Payday loans differ from credit cards or bank loans. One reason is that the interests and fees are different because they are designed to be short-term loans. Although they are much more convenient and fast, in general, the repercussions are pretty much similar if you fail to stick to repayment schedules. They are considered also as cash advances because they are meant to address emergency financial situations, and should be paid back after two weeks.
Payday loans can ask for fees each day, week, or month after your first repayment schedule when you fail to repay it on time. The longer time you delay paying your dues, the larger your debt gets. The increase can be exponential.
Most people would resort to applying for another payday loan to pay for their fees from their previous one. Having this kind of setup will only result bigger debt and more complicated problems. This method is not advisable unless you have plan to get income that can repay the loans plus interest and possible fees.
What payday lenders can do
If you fail to pay your loan on the exact repayment schedule, fees and interests can pile up. Your lender will then contact you via phone or email and they could resort to putting your debt to a debt collection agency. Debt collectors will be the ones to collect your debts for them.
Moreover, missed payments can also reflect in your current credit record, that can be seen by other lenders whenever you apply for credit. This will be visible for the next two to three years. This can discourage lenders in approving your loan application.
After missing three repayments, the lender can now address the issue by asking the court to give you a Country Court.
It is important that you communicate with your lender and let him know about your ideas in addressing this kind of problems. Communicating with your lender can buy you more time in paying your dues. Of course, the ideal solution would be to find another source of income to pay your debt.
Take time to research on debt solutions that can help you address your debt problems. There are a number of debt solutions available. One of them is debt management. Debt management can help borrowers break down repayments so that they can pay their dues in full at a rate that is affordable and easy on their budget. This can be a good option because paying debts slowly can cost you a lot of money in the long run. Although they may require interest and charges, it is better than paying your loans in small amounts.
In summary, it is still best to weigh your options. Research for ways and methods in addressing these debt problems and try to see which method works for you best. Consult a debt advisor to help you choose which solution will work best for your situation. Ask for a second opinion afterwards to strengthen their claims.