Consequences of Default on Pay Day Loans

Before taking any kind of loan, the borrower should be aware of all the ramifications of borrowing money. Consider all alternatives before taking a pay day or cash advance loan. Entering into such an agreement should not be taken lightly. Risks regarding not paying back pay day or cash advance loans can vary widely from state to state, but none of them are in the least bit pleasant.Paperwork Is ImportantShould you decide to take a pay day or cash advance loan, keep all the paperwork originating from any phase of the process in a safe place. If you misplace the paperwork giving you the vitals on the lender and your obligations, you could miss your repayment dates or the address for remittance. That will lead you down a very dark path. You will also need those papers should you feel the need to dispute fees or have other complaints against the lender.Consequences of DefaultNot paying back your loan can lead to increases in your financial liability. If you do miss installment payments or do not fulfill your obligation, you are going to be in a big mess that only you and an attorney can set straight. And that means a lot more expense. Bankruptcy may become your only option. If you are on a payment plan, try to pay back more than is due each time you make a payment. This will help you get the loan off your back sooner and possibly lower your interest fees. Just remember that the longer you hold the loan, the higher the interest rates and other fees will become.Regulations or Lack ThereofSome states have many restrictions on pay day or cash advance lenders, especially regarding interest rates allowed. Some state have none or little. Florida allows its payday and cash advance lenders to do pretty much as they please. Interest at times can be in excess of 300% in some unique situations. If your rates are at a place you can live with, that is a good thing. Some folks who have access to credit cards, can experience up to 1,000% interest on cash advances. So, if the rates, while high, are doable for you, a pay day or cash advance loan can be helpful. You are paying interest to settle some financial problems and to get peace of mind.Be WiseEven though your cash advance or pay day loan may be offer you better rates and terms than other cash loans, you need to remember how a loan for a few hundred dollars can quickly turn into an obligation approaching a thousand or more. Applying for extensions can put you in such a bind that you will soon be paying towards the interest alone and not the principle. Sometimes a pay day or cash advance loan is the only alternative. What are you to do if the car breaks down or you need some new medications? Just be wise in the amount of cash you request and be firm about your plan to repay the loan as soon as possible.Shop AroundWhen you are looking for a pay day or cash advance loan, start your search on the web. Interest rates, fees, and repayment terms can vary widely from lender to lender. Know your state regulations regarding these loans. Check lender credentials with the Better Business Bureau or government oversight agencies and look for customer feedback sites.Whatever you do, do not get into an ever-increasing cycle of debt. A pay day or cash advance loan can be a great short-term safety net, or it could become a nightmare leading you into courtrooms and bankruptcy.