6 Consequences of Missing Your Personal Loan Payments

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

what is a delinquent loan

Taking out a personal loan can be a great way to consolidate your debt and save money. However, it isn’t a perfect solution. In some cases, personal loans can worsen the problem and cause you to fall behind even more. According to American Banker, 1.9% of all bank-issued personal loans were at least 30 days delinquent in the third quarter of 2017.

But what is a delinquent loan, and why is it such a big deal? Find out what the consequences are if you miss your payments, and learn how to get back on track.

What is a delinquent loan?

When you apply for a personal loan, you agree to specific terms and conditions, such as when you have to make a payment each month.

When you fall behind on your payments, the lender considers your loan to be delinquent. Some lenders offer a grace period of a few days, while others consider your loan to be delinquent if you’re even a day late.

If you don’t make your payment and miss the grace period, the lender will consider your account to be in default rather than delinquent. Loans in default have harsher consequences.

Some lenders consider you to be in default if you’re a day late. Others, such as SoFi, give you as long as 30 days before you enter default.

6 consequences of falling behind on your personal loan payments

Becoming delinquent or entering default on your personal loan has serious repercussions. If you miss payments, you might face the following consequences.

1. You could lose your assets

If you took out a secured personal loan rather than an unsecured personal loan, that means you had to put up an asset — such as your home, vehicle, or savings account — as collateral.

Doing so might have helped you get a loan with a lower interest rate, but if you miss payments, your lender could seize your assets. You could end up losing your home or other valuables.

2. You’ll be subject to late fees

Regardless of the type of personal loan you have, becoming delinquent on your loan means you might be subject to late fees. For example, if you have a Discover personal loan and don’t make your monthly payment by its due date, the company will charge you $39.

Continue to miss payments, and the late fees can grow. As late fees build up, more interest accrues on your account.

3. Your lender can send your account to collections

When your loan enters default, the lender can send your account to collections. According to the Federal Trade Commission, that means debt collectors can contact you to try to get you to make a payment.

If you don’t make payments, the lender or debt collection agency can sue you and get a judgment against you. If that happens, it can work with your bank or employer to garnish your wages.

4. Your credit score might go down

When you miss a payment, the lender will send a notification to the three credit reporting agencies — Equifax, Experian, and TransUnion. Falling behind on your payments can cause your credit score to drop. How much it falls depends on your unique credit profile.

5. You won’t be able to qualify for other forms of credit

With a low credit score, it’ll be hard to qualify for other types of credit. If you’re planning to buy a home, purchase a car, or take out private student loans to pay for school, your delinquent personal loan can prevent you from being able to do so. That obstacle can force you to put your plans on hold while you deal with your late payments.

6. You might have to pay your loan in full right away

Depending on your lender, you might have to come up with thousands of dollars at once if you become delinquent on your debt. If you miss a payment, your lender could demand that you pay the remaining balance and late fees right away.

What to do if you fall behind

Becoming delinquent can have a significant impact on your credit and finances. If money is tight and you’re in danger of falling behind, it’s important to be proactive to avoid the consequences mentioned above.

Here are four ways you can prevent becoming delinquent:

  1. Contact your lender right away: Some lenders offer temporary forbearance, which allows you to postpone your payments for a few months if you’re facing a hardship like unemployment. Entering forbearance can give you time to get back on your feet without wrecking your credit.
  2. Sell your possessions: To come up with money quickly, consider selling some of your extra possessions, including clothes, accessories, electronics, or furniture. You can use the cash you earn to make your payment on time.
  3. Take on a side hustle: If your income isn’t high enough to keep up with your debt payments, launching a side hustle can help you earn more money and avoid delinquency.
  4. Ask friends or family for help: Although asking for help with a financial crisis might feel embarrassing, it can be worth it to avoid the consequences of becoming delinquent.

Improving your credit

If you’ve ever wondered what a delinquent loan is, you now know the consequences can be severe. However, if you were delinquent and are now getting back on track, it’s important to know you can boost your credit score and recover from missed payments.

Interested in a personal loan?

Here are the top personal loan lenders of 2018!
LenderRates (APR)Loan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Personal LoansFixed rates from 5.950% APR to 14.490% APR (with AutoPay). Variable rates from 5.825% APR to 14.365% APR (with AutoPay). SoFi rate ranges are current as of May 3, 2018, and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.825% APR assu[mes current 1-month LIBOR rate of 1.90% plus 4.175% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate Disclosure: Fixed interest rates range from 4.99% – 16.24% (4.99% – 16.24% APR) based on applicable terms. Lowest rates shown are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

* Important Disclosures for Upgrade Bank


Upgrade Bank Disclosures


  • Your loan terms are not guaranteed and are subject to our verification and review process. You may be asked to provide additional documents to enable us to verify your income and your identity. This rate includes an Autopay APR reduction of 0.5%. By enrolling in Autopay your payments will be automatically deducted from you bank account. Selecting Autopay is optional. Annual Percentage Rate is inclusive of a loan origination fee, which is deducted from the loan proceeds. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. All loans made by WebBank, member FDIC. Please refer to Upgrade’s Terms of Use and Borrower Agreement for all terms, conditions and requirements.
  • 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
Check rate nowon SLH's secure site
5.83% - 14.74%1$5,000 - $100,000
Check rate nowon SLH's secure site
5.96% - 35.97%*$1,000 - $50,000Visit Upgrade
8.00% - 25.00%$5,000 - $35,000
Check rate nowon SLH's secure site
4.99% - 29.99%$10,000 - $35,000Visit FreedomPlus
4.99% - 16.24%2$5,000 - $50,000Visit Citizens
15.49% - 34.49%$2,000 - $25,000Visit LendingPoint
5.99% - 35.89%$1,000 - $40,000Visit LendingClub
5.49% - 18.24%$5,000 - $75,000Visit Earnest
9.95% - 35.99%$2,000 - $35,000Visit Avant
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.