What Happens If You Don’t Pay Back Your Cash Advance? The Shocking Truth

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Cash advances help bridge the gap until payday. But what happens if you can’t pay your advance back? You might be worried about damaging your credit score, getting a knock on the door from debt collectors, or even getting sued! We unpack your rights and responsibilities in this guide (plus strategies to stay out of trouble and still get the cash you need).

Cash advance apps have become increasingly popular, offering a quick and convenient way to access small sums of money before your next payday. 

But life doesn’t always go to plan.

Whether you’ve had less shifts at work, you’re a gig worker taking time off, or you need to divert funds to cover another emergency expense, you may not be able to pay back your cash advance on time.

Apps like Dave, Cleo and MoneyLion offer flexible repayment dates with no interest and no late fees, so option #1 is to reschedule your payment.  Taking more time to repay your advance won’t cost you anything extra with most apps!

But what happens if you find yourself unable to repay your cash advance on time… or unable to repay your cash advance at all? 

Read on to find out.

Will cash advances hurt your credit score?

Most apps don’t perform a credit check when you request a cash advance, so you can see what you qualify for without impacting your credit score. (There is no hard credit inquiry that can reduce your score.)  

Plus, a poor credit score won’t prevent you from qualifying for an advance, since apps use other factors to evaluate your creditworthiness, such as your bank account history and activity.

But what happens to your credit score if you’re late making a repayment or don’t repay your advance at all?

Unlike traditional loans, cash advance apps generally don’t report missed payments to credit bureaus. This means your credit score won’t be directly impacted by non-payment.  

On the flip side, making on-time repayments of your advances usually won’t help improve your credit score, either.

🤓 Overdraft Apps Tip: Dig into the terms of service of these apps, and you’ll see that they explicitly tell you that they don’t report to credit bureaus. For example, the popular Brigit app says that it will not “report you to a consumer reporting agency” (such as Experian, Equifax or Transunion) if you fail to repay your advance.

Will cash advance apps refer you to debt collectors?

Let’s get technical for a second.  

With most borrowing apps, the money you receive is on a “non-recourse” basis. This means that if you don’t repay the money that you borrowed, the app won’t take steps to take it from you, such as by referring your account to a debt collector or filing a lawsuit against you.  

Additionally, you don’t pledge any collateral when you borrow, so the apps don’t have any claim against your house or car. The apps will make multiple attempts to automatically repay themselves via your linked bank account, which you gave them permission to do when you took out your advance.

*Technically* you could walk away without paying your cash advance and you won’t have debt collectors, police or anyone else banging down your door… but that doesn’t make it a good idea to get in the habit of requesting and not repaying cash advances.

Failing to repay your cash advance comes with its own set of consequences that may limit your ability to request future advances, affect your cash advance limit, or limit you from using your favorite cash advance app at all.

MoneyLion’s Terms and Conditions have this to say:

You could face… restricted access to future advances

The most likely consequence of non-payment is being restricted from accessing future advances on the same app. 

For instance, Dave might freeze your account until you settle your outstanding balance. Similarly, MoneyLion might disable the Instacash feature until you repay the advance amount. 

This can be a hassle if you rely on certain apps for a financial buffer during emergencies. You don’t want to be frozen out of options when you need to borrow $50.

You could face… app-specific consequences

Different apps handle non-payment differently. Some, like Albert, might implement a “cooling-off period” after a missed payment, restricting you from accessing advances for a specific timeframe. 

Others, like Chime, might limit the amount you can advance in the future based on your repayment history. 

Understanding the specific policies of your chosen app is crucial before relying on their services.

You could face… reputational impact

While non-payment doesn’t directly affect your credit score, it can negatively impact your reputation with the app itself. This can manifest in the form of reduced access to future features or benefits offered by the app. 

Additionally, some apps might share information or a “blacklist” about non-payment with third-party data aggregators. There’s no concrete evidence of this, but non-payment may impact your eligibility for other financial products down the line.

The takeaway is that it’s better to focus on repayments (even if you need to reschedule your payment date) so you can keep accessing the maximum cash advance limit available.

Big Disclaimer: The Deal is Off If You Commit Fraud

I’m sure this thought never crossed your mind, but unfortunately other readers may be less scrupulous.  

So let us say it clearly: Intentionally taking out advances with no intention of repayment is fraud.  

The apps may pursue you for repayment plus collection costs via debt collectors or lawsuits. In severe cases, they may pursue criminal charges against you.

So push that thought out of your head and play nicely, please.

What to do if you can’t pay back your cash advance

Falling behind on your cash advance can lead to a cycle of dependence and further financial strain. 

Here are some alternatives to consider:

  • Get in touch with the app’s support team: Most cash advance apps encourage open communication since they want you to remain a customer. Try reaching out to their customer support team and explaining your situation. This might lead to flexible repayment options or payment extensions. If you don’t ask, you won’t get!
  • Explore alternative cash sources: Explore alternative sources of emergency funds. Look into building an emergency savings fund like a MoneyLion Credit Builder Loan, establishing a line of credit with a traditional bank (though interest rates might be higher), or seeking support from friends or family.

Remember, cash advance apps are meant to be a temporary bridge to your next paycheck or safety net, not a long-term solution for financial difficulties. 

It’s crucial to use them responsibly and only borrow what you can comfortably repay within the designated time frame. 

By utilizing these apps cautiously and exploring alternative solutions when faced with financial challenges, you can avoid the negative consequences associated with non-payment and maintain a healthier financial future.

Stay on top of your finances with our latest resources:

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Alexander Porter
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