What Happens If You Don’t Pay Your Spotloan? Consequences and Options

Spotloans are a type of short-term, high-interest loan that can provide quick access to cash in an emergency While they may seem like an easy fix, these loans can quickly spiral out of control if you fall behind on payments. So what actually happens if you don’t pay back your Spotloan? Let’s take a closer look.

Overview of Spotloans

First a quick refresher on what Spotloans are. Spotloans are a brand of online personal loans offered by BlueChip Financial a tribal lending entity owned by the Turtle Mountain Band of Chippewa Indians.

Some key features of Spotloans

• Amounts from $300 to $800
• Payback terms from 4 to 10 months
• APR of up to 490%
• Daily compound interest
• Payments made by ACH bank withdrawals

Spotloans are intended for short-term financial needs, not long-term credit solutions. While more affordable than payday loans, they still carry very high interest rates.

Consequences of Not Paying

So what happens if you take out a Spotloan but can’t make the payments? Unfortunately, failing to repay your Spotloan can seriously impact your finances.

1. Interest Charges Continue Accruing

Spotloans charge interest daily based on your outstanding principal balance. This means if you miss a payment, interest keeps accruing at your loan’s APR of up to 490%.

For example, if you borrowed $500 at 490% APR and missed just one monthly payment, you could owe over $560 including the added interest charges. And that balance will keep growing rapidly with each missed payment.

2. Credit Score Damage

Like most lenders, Spotloan reports loan activity to credit bureaus. If you become delinquent on your Spotloan, it will likely show up on your credit report. Late payments can cause a big drop in your credit score.

The damage can stay on your report for up to seven years, negatively impacting your ability to get other loans or credit cards.

3. Debt Collection

If you are unable to bring your Spotloan current after a certain period of delinquency, Spotloan will likely turn your account over to a debt collection agency. The collections agency will then pursue repayment, typically through calls, letters, and lawsuits.

Having an account in collections makes it very difficult to get approved for future credit or loans. Collection activity also stays on your credit report for seven years.

4. Garnished Wages

If efforts by the debt collector fail, they may seek a court judgment against you to garnish your wages or levy your bank account. This allows them to forcibly collect by claiming a portion of your paycheck or withdrawing funds from your bank.

Wage garnishment laws vary by state, but up to 25% of your disposable earnings can be taken in some places. This can create serious financial hardship.

5. Bank Fees

Even before an account goes to collections, missed automated payments can trigger fees like overdraft or nonsufficient funds fees from your bank. Spotloan may also charge returned payment fees.

These fees vary but can be $30 or more per occurrence. Banks sometimes charge extended overdraft fees daily until an account is brought current.

Options If You Can’t Pay

Clearly, not paying your Spotloan can seriously damage your financial situation. If you realize you can’t make your payments, here are some options to consider:

• Contact Spotloan immediately – Let them know about your situation right away. They may be able to make alternative repayment arrangements or settle for less than the full balance.

• Borrow from friends/family – Ask loved ones for help making a payment or two while you get back on your feet. Be sure to put any such agreements in writing.

• Credit counseling – Non-profit credit counseling provides free budget and debt advice. They can help you manage bills.

• Debt settlement – Debt settlement companies negotiate with lenders for a reduced payoff amount. This requires lump sum payment.

• Bankruptcy – Declaring Chapter 7 or Chapter 13 bankruptcy stops collections activity and discharges debt, providing a fresh start.

• Payment priority – If unable to pay everything, consider paying secured debts like car loans first to avoid repossession.

• Consolidation loan – A consolidation installment loan with lower interest can pay off the high-rate Spotloan and reduce payments.

• Balance transfer card – Transferring the balance to a 0% APR credit card stops interest and gives breathing room.

• Cut expenses – Reducing discretionary spending allows more money to pay critical bills. Develop a bare bones budget.

• Income increase – Bring in more money through a second job, commissions, monetizing skills or hobbies, selling items, etc. This provides more ability to repay debts.

Avoiding Spotloan Problems

While Spotloans offer quick cash, think carefully before taking one out. Their astronomical interest rates can bury borrowers in debt. Only use them as an absolute last resort for unavoidable emergencies that you’re certain you can repay quickly.

Here are some tips to avoid issues with Spotloans or other payday-type loans:

• Exhaust other options first like borrowing from family or credit cards
• Calculate the total payback amount including interest before accepting
• Don’t borrow more than you can realistically afford to pay back on time
• Set up autopay from your bank account to avoid missed payments
• Build an emergency fund to cover unexpected expenses instead of borrowing
• Improve your credit to qualify for lower interest rate personal loans in the future
• Avoid unnecessary spending to have more cash available for real needs
• Create and stick to a budget to keep finances stable going forward

While the quick cash may seem appealing, think long and hard before taking out any high-interest loan products like Spotloans. Defaulting on payments creates lasting damage. Be proactive about improving your financial situation so you can avoid the need to borrow at outrageous rates. But if you do find yourself in trouble repaying a Spotloan, take action quickly to mitigate the impacts and regain control.