We understand at Moolr that things change. Even though we always recommend that you only take out a personal loan if you are adamant you will be able to repay it, we understand that this is not always the case. This could occur for a variety of causes, ranging from the loss of a job to unexpected additional bills. Missing loan repayments has consequences, which we examine below.
This is why we go over the many methods and consequences if you don’t pay back your loan on time. A lender deducts repayments automatically from your debit account on the agreed-upon date. This is what you decided with the lender. Normally, lenders would refuse to lend to you if you have a bad credit score. Or if you have an average score, they may offer less competitive terms.
If you know you’ll be late on a payment, don’t ignore the matter. That is the worst thing you could possibly do. Contact the lender right away to try to work out a solution. Missing a payment may result in additional fees. However this is dependent on the terms and circumstances of your specific loan. But running away never solves anything. Talk to your lender and try to arrange a new payment plan. There may be costs, but they will be less than you ignoring the problem. It will not magically go away.
Because the lender is likely to do a credit check throughout the application process, failure to make the loan repayments may have a negative influence on your credit file, as it is with many loans. A late payment is reported to the credit bureaus and appears on your credit report. This can, unfortunately, stay on your report for up to six years.
Regular payments, on the other hand, will help you enhance your credit rating by demonstrating to potential lenders that you are a reliable borrower. Failure to repay a loan might harm your credit score, but it can be rectified. This is especially important for those who have previously failed to obtain credit. As a consequence, they have been unable to rehabilitate their credit rating, as they are locked in a vicious spiral.
It should be noted, however, that you should never take out a loan only to try to improve your credit score.
Failure to make a timely refund will normally result in a default charge of up to £25 (though commonly only £15 at first), as well as further penalties for any subsequent failures or extra letters that must be carried out. If you do not return any of the calls, emails, or letters, an agent will be dispatched to your home to discuss repayment, which will include a call-out fee. It’s critical to understand the additional charges that come with missing a payment, and it’s critical that if you’re having trouble making a payment, you contact the relevant lender to try to resolve the situation, which may include a restructured payment plan.