Danger! – Your Credit Score is at Risk

Danger! – Your Credit Score is at Risk

Q: I took out a payday loan last month and I am struggling to make my payments. It looks like I may default on the loan if I cannot make the next payment at the end of the week. I was told that it would go on my credit score as a negative mark. This just does not seem fair. I did not have to have good credit to get the loan and they did not care to check my credit. If I take out a no credit check payday loan and I default in the loan, why will it go against my credit?

Defaulting in Dallas

Dallas, Texas

A: What you are dealing with is common for no credit check payday loan borrowers. Many do not take the time to read every page of the paperwork. A lot of the times, this procedure is contained within the agreement details somewhere. These payday lenders are allowed not to mention this upfront and only to place it in the documentation. This is the same tactic payday lenders use to hide fees and additional interest, on top of the usually three or four digit Annual Percentage Rate (APR). This may not seem like ethical business practices, but under many laws, it is absolutely legal.

The way it works is you are the responsible for reading the agreement and if you neglect to do so, the no credit check payday loan company is not responsible. Therefore, to avoid costly mistakes when taking out a payday loan, you need to review the terms, the APR amount, the deadline, any penalties and hidden fees. These fees can be for unmentioned administrations fees, extension fees, early repayment fees, late payment fees, and so on. Over the years, a lot of payday lenders have learned how to be very clever in hiding their fees.

You should always enter into a no credit check payday loan with the absolute knowledge you can repay the loan on the day it is due. Otherwise, you put yourself at risk of defaulting and to have additional fees and interest attached. The payday loan industry is full of individuals who needed cash fast, but did not weigh all the consequences. In fact, this is what the lenders count on. The least a borrower knows about the payday loans, the better and this is why they are considered predatory lenders, besides the insanely high APR and fees.

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