Introduction
Several things make a payday loan bad. If you face money problems, getting a payday advance may seem like the best thing to do. However, the advance may come with a steeper price than the high interest rate. Before taking out a loan you may have difficulties repaying, consider all of your options. You do not want to default on a payday loan.
History
Making your payday loan bad begins with not paying it back on time. Although some payday lenders give you time to make the loan, you may run into problems if you do not pay it on time or pay it at all. You generally repay your loan based on how often you receive your paycheck. This can be weekly, twice a month or monthly. You show proof of this by bringing in a copy of your paystub when you apply for the loan.
The lender requests a check filled out with the next payday date, your full name and the amount of the loan. You must sign the check as well. This protects the lender just in case you do not come in to pay the advance. The company simply deposits the check into their bank at the appropriate time. If you do not have enough funds in your banking account, expect the check to bounce. Some lenders will keep putting the check through, which causes you fees at your banking institution. You now made a payday loan bad and messed up your checking account as well.
Features
Before you make the loan bad, talk to the lender. If the lender knows that you may be late, he can probably give you an extension. He may also hold the check until you have the money but this may only be for a few days. Never ignore the lender or refuse to talk to him. He will think that you purposely defaulted on the loan and make your life very difficult until it is paid.
Your credit worthiness can be affected as well. You may not be able to get other types of credit in the future if the loan stays unpaid or goes into collections. Some collection agencies that take over bad loans can take you to small claims court. They may get a judgment against you for the loan and their court fees.
Tips and comments
Tip #1: Try borrowing from family or friends if you need money for emergency repairs, to purchase food or pay an utility bill right away.
Tip #2: If you want to avoid making the loan bad, borrow only a small amount. Do not let the lender talk you into a larger amount that you cannot repay on time or at all.
Tip #3: Do not get a loan that has high interest rates or fees. The fees can be as high as $15 to $30 per $100 you borrow. The amount increases every time you rollover the loan to the next payday. Pay the advance back as soon as you get paid to avoid giving the lender an extra fee every time you need to come back.
