By signing a payday loan agreement, we commit ourselves to timely repayment.
However, it may happen that in the face of financial problems, we will not be able to meet the previously accepted provisions.
As debt grows over time, we often start looking for unconventional solutions that can often only result in deepening our problems. At this point, many debtors wonder when the payday loan expires?
What is the statute of limitations?
Each payday loan or credit agreement has a specific repayment date, which we undertake to comply with. However, for various reasons, it may happen that we will not be able to accumulate the amount needed to be returned in due time. When refinancing the payday loan is not available and requesting for another commitment turns out to be impossible, many people decide to go a step further.
At this point, the search for a way to circumvent the obligation to return the borrowed money begins. The debtor counts on the contract to be time-barred and he will get rid of the problem. However, it is not as simple as it may seem.
In addition to the date included in the contract, there are also appropriate legal regulations. According to art. 117 of the Civil Code, all property claims after the expiration of a specified period are subject to a statute of limitations.
If the necessary conditions are met, the borrower may refuse to repay the debt. The only exception is when the debtor waives his right. The period of limitation begins on the day the claim matures, which means the repayment date.
When does a payday loan in installments become statute-barred?
If we used the services of a payday loan company or a bank, the period of limitation of debt is 3 years due to the business activity. In the case of a private payday loan, the limitation period is 6 years. Since when is it counted? It starts when the debtor exceeds a specific due date of the payment deadline to the creditor’s account. As it has already been mentioned, in order to become a fact, in the case of an online payday loan, it will take three years.
However, there is some reservation contained in art. 118 of the Civil Code, which says that the date ends with the last day of the calendar year. In addition, in the case of an installment obligation, the period of limitation is calculated from the date of payment of each payment. Ultimately, then, they must be three years from the day when we should pay back the last part of the debt.
It is also worth noting that according to art. 123 the limitation period can be interrupted at any time in three situations. The first of them presupposes taking any action before a court or other body seeking to recover a property claim. The second is the recognition of debt, that is, the resignation of his right.
In turn, the third option may be to start mediation. If a creditor or a borrower joins one of these activities, the limitation period is reset and counted out again.
In each payday loan agreement there is also a provision that provides the lender with the right to give notice by default, with a one month period. Usually, we do not pay attention to the details of official documents, but in the case of making financial decisions, each of its points may turn out to be significant.
By providing an appropriate statement in writing or orally, the payday loan company informs us that we have 30 days to return the money received earlier. It happens that we confuse the termination of the contract with withdrawal from it. However, it should be remembered that the differences between them can be found at the root.
The withdrawal from the contract is vested in each client who, after considering his financial situation or for any other reason, decided to resign from the contracted obligation.
We have the right to do so for 14 days from the date of completion of all formalities. However, we undertake to return the money borrowed within 30 days – as in the case of termination.
Is it worth waiting for a payday loan to become time-barred?
According to specialists, waiting for the end of the payday loan limitation period or any other debt is associated with high risk. The creditor can stop the entire process at any moment as a result of attempts to reach an agreement. Our debt is growing all the time, and the financial situation is getting worse from day to day.
The lender has the right to charge us not only with interest for late payment but also with other fees related to debt collection activities.
If we know that we will not be able to pay off the debt before the repayment date, it is worth contacting the creditor. Many of them offer their clients the option to extend the payday loan repayment term or refinance.
This action does not require any additional documents from us. All you need to do is give the right disposition in the customer’s panel or during a telephone conversation. The use of this service is for a fee, however, it is lower than the possible consequences of waiting for the statute of limitations. With what consequences of untimely repayment of the obligation must we count?
Interest as a consequence of delays
As we mentioned, when unplanned expenses appear in our home budget or we simply have to deal with financial problems, we seek help not only from payday loan institutions, but also from private individuals. The source of financing we use may turn out to be key in the future. In a situation where we are unable to return the due amounts on time, the provisions contained in the contract will also be relevant.
They regulate both repayment terms and the consequences of failure to meet deadlines. In the case of online payday loans belonging to the group of consumer payday loans, the rules for calculating interest can be found in the anti-usury law. It establishes, inter alia, a maximum amount of interest for late payment, which may amount to at most twice the amount of statutory interest specified in art. 481 § 2 (1) of the Civil Code. This means that currently the upper limit is 14%.
Other costs of not meeting the deadline
However, late payment interest is not the only cost we will be required to pay if we fail to comply with our contractual obligations. When deciding to use a particular payday loan company, we should look at all the terms. If we did, we certainly came across a record saying that we would be charged with any costs associated with the recovery of the payday loan.
The final amount depends on the practices the lender uses. Among them may be: prompts, urging phones, e-mails or SMS. We also have the collector’s visit and finally the bailiff’s execution. As you can see, within three years, debt can reach unimaginable value, exceeding not only our financial capabilities, but also the amount of the commitment received.
If you want to use the offer tailored not only to your needs, but also financial possibilities, check out the conditions proposed to borrowers . Do you want to avoid repayment problems? Apply for tailor-made payday loans!