Personal Loans can be a great tool to help you reach your financial golds, whether you used one to fund a renovation or a Car Loan to buy your dream car. However, due to financial emergencies and the rising costs of living, it is not uncommon for borrowers to miss one or two monthly payments.
But what happens if you don’t pay back a Personal Loan? In this blog, we’ll outline the consequences of missing Personal Loan payments and share tips to ensure you make repayments on time, every time.
What happens if you don’t pay a Personal Loan?
Personal LoanWhile there are many reasons why a borrower may fail to make Personal Loan payments, ranging from financial instability to simply forgetting their payment date, you must be aware of the next steps. The actions that a lender might take in your case are determined on the length of your default. We have outlined what happens if you do not pay a personal loan at the 30, 60 and 90-day mark to make sure you are aware of the potential consequences.
- 30 days
One of the standard steps a lender may take if you have defaulted on your loan payment is to charge a late fee. Depending on the lender, late fees can range from $20 to $50.
Of course, some lenders do not charge late fees at all. During this period, you may also begin to receive reminder emails, messages or phone calls from your lender, informing you that your repayment is late. If you are experiencing financial difficulties, it is critical to communicate with your lender, as they may offer options such as temporary payment arrangement or loan modification.
Financial hardship can occur to anyone, and at Finance One, we strive to help you through this period as much as possible. If you are a Finance One customer who is experiencing financial hardship, please inform us as soon as possible. We’ll then work with you to find the best solution that can help get you back on your feet.
- 60 days
When you reach the 60-day mark without making a payment, the situation becomes more serious. Even if you paid between 14 and 60 days after the payment date, your lender may still report this information to credit bureaus, and it will be recorded on your credit file, affecting your credit score.
Defaults like these can remain on your credit report for up to five years, making it difficult to be approved for future credit products. It’s also worth noting that if you don’t make your repayment during this period, the lender may charge you additional interest and late payment fees.
- 90 days and over
If you should fall behind on your payments for 90 days or more, the lender’s efforts to recover their money become more aggressive. For instance, if the loan is secured, they may initiate the process of seizing collateral. In many cases, the lender may also stop trying to collect the funds from you and instead sell the debt to a third-party debt collector, who will then become responsible for collecting the funds from you.
Even if you have missed a payment or two, there are steps you can take to avoid this situation. Aside from applying for financial assistance, we’ve outlined three tips to ensure you make your repayments on time.
Three tips to making your Personal Loan repayments on time
While falling behind on loan payments can seem overwhelming, there are proactive steps you can take to avoid reaching default:
- Set up reminders or automatic payments — Use the reminder app on your smartphone to set reminders of upcoming due dates. You can also set up automatic payments via online banking to ensure you never miss a due date. Just make sure you always have sufficient funds in your account to cover these payments!
- Prioritise payments when allocating funds — Rework your budget to ensure your repayments are prioritised. Where possible, allocate funds to cover your loan before spending on non-essential items. By making your loan payments a top financial priority, you’ll have a better chance of remembering your payment due dates.
- Communicate with your lender — They say communication is key, and updates regarding your Personal Loan are no exception. If you’re facing financial difficulties, contact your lender as soon as possible. They may be able to provide temporary solutions, like a personalised repayment plan or loan modification, to help you manage your payments.
Before signing the dotted line on any financial product, doing your research is essential. Personal Loans can be a valuable way to fast-track your financial goals. However, they do need to be managed responsibly. If you do believe you can manage a Personal Loan responsibly, you may have begun searching for the right lender — and there’s no better place to start than with Finance One
Finance One is a professional lender who has assisted Australians with personal financing for more than ten years. We offer a wide range of loans to suit the needs of our customers, from standard Personal Loans to Medical Loans, Car Loans and Business Loans — we even offer Personal Loans to borrowers with bad credit.
Take control of your financial future with a Finance One Personal Loan
With Finance One, you could access the financing you need with minimal fuss. Explore our range of Personal Loans and submit your application today.
Apply Online NowDisclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent advice regarding your legal, financial, taxation or other needs, to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. All loan applications are subject to normal lending criteria. Fees and charges payable. Terms and conditions apply.
