Unexpected financial problems may strike you when you just can’t get your hands on immediate cash. But a cash advance may come to your rescue. This is a form of short-term funding that enables borrowers to access quick money. Quick-fix cash advance loans or simply payday loans may bring about negative consequences if not settled.
Here’s what happens if you fail to pay a cash advance:
You Accrue Interest
One negative impact of not paying back your cash advances on time promptly is that you accrue interest on the owed amount. And with the sky-high interest rates on loans, failing to settle to pay a cash advance for some months means you’ll need to pay thousands of dollars in interest.
Credit card based Cash advances typically have higher interest rates than regular credit card transactions, but are much easier to aquire, which is why the interest accumulates to a large figure in a few months.
You Face Some Fees and Penalties
Another reason you should avoid defaulting cash advances is that your lender will probably punish you by adding some extra fee. The condition may be; each time you miss making a payment, they charge you a late-payment fee. And who wants a combination as deadly as accrued interest and penalty fees plus the amount owed? It could result in a larger debt.
You get into trouble with Debt Collectors
If the lenders feel you’re taking too long and not willing pay your debts, they may assign debt collectors to handle your case. You don’t want phone calls and email alerts from debt collectors asking you to make payments. In worst cases, they may file a lawsuit to push you into paying. And you know what court judgment could mean; wage garnishment, which means your employer remits a portion of income to repay the lender.
You may go bankrupt
With the huge balances the compile on cash advances, it’s advisable to go for options like small business loans before considering a cash advance. The high debt levels that come with Delinquent outstanding cash advances may lead to bankruptcy which has serious long-term effects on your financial health.
Conclusion
Now you know the consequences of not paying back a cash advance. Always seek out other alternatives and only go for one if you have no other option.