When people say that you should not default on a payday loan, they wish you well. A payday loan is an ‘unsecured’ loan given to a borrower for a short term. As it is without collateral and most of the times even devoid of a credit check, the lenders charge an interest rate that might go as high as 15%-30%, that converts to nearly 400% as APR.
Cash advance payday loans are very helpful to people, specially the salaried middle class in solving their immediate financial problems. All they have to do is visit a pay day loan store or go online and fill out an application form for a cash advance with direct deposit facility. Most of the times, the money is in hand within 24 hours!
Avoid Being A Defaulter
However, what happens if you default on a payday loan. Here are some points to ponder on:
o Once you take a pay day loan with direct deposit, you need to ensure that the principal plus the interest rate is in your account for the lender to withdraw on the due date. In case your post dated check bounces, you become a defaulter, and the lender can charge you quite a high penalty.
o If you take a loan without a direct deposit facility, you need to remember the pay back date and day. In case you do not pay back the principal and its interest on time, once again you default payday loan. The repercussions are enormous, so much so that you can slowly start to sink into a debt trap.
o At times, despite remembering the pay back date, still you might be unable to arrange for the payback amount. So you are a defaulter again! But wait, here you can ask for the roll-over option and extend your loan for another term to get that much needed time to arrange for the payback.
Pay day loans can be your lifeline in the time of financial need. You can qualify for them easily, as all they require from you is to be 18 years of age with a US citizenship, steady employment and in most cases, a valid checking account for the electronic transfer of the amount.
Remember, with the speed with which the lender extends the loan to you, you too must speedily pay back. Use the money to pay only for your utility bills or emergency car repairs rather than for frivolous shopping, lest you end up with a default payday loan!