Did you know that between October and December 2018, the U.S. owed a little over $4 trillion in consumer loans?
That’s a lot of money, which doesn’t even include mortgages.
But that’s not the end of the story.
In the same quarter, 2.34% of all consumer loans were delinquent. That means if all 252 million U.S. adults have a consumer loan, then about 5.8 million loans are delinquent.
If you’re one of these borrowers with delinquency, you want to fix that right away. Especially if what you owe is for a payday loan.
Delinquency doesn’t have to progress into payday loan default consequences. But if you delay payments even longer, you’re looking at more expensive late payment fees.
Exactly what happens if you don’t pay back a payday loan no credit check? And in case you failed to pay the due amount on time, what should you do right after?
All these and more, we’ll cover in this post, so be sure to keep your eyes on this page!
A Missed Payment Often Starts with a Bank Withdrawal
When you applied for a payday loan, just as with a cash loan, you likely gave the lender permission to access your bank account. You may have agreed to this condition in the hopes of getting a “Yes” from the lender.
And so, you did get that yes, but now, that may also mean they can start making withdrawals from your account.
This is why it’s very important to choose a reputable lender, as they offer grace periods. A grace period is one of the most important loan elements and benefits the best lenders offer. With this, you still have a few days after a missed deadline to make a payment.
That said, the lender will only withdraw from your bank account after the grace period.
What happens then?
If your account doesn’t have enough money in it, the lender may try taking out smaller amounts. But every time a debit doesn’t push through, your bank may charge you with a “failed debit” fee.
If they do go through, this can bring your account below the required maintaining balance. If you have other bills on autopay, these transactions will bounce, leading to even more fees.
This is why, when taking out a loan, you need to choose lenders known for being understanding. The best payday loan lenders will want to hear from you in case you can’t pay back your loan. So, don’t hesitate to call your lender as you may be able to negotiate with them.
Calls from the Lender or a Collections Agency
Reliable lenders will call or message you as a reminder to make your payments. This isn’t illegal.
But make sure you pick up their calls and explain to them your situation. Ignoring their calls will only make them feel more worried. Whereas taking their calls promptly is an acknowledgement, then helping ease their worries.
Reputable lenders won’t submit borrowers who never pay back loans to non-stop calls. But there are some lenders who do and may even hire collection firms. Debt collectors may “pressure” non-paying borrowers to repay their loans.
It’s also not rare for some lenders to use illegal tactics, claiming jail time for non-payment. One study found that 30% of payday loan borrowers reported receiving such claims.
Keep in mind that loan delinquencies and even defaults aren’t criminal offenses. That’s why it’s illegal for debt collectors to use threats of imprisonment. In fact, you may sue them if they use such threat strategies on you.
This doesn’t mean you shouldn’t pay back your loans anymore. Remember, proper use of payday loans can help you get out of cash emergencies. If you never repay your loan, you may have serious difficulties qualifying for one again.
Let’s say you took out a payday loan no credit check. Because there was no hard credit check involved, the loan didn’t affect your credit score. But not paying back payday loans can force lenders to tag you as a high-risk borrower.
Many lenders keep such records for years. So, even a few years from now, your non-payment can limit your qualification for a new payday loan.
What to Do with a Missed Payday Loan Payment
For those who can’t pay back payday loans but isn’t delinquent yet, check if your bad credit personal loan contract has a grace period. You may have a few days to come up with the money before the lender tags you as a late payer. If there’s a grace period, contact your lender and make a promise-to-pay arrangement.
If you’re already a few days delinquent, make sure to still phone your lender as soon as you can. Tell them your situation but also inform them that you’re already raising money to pay them back. Calling them and being upfront may make them less worried that you’ll run and not pay them back.
This can then make them easier to negotiate with. They may set you up with a repayment plan that’s easier on your budget. But make sure you have the lender put this into a written and signed contract!
When Delinquency Becomes a Default
Not communicating with your lender can lead to your personal loan no credit check becoming “in default”. In this case, they may have to hire a debt collector to collect your payment.
Ethical debt collectors don’t make empty threats, as they know it’s illegal. But they can contact your references at least once. These are the people you listed the names and contacts numbers of when you first applied for a loan.
Debt collectors may also report your loan default to credit reporting agencies. If this happens, this will pull your credit score down. The lower your credit score is, the lower chances you have of qualifying for future loans.
Communication is Key to Preventing Payday Loan Default Consequences
As you can see, you shouldn’t ignore payday loan online default consequences. You don’t want a default to end up in your credit report. But more than that, remember that your lender lent you money in good faith that you’ll pay it back.
Always keep in mind that proper use of payday loans can be helpful in financial pinches. But you should also make sure you choose a highly-rated, dependable payday lender. These lenders are willing to help late borrowers figure out better repayment plans.
If you need a payday loan from a trustworthy lender, then look no further. All our payday loan programs come with competitive rates and easy-to-meet requirements. We know that many of our borrowers are on tight budgets, so we find ways to make our loans easy to pay back. Here are some other articles you might find helpful: