A payday loan does not differ from a bank credit in terms of legal responsibility. If you borrow money, you automatically comply with the established procedure for paying back. If a client makes a delay on one or more payday loans, the consequences will be negative.
First of all, let’s consider why a customer fails to pay the loan back:
- the borrower overestimated his/her financial capabilities;
- salary delay;
- loss of employment;
- low financial literacy;
- unexpected financial problems.
Top 3 Reasons Why a Client Should be Responsible and Pay on Time
- Extra money in forms of penalties, new interest, collector’ activity etc.
- Bad credit history.
- Loss of a good mood and health.
So how not to lose money, be a high profile client, and sleep calmly? In general, methods for collecting arrears by MFOs are quite tough. One of the preventive measures could be a debt extension. However, it is not provided free of charge, an individual pays for it. This method can be used repeatedly. Possible variations are:
- Payment of accrued interest; then by deferment only the principal amount of the loan is assumed.
- A fixed amount for the extension of the return period. If the delay nevertheless happened there are penalties.
If the MFO does not provide a renewal service, or if the client still could not use it, the loan goes into overdue. The good news is that all financial services in our country are subject to the consumer lending law, which regulates the amount of maximum allowable fines.
What to Do if You Found Yourself Trapped?
- First of all, find out about the rollover service. If the MFO offers it, this will be the solution. Just extend the refund period.
- If there is no prolongation, try to get a loan from another service and close the debt with these funds.
- A good option is to get a credit card with a grace period: it means it can be used for free for 55-60 days. In this case, you need to choose such a banking product with no interest and free cash withdrawal transactions. In such a way you can close a debt on a payday loan, and if you keep within the grace period, the credit card will not cost you extra expenses.
- Ask for a loan in debt from your realities or friends.
So, keeping in mind all 3 reasons, it is highly undesirable even to think about the delay or make it too long. Thus, ever-growing debt obligations are imposed, and your credit record is hopelessly spoiled. As a result, you will finally pay, maybe, with your property as well as with a headache, nerves, and worsening family relations.