If any loan can be truly described as an unsecured loan, it is the payday loan. Also termed as cash advance loans, payday loans are short term loans that are provided to borrowers at exorbitantly high interest rates. Borrowers are not required to provide any credit reports nor do they have to pledge any personal property as collateral so as to obtain a payday loan.
In case a person obtains a payday loan, it is always to pay off the loan as early as possible. This is because there is no way of escaping without paying back a payday loan. There are several consequences of not paying payday loans, and some of them are listed below.
1. Higher overdraft charges levied by banks as a result of insufficient funds in the checking account of the borrower that have caused check bounce.
2. Charges levied by the lender since the loan has not been repaid on time.
3. Reference of the issue to the payday debt collection agency can result in humiliation and ignominy in the society since these agencies carry the reputation of harassing the customers by making multiple telephone calls every day and requesting payment. Calls can be made to any place including at home, at work or at any other number.
4. Aggressive strategies such as threatening calls that are followed by debt collection agencies can cause serious emotional damage including life risk.
5. Repayment of payday loans is not reported by many lenders to the standard U.S. credit agencies. In case the non repayment of a payday loan is reported by the lender to any of three credit bureaus in US, it can cause serious damage to the credit record and the overall credit score. After this, the borrower would find it really difficult to obtain any kind of loan or credit in future since these credit reports are shared between lending agencies.
6. Most importantly, a payday lender has the legal right to sue the borrower under the court of law against non repayment of loan and for writing bad checks. If proved guilty, the borrower can face the risk of a heavy penalty, apart from spending time uselessly and paying several thousands of dollars towards attorney fees.
Punishment For Not Paying Payday Loan
See Also : online payday loans no faxing