What Happens if You Miss a Loan Repayment?
Taking out a loan is serious business. This really is something should know, considering all the checks required prior to being approved for one. Consequently, you are aware how important it's that you maintain your weekly or monthly repayments. However, what goes on whenever you miss a payment? This article will have the answers, along with advice on how to resolve the problem.
The steps to rectifying the situation
The good news is there are approaches you are able to take to solve any loan repayment items you might be suffering. Loan brokers say that “the minute you understand you are in too deep and you've got taken on an excessive amount of is the minute you need to contact [your lender]”.
If you don't tell your lender you are having troubles then basically they can't help you. But you might be surprised at the assistance they're ready to supply, for example granting repayment extensions and freezing your interest. In the UK, you have rights as governed by the Financial Conduct Authority, and there will also be debt advice services to help you in case your debt has become seemingly uncontrollable.
Yet returning to the repercussions of missing a loan repayment, below is exactly what you are able to arrived at expect.
A warning and charges
Typically, the very first consequence of missing a payment is that you'll get a warning from your lender – in both the form of an email or perhaps a letter, or both. This warning will notify you concerning the desire to make the repayment as soon as possible.
It will even include any bills you may have incurred due to missing payment. This could include interest fees and extra overtime fees. If you are already experiencing money, these charges can push you into an even bigger financial problem.
Credit report blemish
Even if you only miss one repayment due to forgetting the deadline, this is still likely to negatively impact your credit score. This is not good for numerous reasons. To begin with, it might allow it to be harder to get another loan in the future.
Alongside that issue, a damaged credit rating will lead to issues that vary from being rejected for credit card applications to passing up on securing a home loan for a new home.
Threats of repossession
Missing only one loan repayment is bad enough. However, what goes on should you miss several repayments consecutively? Well, plus a default notice, you could find a lender wasting threats of repossessing your car or home.
You may also not need to cope with your original lender. They are able to pass your debt onto a professional business collection agencies agency, and this can result in further trouble – such as court action being brought against you.
Court action
If a court decision is the opposite of you, you'll have to wind up paying greater than the repayments you missed. Other fees will also be added on top, including court expenses and extra interest, leading to you being further up front. It will also possess a negative effect on your credit history for multiple years.
