Online payday loans are becoming increasingly popular nowadays, mainly due to the ability for people to obtain almost instant, hassle-free loans that could help bail them out from financial situations immediately.

Although they are highly attractive, they also come with apparent disadvantages of their own, for instant extremely high interest rates (can reach up to 30%), even higher late payment charges, and several other drawbacks that make this service a convenient, yet dangerous deal to take up.

Even though the amounts in question is small (below $2,000), it is still imperatively important to pay them off without any delay, or you could end up damaging your credit score.

So what exactly happens when you don’t pay back your payday loan?

Let us look at some of the things that may materialize when you do not honor your agreement with your lender within this service:

1. Firstly you would be given an extension to pay your debt back

The usual extension given to you is 130 days in addition, after your original due date expires. This is however subject to added interest charges, something that you would want to avoid as they could be several times higher than usual interest rates. Some lenders are also prepared to receive payments in installments, albeit with higher interest rates of course.

2. You would also be charged interest on a much higher rate once you do not pay back what you have promised at the allocated date

These interest chargers would include extra charges, as well as late payment charges. Thus do not be surprised when you repayment amount doubles up on your initial amount.

3. The lender could also take you to court if you do not pay back on time

This is because you signed a legal document when you actually accepted the offer of fast online payday loans, and like it or not you still have to honor the agreement that you signed, failing of which the lender has the full rights to drag you to court to demand for payment.

Remember that you would probably have not much of a case to argue in court, and you would also be charged with court fees as well, something that could cause you severe financial distress. It is best you avoid going to court over a case that involves less than $2,000. If things get out of hand, you could end up losing property or even your home!

4. There would also be an impact on your credit scores

When you fail to pay your credit lenders on time, this would count negatively on your credit report, and would push your scores down considerably. The longer this issue drags, the harder it is to rectify your scores.

The answer to the question of what happens when you don’t pay your payday loan would be you could end up in a bigger financial mess than ever before, and even subject to legal proceedings as mentioned above.

If you choose to take this service up, it is best that you pay your lender off as soon as your pay-check is in!