Missing a loan payment may cost you financially—now and into the future. You may be subject to additional interest and fees, your credit rating may be affected, and you may potentially risk your chances of loan approvals in the future. Your ability to finance a car or home may also be affected by missed loan payments, and the overall costs of borrowing may be higher. Situations vary based on the type and terms of your loan, but some of the consequences you might encounter due to a missed loan payment include:
1. Incurring Late Fees
Late payment fees can vary, sometimes in the range of $25 to $50, or 3% to 5% of your monthly payment amount.
2. Impact on Your Credit Score
A missed payment may be reported to one or all of the top three credit rating agencies: TransUnion, Experian and Equifax. These companies calculate 35% of your credit score based on your payment history. However, lenders generally wait 30 days after a payment was due before reporting it. If you make your payment before that grace period, you may be able to avoid having it recorded as late on your credit report. After 30 days, your account may be reported as delinquent.
3. Your Loan May be Referred to a Collection Agency
If you miss several loan payments and fail to negotiate payment terms with your lender, they may sell your debt to a collection agency. The agency may make numerous attempts to recoup the money. They may also file a court case against you to demand payment.
4. Possibility of Increased Costs for Future Loans
If you have late payments or a default on your record, future lenders may be reluctant to loan you money. A late payment history can also result in higher interest rates for mortgages, car loans, insurance, and credit cards in the future.
5. Possibility of Property Forfeiture
If you took out a secured personal loan and default on your loan payments, you risk whatever property you used to secure the loan.
What to Do if You Miss a Loan Payment
A single missed payment can usually be remedied by contacting the lender and making your payment as soon as possible. For a one-time occurrence, your lender may be willing to waive any additional charges or fees. Here are some other steps to consider:
Set Up Automatic Payments
Automatic payments can help ensure that your loan is paid on time every month. Some lenders will even give you a discount if you elect automatic payments. Be certain that the date you choose aligns with a time of month when you have enough funds in your bank account to safely cover the debit.
Request a Due Date Change
If you were late with your payment because you have several payments due the same week, ask your lender if they can change the day of the month your payment is due. You may want to have your due date close to when you receive your paycheck.
Use a Reminder App
There are many free apps you can download that will send you notifications to remind you when bills are due. There are also options to sort bills by date, name, and category. Apps like TimelyBills™ or Mobills™ may help you keep track of bills and your budget.
Whether you need a personal loan to consolidate debt, purchase an automobile, or pay for an unexpected expense, Mariner Finance may be able to help. Check out a local branch near you.