I Fell Behind On A Payday Loan – What Happens Now?
Do you know what happens if you fall behind on your monthly payments for a short term loan? Have you looked at your contract to see what’s spelled out if you miss even one or two payments? Have you checked your state’s laws to find out what a payday loan company can do if you fall behind? Don’t make the same simple mistakes that many borrowers make when they can’t make their monthly payment. Before you find yourself in this situation it pays to know what the ramifications are going to be if you fall behind on your payday loan payments.
Short term loans are inherently risk for the lender. This is the case not only all throughout the country, but also here in Ohio where cash is tight and borrowers turn to cash advances to pay for emergency expenses. Most applicants will turn to a payday or installment loan because they’re not eligible for other types of financing with lower interest rates. Companies know cash can be tight and there may be times when you can’t make a payment by the due date. That’s why the most important thing you have to remember is to contact your lender if you feel you won’t be able to make an upcoming payment. By being proactive you can avoid even worrying about what happens if you fall behind on a loan payment. Most reputable lenders will work you if you can explain to them your situation. Keep in mind, a direct lender will see no money if you fail to make payments and they write off your loan. As described by the Ohio Attorney General, payday loan companies can not threaten you with jail or other abusive debt collection tactics if you fail to make payments. In most situations an established Ohio lender will want to to work with you to establish a payment plan. Otherwise they know there won’t be much of a chance for them to collect any money in the future.
If you happen to fall behind on a loan and have not previously contacted your lender it’s going to be in your interest to reach out first. Don’t wait for customer service or collections to contact you regarding the past due amount. Payday loans are expensive and every day that goes by means your interest charges are increasing. Even though a lender can’t take your to court or charge you with writing a bad check, there’s still a lot they can do to make it difficult for you in the future. In some cases a borrower will go dark and not answer the phone and return any correspondence they receive by mail. Many of these letters and communications are attempts by the lender to work out a payment plan or even to get in touch. As we mentioned above, don’t avoid these forms of communication! Work with your customer service rep to get back on track with payments. Even if you miss a few weeks or days you can be looking at a significant amount in interest that will only make the amount you owe higher.
As most of our readers know, recent regulations have changed the lending environment in Ohio. House Bill 123 not only caps the amount of interest a licensed lender in Ohio can charge, but it also allows borrowers to pay back the loan after a few days with no penalty or fees. This three-day grace period gives borrowers the right to change their mind or allows them to pay back a cash advance with no fees in less than 3 days. Rest assured, no matter what you chose, a loan company can not pursue a criminal complaint of you fall behind on payments. You can expect interest and fees to increase and you may be hit with small bank charges and collection charges. But most licensed installment and payday loan companies will do all they can to work with you and get the monthly payment back on track.