What Are The Consequences of Missing a Payday Loan Payment in 2023?

What Are The Consequences of Missing a Payday Loan Payment

Payday loans provide a quick and easy way out of urgent financial needs. With this type of unsecured loan, you can get fast cash to pay bills, settle a medical emergency, buy groceries or fix your car before your next paycheck. They’re particularly great for people with bad credit that are having trouble getting other types of loans. 

Although it is easy to get this type of short term loan, one major downside is that it can be very expensive. Unlike bank loans or loans from credit unions, Payday lenders charge high-interest rates on the loans they give. This often makes it difficult for people who get this type of loan to repay. Before you apply for a payday loan, you should be aware of what happens if you are unable to pay it back on the due date.

What Can Happen If You Don’t Pay Back A Payday Loan?

Failing to repay a payday loan on the due date often leads to some serious consequences. The most common consequence is that you will attract additional fees or interest on your original payday loan amount. 

Payday lenders require access to your bank account to withdraw the money you owe on the due date. If a payday loan company attempts to withdraw the money electronically from your checking account but is unable to due to insufficient funds, you will be charged a nonsufficient funds fee (NSF)

The exact amount you will be charged for defaulting on a payday loan varies from state to state. Also, the interest on your loan will continue to increase during that period, leading to a payday loan debt trap. Additionally, failing to repay a payday loan on time can damage your credit score and make it difficult to get a loan in the future from the payday loan lender. 

What Happens If I Close My Bank Account And Default On A Payday Loan?

If you close your bank account and refuse to pay back a payday loan on the due date, the payday lender will reach out to you and attempt to get you to repay the loan. If this continues unsuccessfully for about 60 days, your case will be turned over to third-party debt collectors. 

These agencies can be quite notorious for hounding payday loan borrowers aggressively to recover unpaid payday loans. They’ll send you letters and call you repeatedly until you repay the loan or work out an agreement with the payday loan provider. Having your details turned over to a debt collector also reflects on your credit report negatively and affects your chances of getting new payday loans. 

How Long Does It Take To Default On A Payday Loan?

The exact amount of time it takes to default on a payday loan often depends on the payday lenders you are dealing with. However, in most cases, the lender will give you a period of 60 days from the original due date set in the payday loan agreement before declaring you as a defaulter. After this period, your details will be forwarded to a collection agency to recover the payday loan debt. 

Can You Go To Jail If You Default On A Payday Loan?

No, you cannot go to jail for defaulting on a payday loan, and payday loan collectors are not allowed to threaten you with jail terms. However, they may open a civil case against you and charge you to court. The legal consequences you’ll face will depend on the state you live in. In some states, it may lead to wage garnishment or a lien being placed on your property. 


If you’re unable to repay your payday loan on the agreed date, the right thing to do is to get in touch with your payday lender. In most cases, they may be able to work out a convenient debt management plan for you. Some states also allow you to take debt consolidation loans.

Closing your bank account or refusing to repay may result in expensive NSF charges, bad credit scores, and troubles with debt collectors. You’ll struggle to get future loans until you rebuild credit again.If you think payday loans are too expensive you can explore alternative personal loan options on AdvanceSOS or go to your local credit union for a loan.

What Are The Consequences of Missing a Payday Loan Payment?

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