Impact of Missing a Personal Loan Repayment: A Guide on What to Do If You Miss a Personal Loan Repayment

A growing number of Canadians are now opting for personal loans to deal with unexpected expenses, consolidate debt, or fund major life events. At times, paying your instalments on time can become crucial, and you may still default on a payment due to emergencies, liquidity problems, or unforeseen situations, which certainly puts you under financial stress.

However, it is never too late for any mistake that you might make as far as finances are concerned. Taking the necessary actions will help you mitigate the possible consequences and get back on your feet.

In this blog, we will discuss what happens when you fail to pay your personal loan, how it impacts your financial standing, and what actions you can take to handle the situation.

What If You Fail to Make Loan Payments?

Missing Loan Payments (Up to 90 Days Delinquent)

If you fail to pay your loan on time, your creditor might impose penalties or fees, as specified in the terms and conditions. Your creditor can also report such missed payments to credit bureaus, which can harm your credit rating. Therefore, the earlier you make up for a missed payment, the better.

Loan Defaults (Over 90 Days Delinquent)

In case of prolonged non-payment, your loan can become delinquent in about 90 days, but the terms vary according to the lending institution. Your lender can report the defaulted loan to credit bureaus and ask you to repay the loan balance right away as per your loan agreement.

Consequences of Failure to make a Scheduled Repayment for a Personal Loan

Late Charges: Failure to make a scheduled loan repayment can lead to late charges or fees in line with your loan contract terms. These extra costs will increase the total amount you are supposed to repay.

Negative Effect on Credit Rating: The missed loan payment, once reported to the credit bureaus, will negatively impact your credit rating. This means that your future borrowing might be negatively affected by the low credit score. 

Inefficient Borrowing Terms: A poor borrowing record can make it difficult to access loans in the future on good terms. You might receive less favourable borrowing terms.

Restricted Future Borrowing Ability: It will become hard for you to obtain personal loans, credit cards, mortgages, and other forms of credit due to the past failure to meet your loan obligations.

How to Avoid the Consequences of Missing a Loan Payment

• Make Loan Payment a Budget Consideration

  Include your monthly loan payment in your budget plan along with other basic expenses such as your rent, bills, and food expenses. By doing so, you will be able to budget accordingly and plan for the day that you will have to pay off your debt.

• Set Automatic Payments

  Automatic payments give you the advantage of having your monthly payment automatically deducted from your bank account on the day it is due. This minimises the chances of being unable to make your payment on time.

• Maintain Sufficient Amounts in Bank Account

  If you are enrolled in automatic payments, make sure you have sufficient funds in your bank account before the payment deadline. Doing so will ensure you don't miss a payment and incur NSF charges from the lender and yourself.

• Pay a Little Bit Extra

  If there are no penalties involved in pre-paying your debt, you should always try to pay an extra amount of money beyond the regular minimum monthly loan payment.

Blog in a nutshell!

Monitoring your personal loan repayments is crucial to maintaining a good credit report. Therefore, you should aim to avoid missing even a single personal loan EMI payment for a better financial journey. Smart financial behaviour and better monthly financial planning are great ways to manage personal loan repayments alongside your everyday expenses.Lenditt is the finest and most trusted digital lender in Canada, offering personalised loan products that perfectly match your financial needs. 

Do check the personal loan details on our official website and connect with our executives for more guidance and support!

Frequently Asked Questions

1. How can you ensure that you do not miss any of your loan payments?

   Some of the best methods of ensuring that you never miss a loan payment include automatic deductions, having enough money in your account, and factoring in your loan payment into your budget.

   
   

2. Am I eligible for a personal loan even after making a late payment?

   This depends on several factors, such as your credit score, repayment track record, and income. Although the late payment fees might hinder your chance of getting a loan, you could become eligible if you repay well in the future.

   
   

3. What should I do right away after failing to make a loan payment?

   If you have missed a payment on your loan, check your account, pay promptly, and get in touch with your lender for help. It will save you from accumulating more fees and damage to your credit score.

   
   

4. Will a single missed loan payment affect borrowing in the future?

   Yes. A single missed payment can affect your credit standing if it is reported to the credit bureaus. This poor credit standing will affect your borrowing capacity as well as the interest rates you receive.