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Among a plethora of questions that borrowers ask before deciding to secure a payday loan, the most common question borrowers wonder about is, "What happens if I do not pay back my loan?" It must be said that most borrowers are indeed able to pay back their loans without issue, but the fact remains that there is a good number of borrowers who cannot repay their loan(s) on time. Millions of people get payday loans, whether through a store or through a website, and while they provide the benefit of instant cash for whatever financial situation you may find yourself in, certain obligations must be met. The most IMPORTANT obligation is to repay the loan at the end of its term.

Borrowers have numerous concerns in regards to this issue, so Ill address them in order of importance. First, there is the issue as to whether a borrower can be sued over an unpaid loan. In most cases, this will never happen, as most consumers usually borrow a small amount (often less than $500), and this is not an amount to sue over. What almost always happens is that lenders are aggressive in collecting the amount, using collection agencies or their own department to collect their money. There absolutely is a code of conduct that lenders and collection agencies must follow; it is called the Fair Debt Collection Practices Act and it states, in essence, that collectors cannot be overly intimidating in their collecting practices.

Another issue borrowers who cannot repay their loan(s) on time face is that of additional fees being tacked on for not repaying their loan(s). Upon securing a payday loan, borrowers hand over a check to their lender to use as collateral - if a loan is not repaid voluntarily by the borrower, lenders will deposit the check and withdraw the loan amount, and if there are insufficient funds in the borrowers account to cover the loan, not only will the borrower have to pay the bounced check fees, but also late payment fees from the lender. You are still bound by the terms of the loan and the law to repay the loan, and lenders will always point that out to you.

Third, the issue of lenders reporting to the major credit bureaus is of concern to borrowers, as obviously, a non-payment is a negative mark on your credit report. Most, not all, payday lenders rain from reporting to the major credit bureaus, instead opting to report a customer to a non-traditional credit bureau such as Teletrack. Non-traditional bureaus assess the risk of lending money to a customer, and if a customer has been reported to one for failure to repay a loan, it will be very hard for that customer to secure another payday loan from that lender or any lender.

Regardless of the circumstances, one never wants to be in a situation where he/she cannot repay his/her loan. Always make sure you will have sufficient funds to repay the loan when you receive your next paycheck, as it is not worth the grief to put off repayment. Conversely, you want to make sure you are dealing with a reputable lender, such as a payday loan store or a website like PayAdvanceLending, to make sure your loan has fair terms and repayment can be made without issue.

One of the biggest myths we are led to believe is that rejection of a loan application by one lender means rejection is guaranteed for all others. The truth is that rejection is not a guarantee of continued application failures. In fact, often applications for personal loans with bad credit are rejected for something simple.

What this means is that by simply correcting an error, the application can be approved by another lender. Often, the error is something as small as missing basic criteria, or as straightforward as an unrealistic loan size. It is never down to credit ratings, so getting personal loans approved with poor credit is always possible.

This is not just optimism. Lenders rarely ever know an applicant personally, and so decisions rest on the criteria set and the value of the information provided. Once the basic criteria is met, there can be little surprise that loans with bad credit for personal use are approved.

How Rejection Can Improve Your Chances

It sounds strange but suffering an initial rejection with a personal loan application, can improve your approval chances in the long run. With every rejection comes the chance to fine tune the application.

For example, an application for a loan of $50,000 can be rejected on the simple basis that the applicant has not got a large enough monthly income to make the repayments. However, even with a monthly income of $10,000, this judgement might be made. This is because the judgement takes the debt-to-income ratio in account, a ratio by which lenders go to ensure that a borrower does not overextend their debt.

Basically, personal loans approved with poor credit must leave an income buffer to deal with any sudden expenses. But by reducing the size of a loan for personal use, say $25,000, approval is more likely. It is also possible to apply for two loans of $25,000 to reach the sum needed.

Why Bad Credit is a Minor Factor

It tends to surprise people when they learn that a bad credit rating is not enough to see a loan application fail. This is because a bad credit rating is an evaluation of past facts, and are not reflective of a current attitude. A personal loan with bad credit now might very well be repaid without a hitch.

The credit rating is calculated based on hard facts, but does not take into account the situation surrounding it, so sometimes personal loans approved with bad credit is only just. For example, if someone defaulted on a personal loan last year, it might be because of an unexpected redundancy after the loan was taken out, making repayments impossible.

For this reason, many lenders look for long-standing trends rather than recent instances before ruling on a loan for personal use. So, the actual score does not really matter.

Typical Criteria to Meet

So what are the vital criteria that we must meet when looking for a personal loan with poor credit? Well, they break down into three areas: age, income and citizenship.

Firstly, no-one under the age of 18 is permitted to get a loan, so lenders want ID to confirm that an applicant is not too young.

Secondly, as already mentioned, to get a personal loan approved with poor credit, it is necessary to prove sufficient income is at hand. This usually means providing a copy of a pay slip.

Finally, only US citizens are entitled to seek loans with poor credit for personal use (or any other use) so a passport or social security number is required.

After these three criteria are satisfied, the matter is all but settled. But remember that should the personal loan with bad credit application be rejected, simply go elsewhere. There are hundreds of lenders online.

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No House, Alot of Debt, What Do You Do?

If you have a great amount of debt, especially if it’s mostly from high interest credit cards or store accounts, you’d typically get a debt consolidation loan. This would give you one monthly payment instead of many different payments. Because the interest rate is much lower than the debts you’re paying off, the monthly payment is dramatically reduced. The reason the interest rate for a debt consolidation loan is so low is because it’s a secured loan. This means you have collateral, typically a home or other real estate, securing the loan. Because the lender has collateral for the loan, their risk is much lower and that is reflected in the interest rate.

So what if you’ve got no home or real estate to use for collateral? Can you still get a debt consolidation loan? Well, you may have several solutions. One debt consolidation solution for people who don’t own a home, but still have good credit, is to use no interest credit cards. Many people get these type of offers in the mail every week. You can transfer the balance from one or more credit cards onto a new credit card. For the promotional period, usually 6 months to 2 years, you’ll pay no interest on the transferred balance. That functions like a debt consolidation loan.

Make sure you cancel all or most of the old credit cards and examine your spending habits. This will help to keep you from getting into a dangerous credit situation. This can easily arise when you have the new card with a healthy balance that you transferred over, and all your old cards still active. If you start to accrue a balance on the old cards, you’ll soon find yourself in a situation where you have multiple cards with large balances in addition to the new card with the debt that you transferred. It’s worth mentioning again. Make sure you thoroughly examine your spending habits to ensure you don’t just spiral deeper into debt by adding a new credit card.

Another alternative, if you are really in a bind and don’t own a home, is credit counseling. Credit counseling can get you a debt management solution that can allow you to become debt free within a certain period of time. A good credit counselor will work with you to develop a personal financial plan that lets you maximize the use of you money. You can do more with your current income and get yourself out of debt. They will also look into the future to assist you in planning for the future, so you have a financial contingency plan in the event of an emergency. In a worst case scenario, they will work with creditors to negotiate different payment schedules or decreased credit balances.

If you need a debt reduction or consolidation solution but you don’t own a home, do not despair. There is a solution for your problems. You can get out of debt without sacrifice everything. You may need to increase a little, but you will come to an end, not a little.

Article Source: http://EzineArticles.com/?expert=Jason_Witts

Since the beginning of payday lenders there has been quite a few payday loan consolidation companies jumping on the bandwagon. But not all consolidation companies operate the same way.

Payday loan consolidation works in essence by taking your total debt owed and coming up with an affordable monthly or bi weekly repayment schedule and will pay off your debt in that time frame agreed upon. Based on my research some companies treat payday loan consolidation like a debt settlement model. This means when you make your monthly or bi weekly payments the company may hold onto these payments for a period of 2 or 3 months then try to approach the payday lender to negotiate a pay off. This type of model is bad for two reasons:

1. These payday lenders are very aggressive in their collection efforts and if they dont hear from you (the client) in a reasonable time frame they will call your cell, home, your work and your references constantly.


2. Also this puts the payday lender in a defensive posture and will be less willing to work with your consolidation company to set up a re-payment structure.

Some companies will take your payments for the first few months and all that money you pay goes towards their fees first, then the lenders start to see the money. As well if you have storefront loans and they loaned you a certain sum of money why would they be willing to accept less from you? That doesnt make good business sense.

When you have numerous payday lenders it is important to keep them from constantly calling and harassing you when you are part of a program which is going to help you out of this type of debt. People are dealing with so much stress as it is and if it can be kept to a low level or eliminated completely that is the best.

Solid and professional payday loan companies are pro active and aggressive in their approach with the lenders. This means once the clients start to make their payments the company will have already negotiated a re-payment schedule with the payday lenders based upon the amount they will be receiving from the client. This will obviously make the lenders more likely work with the payday loan consolidation companies.

It is imperative that you perform thorough research when talking to payday loan consolidation companies this way you know you are getting the best value for your money.