Payday Loans vs. Defaulting
Everyone knows that life can throw you curveballs, sometimes even overnight. Depending on your situation, if you have outstanding loans or mortgages, a sudden change of plans can put you in danger of defaulting and a payday loan can sometimes be a tool to help you avoid this situation.
While a payday loan should never be considered a long-term financial solution, payday loans are a responsible way to occasionally bridge the gap between paychecks. Making your payments on time on a regular basis is a good way to keep your payment history in good standing so that when the unexpected happens, your creditors may be much more willing to work with you until the temporary setback has passed. This puts you at a much lower risk for seriously defaulting on important loans, like your mortgage or car payment.
How does loan default typically happen? A borrower is considered in default when he is unable to meet obligations of a loan contract. This can occur in one of two ways:
Debt services default
This means you have simply failed to make a scheduled payment. This kind of loan default is easy to avoid with the occasional, responsible use of a payday loan. Instead of paying your mortgage or car payment late because you simply need to wait a few days for your paycheck to be deposited, a payday loan can help you make those payments right on time and keep your relationship with that lender positive.
Technical default
This means you have gone against a term of your loan agreement. The most commonly violated terms are called affirmative covenants, which state that you must maintain a certain level of capital.
If you have failed to make a payment in a certain amount of time after your due date, as determined by your lender, you are considered in default. It 's much more common than you might think and often very avoidable by simply taking steps to communicate with your lenders.
Default can happen on any kind of loan. Home, auto, short-term, long-term, even student loans are at risk. Student loans generally give the lender a six-month period after graduation or removal from classes to begin payments, regardless of whether or not they have found a job. Student loans also offer deferment in hardship situations, so it 's important to let your student loan lender know if you 're currently having a temporary setback.
Why should you consider all your financial options, including short-term payday loans, instead of simply defaulting on your loans? The consequences of default are severe. Your tax refunds can be seized. Your employer may be forced to remove a percentage from your paycheck to put towards the debt, further hindering your ability to afford your monthly budget. You may be responsible for paying any additional collection agency fees. Legal action could be taken and your belongings could be repossessed. Finally, credit bureaus may be notified, permanently damaging your credit score.
By defaulting, your financial situation will only become even more difficult that it was before. Check 'n Go wants to help you keep yourself out of that situation. Instead taking a risk by missing loan payments, consider getting the fast cash you need from Check 'n Go. Taking out a short-term payday loan from Check 'n Go, at a simple flat interest rate, can save you much more than time.
If you 're repeatedly missing payments every month, Check 'n Go recommends taking a look at our resources section for financial advice, or, seeing a credit counselor for your long-term, month-to-month needs.