The payday loans are the most sought-after financial help for the employed community. This credit is to be paid off in less or within 28 days. If we see the average interest rate charged, it is about 1,300% annualised. About 1/4th payday loans are rolled over for a new loan but at a high-interest rate of almost £24, a month for £100 borrowed. The average loan size is £260 while the majority of applications are received for £100. According to CMA, 75% customers take more than one debt in one year with average 6 loans per year. The 25 -30 years old people earning less than £1,500 / month living in rented buildings are more likely to take salary day loan. The payday loan can be availed online or offline both but the high annual percentage rate many times make the borrower incapable to pay it on the time. What should you do if the same happens to you? Don’t worry, some smart hacks may help you sail safely amid the turmoil of financial instability making the payment of payday loan almost impossible.
What to Do When You Feel Failing in Paying Payday Loan:
Most of the time, you start feeling symptoms of upcoming financial problems a few days before. You start feeling shortage of funds as the date of pay arrives because of pending dues and the expected living expenses for the month. Although paying any debt on the time is must but sometimes you can’t do that even if you wish to do that. There are some smart ways to manage the failure in payday loan repayment. Before going ahead, let’s explore the possibility.
What Can Happen When You Fail In Repaying Loan?
Payday lenders do not waste time expecting the due money. They immediately initiate the automatic withdrawal from the referred bank account; in most cases, lenders get access to your bank account as part of the loan agreement. If you don’t have sufficient funds in your account, they can break the total due amount in small parts to withdraw whatsoever can be paid. Each failed withdrawal triggers a fault penalty against you, while the successful attempts drain the bank account causing other planned transactions to go bounce; it again results in more penalties. In parallel, the direct lender continues calling, and sending reminders through lawyers; he may contact your relatives or friends also. It means the failure in repaying your loan drives in more complex financial crisis and a bad name in society as well. According to Bruce McClary – the spokesperson for National Foundation for Credit Counseling, “If you have a legal and valid agreement to payday debt, the lender can sue you and can attach the wages for recovery of the due loan amount. The borrower is sure to lose prestige and credit score rating as well.”
Action to Manage Your Failure in Paying Back Payday Loan:
As soon as you see a problem in repaying the debt, talk to a lender and try to modify the repayment plan but before the last date of the agreed repayment period. Understand new terms and interest rate by going through a new proposal. Try to take a personal loan from your bank and pay the due loan amount; it may sound a complex process but it is possible; otherwise, direct lenders are a versatile option to act this way. Trying some short-term financial help at credit unions is also a good option; here, you can get the small installment loan even if you are poor credit score holder. Some credit unions offer payday alternative loans also for the members. A chance to negotiate is the other way to solve the problem; direct lenders are more concerned about receiving their money back first rather than getting the expected profit. If you tell them that you are thinking for declaring yourself bankrupt, they will be more serious for negotiation because they know they would get nothing after that. According to John Ulzheimer, a credit expert, “Tell the direct lender that I can’t pay the due amount, I am going to declare bankruptcy. The minute you mention the word ‘bankruptcy’ they become ready to adjust the due amount up to the least that you can pay.”
Majority of lawsuits against the borrowers are for small pending loan amounts; so, if you think that your direct wouldn’t sue you for a small amount, you may be wrong. Depending on state law, the failed borrower is exposed to bank account levies, wage garnishment and property liens etc. The best way to tackle your failure in repaying the payday loan is not to hide the reality from the lender, tell the truth, intent to pay, negotiate to pay less and extend the repayment period.