Today probably every second a person in the world takes a payday loan at least once. The reasons can be absolutely different. You might need a small amount of money to launch a new business or simply arrange a huge birthday party. It is a convenient and quick way to receive extra funds. However, it is important to remember paying out on regular basis. What if you stop paying at all? In order to avoid getting in trouble, you should know what negative consequences of not paying payday loans are.
- Most banks have a so-called grace period. This is the time given to make a payment. Some institutions grant 60 days, others even 90. When you stop paying regularly and miss grace period, your credit gets in default. The amount of money that you have to pay regularly increases. Now it includes various charges, including missing the payment deadlines. Now the amount you owe has increased considerably and will continue to grow unless you start paying off.
- There is no need to say that the debt affects your credit history. Next time, when you apply for a new credit, the low credit score will impact the decision of the bank representatives.
- Apart from affecting credit history, the debt will also affect the interest rate. Clients with debt history might get credits in the future but with considerable interest. This is to compensate in the event you stop paying again.
- Banks frequently cooperate with collector firms to get their money back. The task of a collector is to make you pay. You or your relatives might start receiving bothering collector calls and letters. Most collectors do not follow the law and will not stop disturbing you. There is no point in asking them to stop and respect your privacy.
- Another negative result is repossession. If funds have been granted to purchase something, there is a risk it will be taken as a compensation. It is a widely-spread practice with car loans and mortgages.
- The worst thing that can happen is a lawsuit. Sometimes people think that it will never end up in court. But it can. Banks, as well as collectors, can bring the case to the court. It mostly happens when the amount of debts gets over a certain figure.
Circumstances can be various. If you stop paying out because of unpredictable events, talk to a bank representative. Explain the situation and ask to extend the grace period. The worst is to do nothing and get into numerous debts.