What happens if you don't pay your payday loan back?

What happens if you don't pay your payday loan back?

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A pay day loan is a short cash loan of a small amount of money, designed to help you pay your expenses until you get paid. Pay day loans have risen in popularity over recent years, perhaps due to the economic down turn. Just to give you an example, in 2009, £1.2 billion was paid out to borrowers in pay day loans. Pay day loans usually have to be paid back within 30 days, or by your next pay day. Although the criteria for applying for these loans is not as stringent as for various other loan types, there are consequences if you do not pay the money back.

 

Before you apply for a pay day loan, you should check that the company is registered with the Office of Fair Trading (OFT) under the 1974 Consumer Credit Act. This information should be clearly visible on their website. Try checking the terms and conditions page if you cannot find it.

Failing that, contact the OFT.

 

Even though the criteria is less strict than with other types of loan and no credit checks are usually carried out, there are some minimum requirements before you consider applying for a pay day loan. These include providing your address and date of birth and being in employed in full time work among other requirements.

 

The application process for pay day loans is very fast. Some companies can turn around a decision and pay the loan amount into your account within one day. Pay day loan companies charge interest by the day according to their annual percentage return rate (APR). There is no cap on how much APR a company can charge. The only requirement is that the company advertises their APR on their website.

 

Most agreements stipulate that you must pay the whole loan amount plus interest back within 30 days and will designate a day when they take the money by direct debit.

This means that the loan amount is secured against your bank account. If for some reason, the money is not there, the company will contact you to try to find out what happened.

 

Depending on the company, by this stage, they may have applied further interest charges to your account, making your loan more expensive. They may also hire a debt collections agency to pursue you for the money. Debt collections agencies are specialists at chasing people for money so can be quite ruthless in their approach.

 

If you still do not pay the money back, the company can take you to court. The process of preparing papers for court costs money, so these charges will be applied to your account in addition to what you already owe and any possible late charges.

 

 If the company is successful in issuing a county court judgement against you, this will go on your credit report. County court judgements have an effect on your ability to get credit. In addition, loan companies maintain relationships with credit reference agencies and report your payment behaviour to them in real time.

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Question by : What happens in the board game Life when you don't pay back loans? We're playing the game of Life and my brother didn't pay back his college loans. What happens? Best answer for What happens in the board game Life when you don't pay back loans?:

Answer by Chris D
I am pretty sure they get automatically deducted from his score in the end. they have changed that game so much over the years. It is in the finishing the game section of the rulebook.

Answer by Eat4Fun
You get a bad "Game o' Life Credit Rating" which impairs your ability to borrow funds in the future. And you get obscene phone calls from the bank.

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