Payday loans are meant to give borrowers access to quick cash in the case of a financial emergency. The most commonly used method of repaying payday loans is by simply writing a postdated check to be paid when the borrower receives the next paycheck. Payday loans often come with high interest rates and can be quite costly to the borrower in the case of a default. Regardless of the reason that prompted you to take the loan, you don’t have an excuse for failing to pay it off.
Most borrowers find payday loans quite simple and straightforward but failure to repay the loan on time can easily become a nightmare. Statistics from a recent survey conducted by Which? showed that close to half of payday loan borrowers across the country were unable to pay their debts on time while over a third were constantly hassled by debt collectors.
What Happens When The Borrower Doesn’t Have Money On The Loan’s Due Date?
When you take a payday loan, you agree to be lent a given amount of money for a fixed period of time, for instance, you can borrow $100 for two weeks. When the loan is due, the lender automatically takes the entire loan amount including interest from your bank account. It is, therefore, upon you to ensure that there are sufficient funds in your bank account to cover the loan repayment on the date you agreed to pay the loan.
The lender usually starts the collection process from your bank account at 5 A.M on the repayment day. If you don’t have money in your account or the available amount is not sufficient to cover the full debt, the lender will still try to collect payment from your bank account for as long as it takes. The entire amount has to be recovered so the lender will try to take money from your account as many times as possible. If you don’t have enough money to pay off the loan, the most prudent thing to do is to talk to your lender and arrange a repayment plan that you can possibly manage.
Keep in mind that the lender has been holding your check since the day you took the loan and is only waiting for the day the payment is due to cash the check. If you do not have enough funds in your account on the due date, the check will obviously bounce. The bank will charge you an overdraft fee each time the check bounces and you will incur a late payment penalty from the payday loan lender. Choosing not to pay the loan can be quite costly in the long run.
You may be on some form of government benefits program whose earnings cannot be garnished by a debt collector. However, payday loans are quite different. When you write a check authorizing the lender to collect a given amount of money directly from your account, you give them the permission to collect the funds regardless of the type of funds in the account. It doesn’t matter if you are on a government benefits program or not. The lender already has your permission to collect when the due date comes.
A payday loan is normally expected to be paid at the time you receive your next paycheck. Failing to pay the payday loan may lead to additional finance charges including bounced check fees over and above the amount owed. The lender can even file civil charges against you or even garnish your wages. National Payday Loan Relief can be the right choice for payday loan debt consolidation.