Q:What happens if I can’t make my loan repayments?
A: The consequences of missing loan repayments will depend on the type of loan you have and the lender you’re dealing with. Here are some of the potential outcomes:
- Late payment fees – If you miss a loan repayment, your lender may charge you a late payment fee. These fees can add up quickly, making it even harder to catch up on your repayments.
- Default notices – If you miss multiple loan repayments, your lender may issue you a default notice. This is a formal notification that you have failed to meet your loan obligations, and it can negatively impact your credit score.
- Legal action – If you continue to miss repayments, your lender may take legal action against you to recover the outstanding debt. This could involve going to court and obtaining a court order to garnish your wages, seize your assets, or even force you to sell your property.
- Credit score damage – Missing loan repayments can have a significant impact on your credit score, making it harder to obtain credit in the future. A damaged credit score can affect your ability to get approved for credit cards, loans, or even rental applications.
Q: How to mitigate the damage if I missed my loan repayment?
A: If you find yourself struggling to make your loan repayments, there are a few steps you can take to try and mitigate the damage:
- Contact your lender – If you know you won’t be able to make a repayment, contact your lender as soon as possible. They may be able to offer you a payment plan or hardship assistance to help you get back on track.
- Seek financial advice – Consider speaking with a financial advisor or credit counselor to get advice on managing your debt and improving your financial situation.
- Prioritize your debts – If you have multiple debts, prioritize the ones with the highest interest rates or fees. This can help you minimize the amount of interest you’ll have to pay over time.