What Happens if You Don't Repay a Payday Loan?

Many people use a payday loan to make it through the tough times. Payday loans are becoming more and more common. With paychecks being stretched tighter all the time, it is no wonder that so many people have to resort to using payday loans. While they can be a useful tool in the right situation, they can get very expensive. For this reason, some people can not pay back the loans within the specified time period. If this sounds like your current situation, you might be wondering what happens if you don't repay the loan. Here are a few things to think about.

Keep Collateral

If you used some sort of collateral to secure the loan, there is a good chance that you will not be seeing it again. For example, car title loans are one way to get the money you need for a payday loan. If you gave them the title to your car, they legally have the right to come and take your car. They can then sell it to get back the money that they need for the loan. If you used any other kind of collateral to secure the loan, they can come and get that as well. 

Cash Your Check

Another common method to get a payday loan is to give them a post-dated check. They are supposed to hold it until a certain date and cash it unless you make other arrangements prior to that. If you do not talk to them and present them with an alternate means of payment, they will try to cash your check. If there is no money in the account, you will have to pay for overdraft charges and have to deal with a bad bank record. 

Late Fees

If you fail to repay your payday loan on time, they will charge you a substantial amount of late fees. Many times, the late fees will surpass what the loan itself was and you will be required to set up an automatic payment option with your bank account. If this is the case, be prepared for them to automatically charge your bank account for the late fees as they occur. These fees will undoubtedly be charged at an inconvenient time. Even if they do not charge your bank account, they will fight with you about paying them eventually. 

Lawsuit

With a payday loan, they can also potentially sue you if they wanted to. You owe them a debt and they have the right to try and collect it. Regardless of whether they win or not, they can still take you to court. If they win a judgement against you, the court could try and set up a payment plan with you. No matter what happens in court, you do not want it to get this far. You will have legal fees that are unnecessary and burdensome. Try to take care of the problem before it gets to this point. 

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