Once you have signed the agreement for a quick online loan and have availed it you are legally committed to paying back the loan amount with interest. We do understand that you had every intention of repaying the loan within time but things always don’t go as expected and there can always be situations when you default on the repayment.
If you are opting for payday loans it can be safely assumed that your credit score is already pretty bad and further defaulting will make it even worse. The situation is made all the more difficult by the fact that these loans are expensive with a very high rate of interest and once you default a monthly payment the burden only keeps getting heavier. That is why making sure that you can pay the loan back well in time is important while taking Instant Loan Online and here in this article we will be discussing the consequences of defaulting on repayment of these loans.
- Additional late fee and interest: This is the first thing that happens when you fail to make your regular monthly repayment. Most online quick cash lending services will charge you for late payment and as the unpaid amount will be added to the total loan amount you will be paying increased interest on your next payment.
- Debt collection activity: If you keep defaulting your payment the lender will first try to collect the debt for a period of 60 days and you can expect to face a barrage of messages from the lending service. They will be reaching you through all possible channels of communication like emails, push mails, SMS, voice messages, etc. and the frequency of those messages will only keep increasing.
- 3rd party collection agencies: After a period of 60 days your case is more likely to be handed over to a private debt collection agency and things can really turn bitter once they step into the scene. The primary objective of the lending companies now turns out to recover at least some amount of money by pushing you to a position for making settlements and once you do that the settlement is likely to be reported to the debt bureau and your credit score is going to suffer further.
- Damaged credit score: If you are in a situation to borrow money against a high-interest rate which is the case with any Quick Cash Loan it is most likely that you already have a pretty poor credit rating and a settlement with the lending company is only going to make your score suffer further. That means getting loans will be more difficult and more expensive in the future.
- Legal steps: If all their efforts have failed the money lending service can ultimately file a case against you and drag you to the court of law but they can actually never get you arrested for not repaying the loan.
Considering the above-mentioned possibilities associated with defaulting payday loan repayments everyone should think twice before opting for these loans and make sure that you do repay in time.
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