Payday loan default: What happens if I close my bank account and default on a payday loan?
Payday loan default: What happens if I close my bank account and default on a payday loan?
When you borrow money from a payday loan company, they give you a loan with an agreed-upon interest rate and repayment schedule. If you cannot repay the loan on time, the company can take various actions, including filing a legal action against you. If this happens, there are some things that could happen to your credit score and your ability to get future loans. In this article, let’s take a look about the things that can happen if you default on your payday loan.

Payday loans.

Cash advance loan

In the United States, a payday loan is a small, short-term unsecured loan, typically due within two weeks of being borrowed. The loans are also sometimes referred to as “cash advances,” though that term can also refer to cash provided against a prearranged line of credit such as a credit card. Payday advance loans rely on the consumer having previous payroll and employment records, with some lenders offering no credit check. Legislation regarding payday loans varies widely between different countries, and in federal systems, between different states or provinces. To prevent usury (unreasonable and excessive rates of interest), some jurisdictions limit the annual percentage rate (APR) that any lender, including payday lenders, can charge. Some jurisdictions outlaw payday lending entirely, and some have very few restrictions on payday lenders.

How payday loans work

Payday loan online

If you’re short on cash and need a quick loan, a payday loan may be just what you need. A payday loan is a short-term loan that is given to someone who needs the money right away. The person who takes out the loan will usually have to pay it back within two weeks or less. There are usually very high interest rates associated with these loans, so it is important to understand how they work before taking one out.

When you take out a payday loan, the payday financer will give you money in exchange for a post-dated check. This check is written for the amount of the loan plus interest and fees. The lender will hold onto the check until the date it’s due, at which point they will cash it. Payday loans can be helpful in a pinch, but they should only be used as a last resort. Make sure you understand how much the interest rate is and how long you’ll have to repay the loan before you decide to take out one. Most payday loan companies have plenty of information on their websites and in their materials to help you decide if a payday loan is right for you. READ MORE HERE