court summon. If this happens, the collection agency will automatically win the case. You will be obliged to pay your debt on their terms. Bigger debts is a sure consequence when payday loans are not paid.