What are the consequences of failing to pay back your payday loan

Payday loans have been proven to be great for people throughout the world, yet, not many people are aware of the consequences that they can face in case they are unable to pay back their loans in time. With this in mind, in this article, we will focus on learning what the actual consequences are, alongside with learning how to deal with them, in case you are even placed in the situation of being unable to pay back your payday loan.

To kick things off, it is important to learn the consequences of not paying back your payday loan on time, or at all.

In case you decide to default your loan, and do not manage to arrange an alternate payment method with the agency, then you should expect your credit score to take a considerably hit. Not only this, but when a borrower decided to default, chances are that the lender will go ahead and sell the debt to a collection agency, which will then go ahead and report the unpaid loan to a couple of bureaus, based on your jurisdictional area.

What should I expect from collection agencies?

Most people are truly afraid of collection agencies due to the horror stories they hear. However, in today’s world, there is a legislative framework, which means that they also have to follow a set of laws, and cannot freely roam around your property, or call threats. However, you can expect debt collection agencies to go ahead and call you both at home and work, and in some cases, you can even expect them to get in touch with your friends and family, and ask them to pay back the loan. This often represents the first step of trying to get the debt back. If this does not succeed, then chances are that you will be sued in civil court.

Being sued in civil court

In case you default on paying back a loan, the lender also has the option of initiating a court appeal towards you, in order to collect the amount that is overdue alongside with the afferent taxes. Once the payday loan agency has managed to obtain a judgement against you, they may be able to seize your property and then proceed to sell it in order to pay back the balance of the loan. Debt judgements are quite dangerous, as they can be satisfied by selling most types of properties that you already own, or later decide to acquire. The period of time for your judgement tends to depend based on where you live, but in the UK, it usually lasts for a couple of years.

Do keep in mind that failing to pay back your debt does not represent a crime, so you likely won’t face any jail time for this. However, you can expect to lose some of your property, but also significantly worsen your credit score.

Upon being sued, or being threatened, it is best to hire a lawyer that will proceed to help you get rid of the threats and keep your property. However, in most cases, the best option would be to work harder for a specific period of time and pay back the loan that you have initially signed for. This will get you rid of quite a lot of headache, while also saving you time and valuable resources.

Expect to pay higher interest fees if you’re late with your payment

As payday loan agencies do not check your credit score, they also often use higher taxes, to make sure that borrowers pay back their debt on time. Based on this, being late and failing to negotiate with the agency can lead to higher taxes and interest fees, so you can easily find yourself owing a few more hundred pounds for a smaller loan that you took a few months ago, if not paid back on time.

Dealing with the issue

If you know that you won’t be able to payback your loan on time, then you might want to call the payday loan agency as soon as possible, and let them know about the issues that you’re dealing with. If your problems convince them, then chances are that you will be given a few extra days or weeks, during which you can pay back your loan. Interest fees may also be smaller, depending on the payday loan agency that you choose.

However, your best bet is to try your best to pay off the debt as soon as possible, as dealing with it in court can be a pain for both the lender and the borrower, and can lead to other issues later down the road, especially if you will find yourself requiring a loan in the future.

The main benefits of payday loans

The payday loan market has grown substantially during the last couple of years, and this is completely understandable, considering the current state of the world’s economic system, and the large amount of people who are currently underpaid. This has lead millions of people from regions from all around the world, including the UK to resort to payday loans, which are popular for offering a quick way out of financial emergencies.

To put things better into perspective, most people use payday loans for emergencies such as not being able to cover utility bills, having their car break down, being involved in an accident, needing medical attention, the death of a relative/friend, celebrating a special event, and even travelling. Most of these financial situations do not require too much money to be used, and often only require smaller sums, which can be paid back on time. The concept has been defined as a small loan that can be scored immediately, and which has to be paid back in a lower period of time, once the borrower receives their next pay check. From this definition, we can quickly extract the main requirement of being eligible for a payday loan: being employed, and receiving a monthly salary.

With this in mind, consider the mental exercise of putting yourself in the place of a person who requires money quickly, to help remediate an emergency. Regardless of the reason, chances are that your best bet would be to try and get a payday loan. In this article, we will talk about 5 of the main benefits of payday loan, thus explaining why they are such a great idea, and why so many people choose them over traditional loans, or borrowing money from friends and family.

Fast credit check

In fact, most payday loan agencies don’t even require a credit check, so you won’t have to worry about your current credit score. Rather, you will have to provide documents that prove you are currently employed and receive a decent monthly salary that would allow you to pay back your loan in time. If this is the case, and you are also over 18 years old, then chances are that you should be able to get a payday loan, in the UK, but also in other areas of the world. While there are in fact, some agencies that also check your credit, this is normally done when it comes down to negotiating higher loans that normally, people wouldn’t be able to pay back on time. However, such cases are quite rare, and for the normal type of payday loan, nobody will bother checking your credit score, and seeing whether you owe anyone any form of debt whatsoever.

No upfront fees

While payday loans are typically a bit more expensive when compared to traditional loans, there are no upfront fees. This means that all the interest alongside with the debt will be paid at the end of the turnaround period, once you are able to pay your debt back. This has further increased the popularity of payday loans in the UK.

Application is quite easy

As the era of the Internet has taken over the world, people can easily research for the best payday loan agencies operating in their jurisdiction, and even apply online by scanning the afferent documents. Normally, the application for a payday loan shouldn’t take longer than one hour. You also have the possibility to apply via phone, or in person, at the physical location of the payday loan agency that you chose.

Payday loans also offer insanely quick processing

In the case of traditional loans, you often have to wait for a couple of days, or even weeks before you get your funds transferred to you. This isn’t the case with most payday loan agencies, as they’ll quickly proceed to send over the funds within a couple of hours, or at the beginning of the next business day, which is great, especially in case you are dealing with a difficult financial situation that you need to solve as soon as possible. Your documents will also be processed fairly quickly, so you won’t be wasting valuable time.

The debt and loan are automatically transferred

Once the day to pay up has arrived, the agency will simply debit your account, and take away the loan, alongside with the interest fees, so you won’t have to spend time at the bank, or make the transfer yourself, unless you really want to do so.

Based on everything that has been outlined so far, these benefits have further increased the popularity of payday loans, thus making them perfect for people from all around the world who are in need of some emergency cash, and don’t want to get it from a bank, or by borrowing from friends and family.