What to Do if One Did Not Manage to Pay a Small Loan Back in Time

What to Do if One Did Not Manage to Pay a Small Loan Back in Time

Payday loans are issued to households with moderate income. They often lack stable work. Their monthly income is not very high. Financial instability does not give a chance to many Americans to return a payday loan in time. This can lead to very negative consequences. A borrower has to have a clear understanding of what to do if he/she can not return a credit in time.

Actions to Take

A short-term credit issuance process runs similarly to the process of long-term credits issuance. A borrower has similar obligations. The only thing that differs is the sum of a credit. A loan agreement is a key document that determines the terms and conditions of credit taking. These documents have to be written by professionals. It is good if it includes clauses on consequences if a small loan is not paid in time by a borrower.

Each borrower has to remember that the loan agreement is a legal document. In case a small loan is not returned in time, the lending company may bring a borrower to a trial. Here are several things that a good loan agreement should contain:

  • Return date. This date is very important to every borrower. When this date comes, a lender will withdraw loan body plus interest rate from a person’s account. If money is not there, a lender will contact a person. Financial company will ask when money will be returned. From that day on a borrower be charged an additional fee on a loan. If one returns a loan a week after a return date, a fine will be moderate. This will be 1% percent of credit body.
  • Fine sum. It is very important that a loan agreement contains a certain statement of what a fine should be. It is usually stated percentage wise. If the contract does not contain such information a borrower is in big trouble. A sum of a fine will be determined by court decision.
  • A clause on what process will be if a person does not return money in time. In the majority of cases, it will be taken to court. A lender will state at a court, a borrower did not return a loan back in time. Financial company will employ a lawyer, who’ll lead the case.

If one does not pay a borrowing when he/she has to, the lender will start a juridical process. There is only one exception. A borrower can guarantee his credit by personal property. In this case, a lending company will appeal to a court with the request to confiscate the property.

In case a lender did not guarantee a borrowing with the property, he/she will be assigned a fine. If a return date comes and a borrower does not have money to pay, he/she has to contact a lending company. Financial company will appreciate that a client informs about the problem. It is good if one can state the date when he/she will be able to return the loan. During the conversation, one should ask how much his fine should be. It is good to immediately employ a lawyer.

This is the main thing a person should do. If one employs a good lawyer, a process will run smoothly. He/she will need only to pay a fine.


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