June 1, 2022
A single missed payment on your personal loan may cost you additional money in the short and long-term. A potential late fee is just the start. You may want to think twice before you skip a payment and consider all of the possible consequences, which may include:
1. You May Incur a Late Payment Fee
Under the terms of your loan agreement, you made a commitment to make monthly payments due on a certain day each month. If your payment is late and depending upon the terms of your note, your lender may charge you a late payment fee. Late charges can be a flat fee or a percentage of your monthly payment. For example, if your monthly payment is $200 and the lender charges a 5 percent late fee, you’ll be charged an additional $10. Some lenders allow a grace period, which could range anywhere from 5 to 15 days, but the sooner you can make a payment, the better.
2. You may Incur Additional Interest
When you miss a monthly payment, interest still accrues, and you may pay additional interest over the life of the loan.
3. Your Credit Score May Take a Hit
Missed payments may be reported to the three largest consumer reporting agencies, TransUnion, Experian and Equifax. However, in some cases if you’re less than 30 days late, you may avoid the transgression being recorded on your credit report. Lenders are required to wait on reporting until your payment is at least 30 days past due. After this 30 day period, your payment may be recorded as delinquent. Late payments stay on your credit report for up to seven years and may affect your ability to borrow money in the future.
4. You Might Have to Forfeit Your Collateral
If you took out a secured personal loan, you backed up your promise to pay your loan with pledged collateral such as your house, car, or other asset. When you miss a payment, you potentially jeopardize that collateral. If you miss several payments and ignore collection attempts, your possessions could be repossessed.
5. Your Loan Might be Called Due
While a single missed payment may not derail your financial stability, missing several payments without communicating with your lender could escalate the matter. Under the terms of your loan, if you default, the lender may have the right to call the entire loan due. That means that the full amount would be immediately due, including interest, fees, and legal expenses.
6. Your Loan Might be Referred to Collections
Another route lenders can take to recoup money owed is to refer the note to a collection agency or litigate the case in court. If your lender does sue you in court for the unpaid debt and wins a judgment against you, you are then responsible for the money you owed, plus late fees and possible legal expenses.
7. Future Lenders May Not Want to do Business with You
If you have a default on your record, future lenders may be reluctant to loan you money. A history of past due payments may have consequences such as higher interest rates for car loans, mortgages, insurance, and credit cards.
What to Do If You’re Going to Miss a Loan Payment
You can help prevent late payments with a good budget and payment routine. If you do accidentally miss a payment, contact your lender and pay the amount due as soon as possible, preferably within the grace period. Even if your payment is paid past 30 days from its due date, it’s better to communicate with your lender than to have potential collection attempts escalate. If you’re having financial trouble, reach out to your lender, as they may have options available to assist you.
The information provided in this article does not constitute financial advice and is provided for educational purposes only without any express or implied warranty of any kind. This article is not intended as legal, tax, investment, or any other advice, and Mariner Finance does not offer credit repair services. Consider talking with an appropriate qualified professional for specific advice.
Blog posts are for informational purposes only.
†We offer personal loans from $1,000 to $25,000, with loans terms from 12 to 60 months. Minimum and maximum amounts dependent on an applicant’s state of residence and the underwriting of the loan. Loans between $1,500 and $15,000 may be funded online. Loans greater than $15,000 or less than $1,500 are funded through our branch network. Specific interest rates and fees are determined as permitted under applicable state law and depend upon loan amount, term, and the applicant’s ability to meet our credit criteria, including, but not limited to, credit history, income, debt payment obligations, and other factors such as availability of collateral. Not all rates and loan amounts are available in all states. Additional fees may apply to some loan offers; some state required and/or permitted fees may be treated as prepaid finance charges. Any such charges shall be in addition to the loan amount requested and/or approved and shall be fully disclosed to the applicant on his/her loan agreement. Not all applicants will qualify for the lowest rates or larger loan amounts, which may require a first lien on a motor vehicle not more than ten years old titled in the applicant’s name with valid insurance. Our loan by phone and online closing process requires a compatible mobile or computer device on which you can access your email and electronic documents. Not all loan types are eligible for loan by phone or online loan closing.
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. As a result, under our customer identification program, we must ask for your name, street address, mailing address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.
For any stated annual percentage rate (“APR”), the APR represents the cost of credit as a yearly rate and will be determined based upon an applicant’s credit at the time of application, subject to state law limits. A range of APR’s may be applicable, subject to state law limits and individual underwriting. Not all applicants will qualify for a lower rate. APR’s are generally higher on loans not secured by a vehicle, and the lowest rates typically apply to the most creditworthy borrowers. All terms and conditions of a loan offer, including the APR, will be disclosed during the application process. As an example, with an amount financed of $5,000.00 the borrower receives $5,000.00 at an APR of 29.99% and an interest rate of 28.77% which includes a finance charge of $3,640.96. Under these terms, the borrower would make 48 monthly payments of $180.02, for a total of payments of $8,640.96. The amount financed may not be the net proceeds paid if charges other than interest are included in the loan.
*The process uses a “soft” credit inquiry to determine whether a loan offer is available, which does not impact your credit score. If you continue with the application process online and accept a loan offer, or are referred to a branch and continue your application there, we will pull your credit report and credit score again using a “hard” credit inquiry. This “hard” credit inquiry may impact your credit score.