What if I Miss a Payment on a Personal Loan?
There are several negative consequences that will happen if you miss a payment on a personal loan depending on the amount, your agreement with the bank, how long the loan has been in default, and other factors. For one, late fees will be charged based on the information in the credit contract. Your credit score will also get impacted. Naturally, the collection agencies will be involved to facilitate the collection. The creditors can also sue you. If the payment has been delayed for a long time the loan may default and this will impact your credit score and your eligibility for another personal loan. Start researching personal loan options now:
When finalizing your personal loan application process, you and your preferred creditor have to agree first on the amount of the loan, payment terms, loan duration, interest rates, payment frequency, and other conditions. Once you got the loan, you need to ensure that the agreed terms are being met especially when it comes to timely payments. If you miss a payment on a personal loan, there are multiple unfavorable aftermaths that might wreak havoc on your overall financial health.
Set a Schedule: How to Not Miss a Payment on a Personal Loan
Once you got the proceeds from your loan, it is time to track your loan payment budget and the agreed billing schedule in order to ensure that you will not miss a payment on a personal loan. Most people are aware that sticking to the agreed loan terms can help them have a good financial background. However, this is not the case most of the time as there might be instances when there are unforeseen challenges like hospitalizations, loss of income, recession, and others. When this happens, some people might not have any emergency funding to cover all their critical expenses especially their personal loan payments. You can take another loan for these emergencies but the approval might be problematic especially if the lenders have seen that you have missed payments in your credit report. Compare personal loan rates in your area:
Delayed or missed payments can result in late fee charges. Typically, the late fees vary between $10 and $50. The late fees will be charged for the individual missed payment. Given this, you can expect that the charges can readily increase if you miss a payment on a personal loan. Creditors typically offer a grace period for several days. However, you should not be relying on this offer as delayed payments can also have consequences in other areas.
Consequences of Missed or Delayed Payments
One missing payment will not totally destroy your creditworthiness. However, missed payments can still cause your credit score to have some dents. Furthermore, if you kept missing payments, the impact to your financial standing will heavy and you might gain a highly unfavorable credit score.
Check if you are eligible for a personal loan by getting your estimated FICO credit score by inputting certain credit information in the myFICO online free credit score estimator tool.
If you only missed a payment on a personal loan once, the collection agencies might just give you several reminders via phone calls. However, several missing payments will trigger the collection agencies to try to have you pay for the delayed amount in order to maintain a clean credit record and avoid any negative impact.
Another unfavorable consequence involves lawsuits that might be filed by lenders. This typically happens when you do not answer the calls or respond to any attempts by the collection agencies to contact you. If this is the case, this will eventually lead to lawsuits and the demand for the full payment from your creditors.
Loss of Assets Due to Missed Payments
Assets and possessions can also be taken from you if this continues to happen. Although personal loans do not usually require collaterals, there are some types of personal loans that have collaterals. If you miss a payment on a personal loan, ensure that this will not be repeated again to keep your assets and properties under your name.
Another negative impact of missed payments is loan defaults. When this happens, your credit score will suffer a free fall and you will have some trouble in obtaining new loans in the future. Furthermore, the lenders might demand the full loaned amount to be paid.
You can compare the personal loan rates of several companies through the online comparison tool.