If you have found yourself in some dire financial straits, you may have had no alternative but to take out a payday loan. Not everyone has emergency funds set aside, and sometimes friends and family members are not able to help you with that emergency car repair or the need to get some medical treatment. Unfortunately, these payday loan purveyors charge horrendous interest rates and not paying the balance due on time can quickly cause that rate to escalate into the stratosphere.
Read on to learn more about dealing with payday loans and what could happen if you default.
If you have a job, you can get a loan in just a few minutes and be on your way to paying for that expensive widget, or so these lenders would have you believe. Normally, you need to show proof of having a job and you set up the loan to be repaid on your next payday. In most cases, you will need to fill out a check, dated the day of your next payday, and leave it with the payday loan store. It's important to note that giving someone a postdated check is not in any way considered criminal behavior, unless you had full knowledge that you would not be making good on that check when the time came.
Sky High Interest
You may not even want to know what the interest rate of your payday loan is, but you undoubtedly signed paperwork agreeing to it. Often, these loans carry extremely high rates. For example, consider this scenario. Your loan is for $900.00 and you take it out on January 1st. The amount due on your next payday, January 15th, is $990.00, or 10% interest. While that may seem like more than a reasonable interest rate, the problems begin to mount when you don't pay the loan back on the agreed upon date. Over a year's time, that interest rate effectively zooms to 260% and you will end up paying back a total of $3240.00.
If you are unable to make good on the check you left with the payday lender, they may inform you that they will be contacting the police and you will be jailed for passing a "bad check". You should understand that this is a commonly-used scare tactic used by payday lenders. As stated above, it is not against the law to postdate a check if you believed you will have the funds available to make good on it when the time comes. If the check bounces, you can only be arrested if you intentionally wrote worthless checks with the intent to defraud.
While being in this bad financial straits is never good, you should not be worried about arrest. Instead, you should contact a bankruptcy attorney quickly to prevent further financial ramifications. Call an attorney today and get out from under your debt burden.Share