This might sound bad but... What Are the Consequences of Not Re-Paying a Payday Loan?

Not repaying any type of loan is going to cause you major problems. Payday loans are different from other loans, however, because they are unsecured loans. Unsecured loans do not contain collateral, like a mortgage or auto loan would. If you default on your mortgage the lender has the right to go after your home and sell it to make up for the value that you still owe on the mortgage. The same is true for an auto loan. So what happens when you default on an unsecured loan?

The Electronic Era

Today's computer era can make business much easier. It can make payday loans much easier for you because all you have to do is apply online, get approved and the money you desire can be direct deposited into your checking account almost instantaneously. This also makes things easier for the payday loan lender. They, as part of the contract you sign, will have access to your checking account so they can deposit the money. They also have the access to withdraw money from your checking account. This is done as the normal repayment plan, making it just as easy for you. If you have the money in your account you are not going to be able to default on the payday loan because they can access it so easily. If you do not have the money in that account anymore that is when problems can occur.

Collection

Like all debts that go uncollected, payday loan companies will get a collection agency involved. Payday loans will turn over the duties of getting their money back to this agency, which will then come after you. This is what can give payday loan a shady name, because a lot of collection companies can be pretty shady. If you are borrowing from a legit company, then they will have a legit collection agency.

The payday loan company can also take legal action on you if they so choose to. Defaulting on a payday loan can also help to lower your credit score which could force you to take out more payday loans in the future. Your best bet is to pay off your payday loan on time, or extend it if you really have to. You do not want to deal with a collection agency, lawyers and the possibility of losing even more money.