Because life is full of emergencies, sometimes we find ourselves in need of a short-term loan to help with our immediate financial needs. As with traditional, long-term loans, payday loans must be paid back over a certain period of time. Defaulting such loans can lead to certain consequences.
What is a Payday Loan?
A payday loan is an unsecured, short-term loan. This is a loan that is taken to help one handle an emergency that can't wait for the payday. A payday loan lender will require the borrower to have a steady source of income. Access to bank statements by the lender may be required.
Consequences of Defaulting a Payday Loan
Defaulting happens when you can’t pay back your loans on time. The consequences of defaulting a payday loan are as dire as the other loans. Failing to settle one's payday loan can lead to several consequences, such as:
- Your credit score could drop.
- Your loan could get turned over to a debt collector.
- Your wages may be garnished until the loan is paid back in full.
- You may be subject to extra Fees and Interests. Any additional fees and interest will accrue as the payback period extends, thus adding to the original amount of the loan.
What to do if You Can't Repay a Payday Loan
If you haven't raised enough money to pay your payday loan on the scheduled time, you must try and do so as fast as possible to avoid future consequences. You can do this by negotiating with your lender to renew or extend your payday loan. This may require additional charges and must be done before the last day your loan is due.
For more information on payday loans, click here.