Consequences Of A Bounced Check In Case Of Pay Day Loans
You have obtained one of those instant payday loan from the provider and as per the current practice of the trade you have also given him a post dated check including the principal amounts and the fees payable as per your loan contract. Unfortunately, your balance in the bank account does not permit encashment of the check and the check bounces.
Of course there are legal consequences to such cases where the payment could not be made in due time. If you take steps to replenish the payment through it may be alright and the lender may not consider further pursuing the legal course to his benefit but when you are not able to pay, he or she perhaps has no other alternative. Cash Advance Loans are therefore always risky proposition for the lenders.
In case of such bounced checks, the borrower will be further liable to pay the processing costs and penalties under the Federal and state laws. There could also be enhanced interest rate as a result of which the low fee payday loan you originally obtained could be converted to a high fee loan.
For those consumers who are unable to repay their loans by the due date, it is necessary that the dates of repayment are extended. This is the responsibility of national trade association who may exempt any additional fees payable for such extensions. Some of the states like Washington have made such extended plan mandatory in respect of those who have taken pay day loans and are not able to repay them.