While taking payday loans no credit check, one fails to understand that these are unsecured loans yet need to be paid back diligently like secured loans.
Unsecured loans such as payday loans no credit check are basically great options for individuals in need of cash on an immediate basis. Irrespective of the credit score of the applicant, the loan provider sanctions a loan on an immediate basis after checking into three factors – nationality, income, and checking account details. Though unsecured, one must understand that the applicant is obligated and needs to payback the entire amount within the stipulated timeframe mentioned in the loan agreement papers that is signed by both parties.
What Happens when You do not Payback on Time?
A number of loan applicants already have a bad credit score; so, what if the loan seeker is unable to pay off in time? This is a valid question considering the financial history of the individual. Though these are unsecured loans, a lender can certainly drag you to a court by filing a suit against the individual – if and when he is unable to pay back in time. In such cases, the lender can be awarded a personal belonging by the court of law. Also, the judgment can instruct you to payback with your forthcoming monthly salary or also give the lender the control over your banking accounts. Such income garnishing is a very popular way of getting money back in the case of delay or failure of payday loan amounts.
Another possible repercussion is that the interest rates on the outstanding balance are doubled and a heavy late fee is also levied upon the money. Given the fact that payday loans already have high interest rates, the charges will double the financial worries of the individual and in most cases contribute to debt collection.
Another possibility is that the loan provider may file a complaint with a credit rating agency that has been listed as the defaulter of the applicant. This remains till the full payment is made and once done, the entries are revised.
Factors to Consider
Payday loans seem like a wonderful opportunity to get hard cash easily. However, one must understand that these also expose you to loan sharking because you will need to payback high amount rather immediately. Being short term loans, the interest rate will be a disturbing factor if and when the debt remains unpaid for a long period of time. In few cases, the interest rates are as high as 500 percent on an annual basis. This makes short term loans disastrous if one is unable to pay back on time.
Also, remember that lenders use bad business practices to get their money back on time. If one is not careful then the contract might favor the lender and if your credit card details are provided then the interest payments are charged on your credit card. Though this might seem unethical, such methods are common.
In all these circumstances, one must understand that a lender can threaten you for non payment of payday loans no credit check but it cannot lead to jail time. If a lender threatens you with jail time then consult a lawyer immediately.