The consequences of missed repayments on borrowed finance

I cannot even to stress enough at just how important making the required repayments on a person’s debts are. Whenever finance is borrowed from any financial lender it has to be repaid and it must always be done as agreed with the lender and customer before any amount was obtained. It will not matter whether a person is looking to borrow short term loans or possible loan alternatives such as installment loans. Credit cards or even mail orders all the debts have to be repaid. Missing such repayments can then often lead to severe negative consequences to that person. Below is three of these explained in more detail.

When a person misses finance on installment loans for just one example, the lender who is now owed the money will contact that person. The lender will need to liaise with the customer to see why the repayment was missed and then how the person will look to resolve the issue. They have every right to contact the person on all the contact numbers they have available at their disposal and this can include their home, mobile as well as any work contact numbers. They can also send regular text messages, emails as well as letters being sent to the now debtors home address. For certain people being contact by some of these channels such as calls to work, this may lead to other people finding out about the debt and no one will want this. I think it is fair to say that anyone being chased for money that they owe is never going to be a nice experience.

When repayments are missed on installment loans or other borrowing that person can then have their credit file negatively affected. This will not happen straight away but can occur if repayments are not settled for the overdue amounts as soon as possible. This as a result can then make it harder for a person to get finance approved in the future. It can also lead to any other future borrowing becoming much more expensive. When lenders are reviewing an applicant’s financial application, they will most likely review a person’s credit and can be likely to decline such if that person has poor credit. Some lenders however, such as payday lenders actually aim the finance they offer towards people with bad credit and people who may have limited other borrowing options.

If any someone’s account becomes overdue for any kind of missed payment then the chances are the balance will then increase. This can be a problem for people looking to then clear the debt at a later stage as it now may be higher and no longer affordable. There can be some borrowing such as payday loans, that when they are overdue they can charge high interest and charges and even more so when they are overdue. This can then mean anyone looking to repay the debts after the due date can do so but the balance can often be much higher. Some people may even look to repay the finance in just a few days after first being due yet now they will owe much more than the original due amount. This can in turn mean the account is no longer affordable to repay the arrears which leaves the account overdue and that will just keep that balance increasing.