If you are looking for a short-term loan because of an unexpected expense such as a car repair or a medical bill, it is always important to make sure you know how and when you will be able to repay the lender. Many Americans seek out payday loans online when they need a quick loan to get them through a financial emergency and potentially tough times. Often, by the time you realize you are in trouble financially, it may be too late to ask friends and family for help and in these cases you may consider a payday loan or other similar financial product.
Not repaying a payday loan on time can have extreme consequences. Although it is can be unlikely you would ever go to jail for not repaying a payday loan, extra fines, calls to your work and even a day in court could happen if you continue to default on your payment and fail to repay what you owe the lender.
Always make sure you have considered alternatives to payday loans before looking into taking one out if you believe that you would not be able to repay the loan on the time agreed.
Can I Get Sent to Jail For Not Repaying a Payday Loan?
No, you are unlikely to to get sent to jail if you do not repay your payday loan on time. However, there are many other negative consequences that can happen when you do not repay your payday loan such as having a negative impact on your credit rating, incurring late repayment fees and penalties and having follow-up calls and letters that might lead to a day in court. Any time you borrow money online or otherwise, lenders will need to make an affordability assessment on the borrower to make sure they are as likely as possible, based on their past financial behavior to repay the loan.
In extreme cases a payday loan company may try to sue you over unpaid fees and if you fail to appear in court on multiple occasion then a judge may issue a warrant for your arrest within your state.
Although this is rare thing and you will generally not need to worry about going to jail for failing to repay your payday loan, you should always be mindful if you are taking out any short term or long term loan that you can repay to avoid any unwanted outcomes as a result of not paying back your loan. There is a lot of fear surrounding not being able to repay your loan on time and that can put people off applying for a loan in any way, shape or form. However, although you should always exercise caution before requesting any loan, you should consider your options either way. For example, ask yourself whether the loan in question is right for you and if not, is there an alternative.
What Will Happen if I Don’t Repay a Payday Loan?
There are a few things that are very likely to happen if you do not make the repayments on your payday loan. These include:
- Incurring late fees and penalties
- A severe impact on your credit rating
- Follow up emails, calls and letter from your lender to you and sometimes even your place of work
- Much higher interest rates on loans in the future
- Harder to be approved for loans in the future as well because of a poor financial history of repaying loans
One of the biggest problems that you can face when not repaying your payday loan on time is the severe affect that it will have on your credit score. This will impact your future financial decisions greatly as well as the decisions any lenders will make on you when you apply for any financial product or loan.
It will be challenging in the future for you to access loans because lenders will not trust that you will repay them on time because of past mistakes. This will also mean that lenders will put a much higher interest rates on these loans making it much more expensive to borrow.
If you do not believe that you would be able to repay your payday loan on time then it is worth looking into the alternatives to payday loans such as borrowing money from family and friends because this might give you the flexibility you need in order to repay on your own terms. You may also consider looking at a smaller loan. For example, it may be the case that a $100 loan is more suitable in your circumstances than a slightly larger payday loans and this being the case, it might be worth considering.
The consequences of failing to repay your payday loan can also include wage garnishment (part of your paycheck being withheld to be sent directly to the lender) and lawsuits in extreme cases. Payday loan lenders can and often will take you to court if you continue to default on your payments because they want and need to find a way to find the money that you owe them.
If you wish to avoid any sort of jail time or further penalties it is vital that if you are summoned to court for failure to repay a payday loan that you show up.
Can I Be Taken To Court For Not Repaying a Payday Loan?
Yes, it is definitely possible to go to court for not repaying a payday loan. If your lender decides that is the route that they want to go down in order to get the money that you owe them. Payday lenders will often try anything they can before that so that you and they do not have to go to court, including adding on extra late fees and follow up calls and letters. It is always best that you get in touch and speak to your lender as soon as you realize that you might not be able to meet your obligations and make the necessary repayments.
If no solution can be reached through speaking to your lender and trying to work out a repayment plan, it is possible that you can be taken to court for your failure to repay. If you do get taken to court, make sure you show up to court if you are summoned so that the matter ca be resolved in the quickest and best way possible and to make sure you avoid a warrant being issued for your arrest.
What Should I Do If I Can’t Repay a Payday Loan?
If you realize that you will not be able to repay your payday loan on time, then the first thing you have to do is speak to your lender. Do not ignore the calls and messages that they might have left you and get in contact with them as soon as possible. this applies for all sorts of short term loans, including:
Between the two parties it might be possible to come up with a solution such as giving you more time to pay back the money that you owe. If you do not respond then you are potentially giving the lender the excuse to take further measures such as incurring extra fees.
You may be able to commit to paying off lower amounts for longer if you get in contact with your lender. US lenders are regulated and therefore will follow procedures to make sure that they are maintaining efficient ways to help people who are struggling to repay their payday loan. This applies everywhere that short term loans are legal, including payday loans in Texas, Ohio, Kentucky payday loans and more.
After these steps it might be worth looking for advice from a bankruptcy attorney or a non-profit legal aid centre or credit counsellor who can try and find more options and a better plan for you so that you can get out of the financial hole you may find yourself struggling to get out of.