Negative consequences of payday loans.
There are following valuable negative effects that cause payday loan:
• Risk of losing bank accounts.
It is shown that admission to payday loans is connected with increasing rates of automatic bank account closures, which makes standard financial transactions more high-priced and hazardous.
• It is easy to become an offender on the debt.
Actually, it is found that if customers began lending loans from payday loan companies, they are more likely to become delinquent on their credit card payments.
• Consumer insolvency. It is found that payday customers multiply their chances of filing for bankruptcy by two in comparison with housekeeping of the same financial position that are refused a payday loan.
Eventually, borrowers who fail to pay a payday loan confronted with a list of difficulties:
• Extra economic stress which is caused by paying non-sufficient-funds fees to the payday lender and the borrower’s bank assessing NSF and/or overdraft fees, both of which average is close to $30-35.
• Legal consequences, for instance wage garnishment and potential court action.
• The debt can be sold to a collection agency, which can influence on credit references negatively and can bring to repeated solicitations for payment or even illegal hassle.