Personal Check Pitfalls
Many payday loan transactions are based on personal checks.
Borrowers write a personal check to lender for amount borrowed plus fees and receive cash. Lenders hold the check until next payday. At that point, borrowers can:
- pay the finance charge to extend the loan (roll over or flip the loan)
- pay the full amount in cash to redeem the check
- allow lender to deposit check at bank
Sounds easy enough. If you are not careful, though, you could face stiff penalties, lose your checking account or even face a lawsuit…
If the lender tries to cash the check and there are insufficient funds in your bank account, the check will bounce.
Bounced checks lead to:
- bounced check fees from your bank
- bounced check fees from the lender’s bank
- depending on your loan contract, additional fees from the lender
Bounced checks can hurt your credit rating.
If you bounce checks several times, you may:
- lose your bank account
- have difficulty opening bank accounts in the future
Unethical lenders may:
- threaten you with criminal penalties
- sue for damages under bad check laws
- threaten court-martial (if you are in the military)
Very unethical lenders (who have additional fees for bounced checks hidden in the loan contract) may cash the check early knowing full well that it will bounce.
When considering a payday loan, keep personal check pitfalls in mind and choose your lender carefully.
Recent Posts:
- 07/12/2011: Expanded Contact Info Page
- 06/11/2011: Internet Crime Complaint Center (IC3)
- 05/18/2011: Added Full Contact Info Page
- 05/15/2011: Payday Loan Site Traffic Comparison Update – May 2011
- 05/10/2011: IP Ban for Ratings Abuse
Random Posts:
- 10/26/2006: Ken Eiden
- 08/11/2006: Supreme Court of New Jersey
- 11/05/2006: Avoid Payday Loan Websites with a Shared IP Address
- 06/27/2006: Unwanted Commercial Messages
- 11/17/2006: John Reich
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