A payday loan is a loan that gives you money, as an advance on your next paycheck. You will be required to write a check for the amount of the loan plus any fees. You will postdate the check to the date specified by the loan company. You have two options to pay off your payday loan, you can pay the full amount in person or allow the loan company to deposit the check.
Your Loan Is Due and You Do Not Have The Funds:
The payday loan company will first try to deposit your check. If you do not have sufficient funds in your checking account to cover the check, you will be charged a fee by the bank.
The payday loan company will typically keep trying to deposit the check until it clears. If you know you will not have the funds to pay the loan off, try calling the loan company. They may be willing to extend your loan for a few days. Some payday loan company’s will allow you to roll over the check, and they will charge you an additional interest fee. Every state has different laws regarding the ability to roll over a payday loan. The loan company will be able to inform you of applicable state laws.
What If You Can Not Pay The Loan Back:
If you are unable to pay the payday loan back, there are consequences. Most states view a payday loan as a loan and not a check. This means that you will not be charged with writing a bad check. The payday loan company is able to use alternative means to recoup their money.
The majority of payday loan companies will work with you to arrange paying back the loan. Set up a payment arrangement with the loan company, and stick to the agreed upon terms for repayment.
A payday loan company has the legal right to garnish your paychecks for repayment. A lawsuit may be filed against in small claims court to recoup the money you were loaned, the fees of the loan and any applicable court costs. This will have a negative impact on your credit rating.