Late to paying off a personal loan

As of the second quarter of 2019, there are $305 billion in outstanding personal loans. Personal loans are experiencing a boon in 2019. Once something only for those who need a quick buck, they’re fast becoming an option for everyday American families.

Nowadays, people use them for everything from financing a DIY project to paying off medical bills to consolidating their debt. But, no matter how people use them, it is certain that their popularity is booming.

But, with the boom of person loans comes the inevitable: paying them back.

If you’ve taken out a personal loan and since fallen on hard times, or simply just forgotten to pay, you may wonder what happens next.


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In this article, we’ll discuss how missing a personal loan payment is handled through most lending institutions, and what impact to expect the missed payment to have.

I Missed Paying Off My Personal Loan Payment, Now What?

It’s easy to miss paying off at least one payment. In fact, most of us have done it at least once. With the rise in the gig economy, many Americans aren’t getting paid consistently each month, or even at the same time each month. Additionally, many Americans may not have the money available to pay off their loan when it’s due but are maybe are able to pay a week or so later.

Or, you may have fallen on hard times and can’t pay back the loan at all. So, what happens now?

Most often, you’ll be charged a late-fee first. This late fee can range from a couple of bucks to a few hundred dollars, depending on how large your loan is. Unfortunately, even if you miss the loan by just one day, the fee is often tacked on immediately. Therefore, it is important to ensure you do pay back your loans on time every month.

What Else Can Happen Beyond a Late Fee?

While a late-fee is a pain, it is one of the best outcomes if that’s the only thing that happened after forgetting or forfeiting a loan repayment. In fact, that’s quite rare if the only consequences you face are a late fee.

Beyond a late fee, your lending institution may decide to up your APR or interest rate. For example, you may have signed a document when you took out your loan that said you would pay the full amount each month on the 15th. The document may have stated that your interest is at 7.5%, but if you fail to make a payment on the 15th, your interest rate will become 15%. In some cases, it can mean your interest rate will effectively double.


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If you’ve missed your payment due to a financial emergency, this means that you may even be further behind as your payments may now be higher due to the added interest.

Negative Credit Score Effects

What about your credit score? Can that be affected by not paying back your loan on time?

It can, but luckily it doesn’t happen immediately. So, if you failed to make your personal loan payment by a couple of days, you don’t need to necessarily worry that your credit score has plummeted.

Lending institutions don’t typically report non-payment for 30 days. If you leave the payment unpaid for a full 30 days, then it will affect your credit score. As such, you should always pay your bill as soon as you remember or as soon as you’re able. And if you can do it before the 30-day period, that’s ideal.

Your credit history will determine how and if you can take out loans in the future, including mortgages. If you have a history of late or non-payments, it can mean you won’t be awarded loans and mortgages because lending institutions will see you as a risk.

Or, you may be able to obtain loans in the future, but they’ll be at a much higher interest rate. As you want to ensure you have the lowest interest rates possible, pay back your personal loans on time.

Do I Have a Grace Period for Repayments?

This is a question you’ll need to ask your lending institution. You’ll likely have this information in your original agreement, and you should go over the paperwork in the event that you’ve missed a repayment.

For some personal loan lending institutions, they may offer a grace period. This may be for everyone, or for people with high credit scores. The grace period isn’t fixed across the board, so you’ll have to read your personal paperwork so you can find what your lending institution originally offered you.

A grace period means the institution may give you a couple of days where you can make your payment without negative consequences. If you do have a grace period, it is important that you pay back your loan within that time frame so that you don’t have further issues.

What to Do If You Miss a Payment

When you’re paying off a personal loan, it is important that you make repayments in full when they are due. But, if you can’t make a payment due to an emergency, it is important you call the lending institution and let them know. In many cases, they can (and will) work with you to create a plan that’s feasible.

Although this may impact your credit, it is important that you work with the institution so you don’t end up in a position in which you’re sued by the loan company.

For more information on all things personal loans, payday loans and bad credit loans, visit our blog.