Top Four Consequences of Not Paying Payday Loans

[Feb 25, 2009.]

 

What’s the worst that could happen if you’re found not paying your payday loans off in a timely fashion? And how serious is it anyway? Well, that depends on who you ask. One person’s view of stiff penalties could be seemingly tame in another’s perspective. Keep in mind that there are consequences, but not nearly as many as nonpayment of a more traditional loan form. Here’s a brief rundown of what you can expect if you’re unable to pay.

1. No Court Time. Be cause loans are typically under $300, chances are you won’t have a payday lender come after you in court. In fact, the typical strategy is to be super aggressive in the collections phase and then write the loss off as a bad debt.


2. That Incessant Calling! One of the ways payday loans got a bad rap in the press is that they literally hound you to death if you’re late on a payment. They call your home, your work, your cell number, etc. Calls to your work can be particularly embarrassing if you don’t want colleagues knowing that you’re not paying payday loans back. This aggressive collection behavior can also wear on your stamina, like a dark cloud constantly hanging over your head.


3. Deposit the “Safety” Check. Payday loans typically require a safety check to be written before loans are dispersed. This check is usually in the amount of repayment with an authorization from you that payday lenders can deposit it in case of nonpayment. If there are insufficient funds to cover the check, you’ll have to deal with repayment of the loan plus any bank fees your bounced check accumulates.


4. You, on the Blacklist. Another “this for that” consequence that can come from not paying payday loans is with respect to your borrowing record. Because of the small amounts, payday lenders typically don’t report you to one of the three major credit bureaus. Instead, they flag your name in their proprietary system, used by a majority of payday lenders in the country, as an elevated risk. This can easily get you barred from receiving other payday loans.

Remember, payday loans are inherently risky, so lenders must have a system in place to attempt to offset that risk. You might look at this list and decide that the hassle isn’t worth the convenience of virtually instant money. But it’s the smart borrower that understands the rules before he or she plays the lending game.

 

About Author:

Kelly Richardson is a freelance writer, marcomm consultant and digital entrepreneur. He’s written content for Fortune 500s Google, Yahoo!, Microsoft and Wells Fargo. Find out more about him at kellyrichardsoncopywriting.com.