Implications of non-payment
If you have any doubts over whether you will be able to repay a payday loan comfortably on time, it's best not to apply in the first place. However, if you find that your finanical circumstances change considerably, and you think you may have difficulty making a repayment, you should contact your lender as soon as you are aware there is a problem.
We work with numerous payday lenders, all of whom have their own policies with regards to fees and interest, and how they collect debts. Below is a summary of the most common practices with regard to non-payment, however, we recommend that you check the lender's specific policies before taking out a new payday loan.
If you fail to repay your payday loan on time, the lender may contact you by phone, email, SMS, or letter in order to rearrange payment. If you repeatedly fail to make repayments, they may pass your details to a third party collection agency, or pursue legal action against you.
If you default on your payday loan, you may incur charges and/or additional interest, which will be added to your loan account. Late payment charges typically range between £10 and £20, however if you repeatedly fail to make repayments, collection costs could be considerably higher.
Potential impact to your credit score
Most payday lenders report information to credit agencies. Non-payment of your payday loan may have a negative effect on your credit score, which could make it more difficult to obtain credit in future, for items such as car finance, mobile phone contracts or satellite TV subscriptions.