What happens if I can’t repay my loan?
Sometimes we find ourselves in financial trouble and it can be difficult to make ends meet. If you’ve taken out a loan and find yourself in a situation where you think you can’t repay and might miss a loan repayment, you should contact your lender straight away. They may be able to offer guidance or even arrange a payment plan to help you.
If you fail to miss your loan repayment, there can be consequences:
If you miss a loan payment, the lender may charge you a fee as well as interest on any missed payments. Don’t forget, you’ll still need to pay the owed money back – it doesn’t go away. It’s easy to see how the costs can quickly mount up.
Loan companies will report missed payments to credit agencies, such as Experian. This can mean your credit score takes a hit. This may make it difficult for you to borrow in future as banks will view a poor credit score as a sign that you aren’t able to repay. So missed repayments on loans can affect your chances of being able to take out a mortgage or credit card.
You may find that lenders won’t report a late payment to credit bureaus until 30 days after the due date.
If things get really out of hand, your debts might be taken to a collection agency. If you fail to respond to a collection agency and ignore your lender’s requests, your lender may take you to court.
If you have taken out a secured loan that’s secured against your car or home, these could be repossessed to cover the costs. If you still fail to pay back your loan, the last resort would be to file for bankruptcy. This could seriously affect your chances of taking out a loan again in future.
If you find yourself in a situation where you are unable to pay back your loan, one option you could look at is a debt consolidation loan. A debt consolidation loan is used to pay off all the debts you owe in one big lump sum and requires you to pay the lender back through a debt repayment plan. You must, however, be confident knowing you can pay the money back, otherwise the debt could escalate even further.
Whether you're planning on some home improvements, replacing your car or simply getting your finances in order, a loan from Freedom Finance could be more affordable than you think. Use our calculator above to find the ideal loan for you. All quotations given are for illustrative purposes only. Credit subject to status. The rate you are offered will depend on your personal circumstances, credit assessment procedures and other related factors.