What Happens if You Can’t Repay a Payday Loan?

The beauty of taking out a payday loan is that’s it’s simple and straightforward – you borrow the money and then pay it back, with interest, when you get your next paycheck. What happens if you don’t get as much as you expected or if you can’t pay back your payday loan because of an emergency? The nature of a payday loan makes it difficult to skip a payment without paying serious fees.

1. You may get hassled by collectors. A lot of people – approximately 50%, according to Which? – who can’t repay their payday loans end up fielding calls from debt collectors.

2. You might pay much more than you originally thought. Rollovers, added interest, and miscellaneous charges can increase the cost of a payday loan.

3. You could immediately get charged a late payment fee. Unfortunately, a lot of lenders don’t put detailed information about their late payment fee on the website, so you may not even know it’s coming. If you’re looking into Utah payday loans, make sure to ask about their late payment fee before agreeing to anything.

4. Your credit score could go down. Failing to pay a payday loan has a negative effect on your credit report, which could make it harder to borrow in the future.

5. The payday loan will continue attracting interest until it’s paid in full. Most payday loans have a high interest fee, which is a big problem if you can’t pay it sooner than later.

6. If you have to ask your bank to cancel the lender’s check or to block the automatic payment from being deducted, you could get charged a fee for the service.

During the early morning hours of the day when you have to repay the loan, the lender will begin trying to collect – it could be as early as 5 a.m. If your bank has a policy that charges you every time you have insufficient funds for a charge, the extra debt could start piling up right away. Talk to your bank about their policy and to the lender about getting an extension before this happens. The best way to avoid more and more charges is to talk to the lender ahead of time – don’t wait until the payment is already late.

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