Instant same day loans are a great way of getting out of a tight squeeze quickly, however there are potential downsides. One of the most obvious and frequently encountered issues arises when a customer is unable to repay.

Whether circumstances have changed since initially applying for the loan and receiving funds, or you simply misjudged the cost and your own financial stability, coming up short on the repayment date can create a massive problem. First of all you have to consider the charges. As with any financial agreement, if you fail to honour it in full, the lender is entitled to charge a fee. Within the realms of short-term borrowing, this can have much wider and larger implications though.

As well as a one-off fee, which will be charged every month that you fail to settle the debt in full, interest will also be applied. Again, this is done on a month-by-month basis, so the longer you leave the repayment, the more it will cost.

Let’s demonstrate this with a quick example. If you borrowed £400 at a rate equivalent to 20% interest, your total debt would be £480 when the repayment date arrived. Now we’ll assume that you miss this. Most companies will immediately apply a charge, we’ll say £30, and the added interest for the full month (assuming it isn’t a lender that charges on a daily basis). This would then push the total amount owed up to £612.

As you can see, this could prove to be very costly indeed and may quickly get out of control if you don’t take measures to ensure it isn’t allowed to escalate. One solution might be to contact the lender directly to discuss your problem and see whether you can find an amicable solution. One such answer may be to defer the payment for a month.

It is important to note however that there could still be a charge associated with any deferment. Again though, this might be reduced if you approach the same day loan company before automatically defaulting. Not all lenders will be able to help though, as some have strict rules on repayments and deferrals. This would mean that you either accept the defaulted payment or have to find the money elsewhere.

If you can feel yourself getting dragged into a cycle of debt and know that you’re not going to be able to repay in one go as you had originally intended, it may also be worth discussing a repayment schedule with the lender. So rather than having to find £612, using the previous example, you might be able to pay off the debt at a rate of £200 a month.

This won’t provide a complete solution for your problem, but it will at least give you a pathway to recovery. Whilst interest will continue to be applied to the total amount, it should become more manageable over time. By breaking up the total amount, charges should be reduced as will your anxiety levels.

After all, it is in the best interests of both parties that the debt is repaid. Whilst in an ideal world this would always happen on the agreed date, sometimes things do go slightly awry. If the borrower goes AWOL and is unable to provide the lender with any funds, then they could eventually end up significantly out of pocket. Equally, if the lender keeps applying charges, they may push borrowers into a position where they simply can’t get their hands on the money needed. Again, this could mean that they end up with nothing.

So whilst it may be possible to defer payments, you should always do everything possible to make sure that you have the cash in your account ready for collection. This means being sensible with your borrowing and not being scared of asking for help before things are allowed to escalate to unmanageable levels.

Vincent Rogers is a freelance writer who writes for a number of finance businesses. For Payday Loans, he recommends Payday Power.

Vincent Rogers is a freelance writer who writes for a number of finance businesses. For Payday Loans, he recommends http://www.paydaypower.co.uk Payday Power.

Author Bio: Vincent Rogers is a freelance writer who writes for a number of finance businesses. For Payday Loans, he recommends Payday Power.

Category: Finances
Keywords: payday loans, same day loans, loans, UK, finacne