When it comes to paying bills, it’s easy to put loan payments last. After all, paying rent or a mortgage ensures a roof over your head. Timely car payments mean your vehicle won’t get repossessed. After taking care of other bills and necessities, it can be easy to forget about making a loan payment.
But what if you miss a loan payment? If you’re trying to avoid that from happening or you’ve made a late payment before, here’s what you can expect.
What if you miss a loan payment?
Most lenders and loan servicers don’t report a late payment until it’s 30 days’ past due. If you’ve had a fairly clean record or a long relationship with your lender, it might not report the delay. But here are some repercussions to keep in mind when you miss a personal loan payment.
Late fees vary by lender, so make sure you know what’s being enforced for your loan. Lenders sometimes have grace periods, and some of them say they don’t charge any late fees. Review your lender’s terms before signing anything, so you know whether late fees are assessed and how much.
Bad credit marks
If your payment is at least 30 days’ late, creditors can report your account as delinquent to the major credit bureaus. This will make your credit report look spotty and cause your credit score to drop.
In addition, creditors can keep reporting a delinquency when you miss payments by 60, 90, and 120 days. The longer you go without making a payment on your loan, the more your credit score can plummet.
Higher interest rates
When you get into a car accident, your insurance goes up. The process is similar for credit cards or loans: When you miss a payment on your balance, your interest rate could go up. The lender loses trust in you, so your punishment is a higher interest rate.
If you miss payments on federal student loans, they can go into default. This occurs 270 days after a missed payment was due. If your loan goes into default, you become responsible for paying the entire loan in full immediately. You also lose some federal debt-relief protections, such as deferment and forbearance or income-driven repayment plans.
What to do if you miss a loan payment
If you’ve missed an installment loan payment and are struggling to get back on track, there are a few steps to take.
When in doubt, call it out
You might feel embarrassed or worried about missing a loan payment, but the best course of action is to be honest with your lender. Call the company and explain your situation. Many times, lenders will work with you to make sure you get back on track. They might be able to pause upcoming payments or change your monthly due date if your terms allow it.
Some personal loan lenders offer help. SoFi, for example, offers an unemployment protection program, which can suspend payments in case you lose your job and can’t afford monthly payments.
Ask for bad marks to be removed
If your late payment already has been reported to the major credit bureaus, you can request a goodwill adjustment. Under this process, you ask your lender to remove a late payment record as a goodwill gesture. It shows you’re taking responsibility for your tardiness while also asking for forgiveness.
How to make sure you don’t miss a loan payment
It can be overwhelming to remember to pay your bills every month. To avoid a missed loan payment (or to avoid another one), here are a few ways to make sure you never miss a due date.
- Mark your calendar. You can add recurring entries on your calendar to notify you every time your bill is due. Save yourself time and trouble, and try to set up all your bill payments that way.
- Set up autopay. Authorizing automatic payments allows lenders to take money out of your account on time every month — you can set it and forget it.
- Pay more often. Instead of paying every month, make smaller payments every week or every other week. Incremental payments might feel easier to manage than a lump-sum payment once a month.
- Negotiate better terms. If you’ve recently changed jobs or you’re struggling to make payments, talk to your lender. Ask about ways to continue loan payments without going broke.
Missed payments don’t mean missed opportunities
What if you miss a loan payment? Forgetting one loan payment might not hurt you in the short term, but if you leave it unchecked, your credit report could be damaged and your credit score could drop. Do your best to make sure it doesn’t happen again.
If you find yourself struggling to make payments, don’t be scared of discussing your situation with your loan servicer. Find out what payment plans can work best for your situation.
Interested in a personal loan?Here are the top personal loan lenders of 2018!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
3 Important Disclosures for FreedomPlus.
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
6 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.16% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.
7 Important Disclosures for Earnest.
8 Important Disclosures for Avant.
* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
|7.73% – 29.99%||$1,000 - $50,000||Visit Upstart|
|6.26% – 14.87%1||$5,000 - $100,000||Visit SoFi|
|6.99% – 35.97%*||$1,000 - $50,000||Visit Upgrade|
|5.99% – 24.99%2||$5,000 - $35,000||Visit Payoff|
|4.99% – 29.99%3||$10,000 - $35,000||Visit FreedomPlus|
|5.99% – 18.99%4||$5,000 - $50,000||Visit Citizens|
|15.49% – 34.49%5||$2,000 - $25,000||Visit LendingPoint|
|6.16% – 35.89%6||$1,000 - $40,000||Visit LendingClub|
|6.99% – 18.24%7||$5,000 - $75,000||Visit Earnest|
|9.95% – 35.99%8||$2,000 - $35,000||Visit Avant|