Payday loans are short-term loans taken out to meet financial emergencies. They are termed unsecured loans due to their nature; their interest rate is very high. Payday loan companies justify their high interest rates by making cash to borrowers quick and easy. Cashfloat doesn’t consider borrowers’ credit report, neither do they require any form of collateral from clients.
Their major concern is that the borrower should have a steady source of income with which he/she can repay the loan as at when due. Unlike traditional sources who consider borrowers’ credit scores and collateral before approving loans to borrowers.
Like earlier mentioned, payday loans are short-term solution for unexpected and necessary expenses; it means that these loans cannot provide permanent solutions to long-term financial problems. Borrowers who do not understand this often end up going deeper into debts than they were.
These kinds of loans if not controlled, can culminate into serious debts. It is very important to not act greedy; taking more than is necessary because, there is no escape root once you’ve become a payday loan debtor.
So, failing to pay off these debts like every other loan has consequences.
Here are some of the consequences for failing to pay your payday loans.
If your payday loan was granted by your bank, your bank can charge you with high overdraft rates and fines when you don’t pay on the repayment date. This is why many borrowers prefer financial payday loan companies to banks when choosing lenders.
Penalty from lender
This is based on the terms and agreement binding you and the lender. You could be required to pay penalties and fines as embedded in the agreement. Borrowers are advised not to be too desperate that they won’t even go through the documents before putting down their signatures. It is expected of a borrower to communicate whatever he/she doesn’t understand or agree with to the loan officer, in order to avoid ignorant mistakes.
Harassment and humiliation from collection agencies
Once your unpaid loans have been referred to loan collection agency, you are in for trouble. These agencies would employ many tactics to get you to pay off your debts, even if it means them disgracing and embarrassing you. They are at liberty to show up or call your house, workplace and anywhere in order just to get you to pay up.
Some collection agencies may resort to abusing the borrower emotionally with threatening calls. This not allowed here in the UK as they are regulations and rules governing the collection of debts.
Bad credit rating
Your credit rating can be marred if the lender reports you to any of the three credit bureaus in the UK. This can affect your credit score, and when you finally pay off the loans, some payday loan companies won’t even notify the bureaus. It will be difficult for you to get another loan with a bad credit rating from payday loan companies.
Though many payday loan companies threaten to imprison their debtors, but it is considered as a form of embarrassment in the US. No loan company has the right to jail a borrower simply because he/she couldn’t pay off his debt; except, the borrower was found guilty by the court of law for committing fraud knowingly.
Allowing the loan company to take legal actions against you will cost you more than you were to pay. You would have to pay attorney fees and fines when found guilty.