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What Happens If You Default on a Payday Loan?

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Defaulting on your payday loan is serious matter and can have many negative consequences for you. The majority of people don’t have intention to default on their loans and knowing what could happen should they do so is frequently enough to keep them from doing so. The subsequent things will most likely occur, depending on what state you live in, if you happen to default on your payday loan.

Cash advance payday loans are very useful to people, especially the salaried middle class in solving their instant financial problems. All they need to do is visit a pay day loan store or go online and fill out an application form for a cash advance with direct deposit facility. Most of the times, the money is available within 24 hours!

Cycle of Debt

The trouble with payday loan defaults for most borrowers is it closes them in a cycle of debt. The most often borrowers seeking payday loans do not have access to funds or savings in the case of a financial emergency. This means, in order to pay off the fees connected with the default, the borrower has to look for another payday loan. With the interest rates being higher, the new loan can be extremely expensive and risky. It may lead a borrower to forfeiting an enormous percentage of an income each year just by getting advances on every paycheck.

This kind of payday lenders prey on your embarrassment and the general awareness that writing bad checks do, in fact, get people arrested in case they don’t pay for them. In those cases, writing a bad check at Wal-Mart or at a gas station for goods or services – and then not paying them – is quite the same as stealing from them. Luckily, for debtors of loan companies, writing a check for payment or a payday loan is not considered to be theft of goods or services, therefore the only recourse is civil action.

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