What happens when you write a check but don't have enough money to cover it?

Question

Ok so my car payment is due and my bank account doesn't have enough money in it to cover it! (I had a bunch of unexpected expenses this month) I SHOULDDD be getting paid before the check clears. However...What will happen if toyota clears my check before my paycheck goes into my checking account??? Will the car payment go through even if there's not enough money to cover it? :os

Answer 1

It is against the law to write checks knowing that you don't have enough money to cover it.

Each financial institution (FI) handles NSF (non sufficient funds) items differently. Some will bounce (return the check to Toyota unpaid) automatically. Others will pay it, depending on how short you are and charge you a fee.

Consumers grumble about the fees FI's charge, but Toyota would charge a fee if the check bounced and report you to a credit bureau so being charged without the black mark against your credit is a pretty good deal. Toyota could redeposit the check and you might get charged a second time if you were still short!

Check 21 is a new, electronic way FI's clear (process) checks. It used to be that the checks were placed on planes to the maker's (check writer) FI for processing. The check can now be converted into a digital image and negotiated the same day. The law is still new so there are many FI's that are not ready and must still deal in paper checks. The point is, you cannot count on Toyota taking days to clear your check. They might clear it quickly. You can get an idea of how long it takes by looking at your check register and check statement.

You should apply for "overdraft protection" with your FI. It is like a credit card for your checking account. Some FI's charge an annual fee. There will be an interest rate for amounts borrowed. The annual fee is much cheaper than the NSF fee so talk to your banker about it.

Good luck.

Answer 2

I'm surprised there are people out there that don't know this.

If you don't have enough money in your account, then the bank will refuse to pay the check and send it back. That's called "bouncing a check". You will have to pay a fee at the bank and to whoever you wrote the check to. You also may face criminal charges for fraud, but typically you just end up paying a lot extra in penalties.

There are some recent changes in the way checks are handled, so the money transfer is almost instantaneous--so don't count on having a few day's cushion before the check hits your bank.

The best way to handle this (second only to actually having the money in the bank) is to set up a credit line in the form of "overdraft protection" with your bank. You will have to pay an extra fee and steep interest, but you won't be breaking any laws and it will be much less than the bounced check fees.

Answer 3

The answer depends on many things: your bank's policy, your history with them, and state and local laws.

Some banks will cover the bad check if their policy allows, and if your history with them has been good. They will charge you a fee for this service. I've seen NSF (insufficient funds) charges from $15 to $49, depending on the bank.

If they don't cover the bad check, they will return it to Toyota and charge you an NSF fee for the "service." (If you bounce checks too often, they can close your account and you'll have a hard time getting a new one.)

Toyota will then add a returned check fee to your loan account. They will probably also put a derogatory note in your credit file with one or more of the three credit reporting agencies. That will stay on your record for seven years. Toyota will also be less willing to be flexible with you in the future.

It is a crime to write a bad check. It's a federal offense, though the FBI probably has better things to do than come and arrest you. It's also regulated more strictly by some states (e.g. California) and counties (e.g. Los Angeles). The Los Angeles District Attorney has been very aggressive at prosecuting writers of bad checks.

Here's an alternate idea: call Toyota and ask if you can have an extension on the due date. If you've got a good history with them, they may say yes. That will protect your relationships and credit history, and avoid any criminal problems.

Answer 4

Good excuse,,

Some banks offer what they call bounce proof checking so they would pay your check even if you don't have the funds in your account. The bank charges a fee to do this,, usually $20. to $30. for each check and they have a limit on how much they will cover for you and for how long. Usually the amount they will cover is small. If you don't have this type of checking ,, the check will be returned to the person/place you sent it. Many companies will charge you for a "hot" check. Beside the bank charging you, the people you wrote the check to charge you,, and it will show up on your credit rating.

You can expect to pay a car loan every month till it's paid off.

Answer 5

It depends. If you have overdraft protection on your checking account, it might be covered. Call your bank to find out. If you do not, your check will bounce -- that is, will be returned for insufficient funds, and I imagine Toyota will charge you a fee for the returned check, and possibly a late charge as well.

Answer 6

Go directly to jail;
Do not pass go;
Do not collect $200!

Answer 7

BOING