Thursday, September 19, 2013

Payday Loans - Your Rights and Responsibilities

Payday loans are known as a quick and simple way to access emergency cash. But do you know your rights and responsibilities as the borrower of a short term cash advance? It is important you educate yourself and understand your responsibilities as a borrower before you finalise any loan.

There seem to be more and more tales of people being harassed by bad lenders for money. Be careful which lender you chose to borrow from. There is a huge difference between legitimate money collection and harassment by a lender.

Payday loans are short term loans which allow individuals to borrow money until their next pay day. The borrower agrees to pay back the sum borrowed, in full, plus interest when their next wage arrives in the bank. Loan repayments are debited from the borrowers account on the agreed date.

It may sound simple but your main responsibility is to pay back your short term loan on the date agreed. If you do not repay your loan on the agreed date, your lender has the right to contact you and arrange for repayment. If a payment fails, you as the borrower would be liable for additional charges and interest on your loan because you will be in breach of the original loan agreement.

If you think you are going to be struggling to repay the full amount, do not leave it unresolved, this can prove to be extremely costly in the long run. Much better to contact your lender and en-quire about a reduced payment until you can clear the remaining amount. Responsible lenders will do everything they can to help you stay in control and provide you with repayment options should you need them.

A lender is entitled to contact you about repayment of a loan, however, they are not permitted to contact you more than three times per week or during unsociable or unreasonable times, and they must not be intimidating or threatening in any way - this is regarded as harassment and you are entitled to report the lender if you receive this kind of treatment. Good lenders will call you, send you an email or letter and you will only hear from them during business hours, Monday to Friday.

In some extreme cases, if a borrower refuses to agree a repayment plan and does not repay the loan, the amount can become a matter for court. When this happens, interest is still applied and court judgements can seriously affect your credit rating. When you are struggling to repay a loan, try to arrange a payment plan and avoid a court judgement.

Difficulties can arise for any of us at any time. The biggest reason people struggle to repay their creditors is loss of employment. If you lose your job and are on benefit then you should get professional advice immediately about dealing with your debts until you are working again and have a regular income once more.

Responsible lenders will always make their terms and conditions clear prior to a loan agreement being finalized. They will also clearly give you a breakdown of the cost of your loan, the interest charges and any fees associated with it. You should also be told exactly what you will be charged if your loan repayment defaults or is late.

If you are considering a loan, whether short term or otherwise you should always make sure you understand your rights and responsibilities. In addition it is vital you are aware of the agreement you will be entering in to with your lender. Making sure you are borrowing from a reputable, responsible lender will help you to borrow with peace of mind.

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