While loans are there to help you through difficult times, keeping on top of payments is especially important to keeping your credit rating secure and ensuring your financial situation stays in tip-top shape.
Finding yourself in a difficult financial situation can be incredibly difficult, especially in times where monthly outgoings are on the rise and missing a loan repayment isn’t something that is unheard of. Having financial difficulties can make for a particularly trying time in your life, and if this is the case, then there are a number of different routes you can take to get your finances back on track if you are struggling to make repayments.
In an ideal world, if you take out a loan then you will repay it quickly and without difficulty, but unfortunately, not everything in life is easy, nor does it go as smoothly as anticipated.
What Happens If You Miss A Loan Repayment?
Missing a loan repayment isn’t the end of the world, but it can make managing your finances in the future more difficult. Normally, upon missing a loan repayment, you are charged a fee by the lender. The amount attached to this fee depends on the lender and can range significantly. The fee is added onto the money you already owe and in time can become quite costly.
Missing several loan repayments can seriously affect your credit rating, as lenders – the people who gave you the loan- are obliged to report any late or missed payments. The damage shown within your report depends on a number of factors, such as how many repayments you miss and how long it takes you to get back on track.
In more serious cases, missing loan repayments could mean that you’re issued with a county court judgement (CCJ), which means you would have to attend a hearing in court. Here, a judge would decide how, when and who to pay the money to. These judgements are kept on record for six years, meaning that it can be much more difficult to get credit afterwards.
I’m struggling what help can I get?
If you know that you’re struggling to find the money for a loan repayment, then there are a number of different directions that you can take. If you think you’ll miss a repayment, then speaking to your lender as soon as possible can help you exponentially.
A short-term issue, such as an unexpected breakdown cost or an appliance repair, for example, could allow the lender to give you a little bit of extra time to make the payment, holding off from notifying the credit agency of this missed or delayed payment.
On the other hand, if you know that your issue is going to take slightly longer to resolve, then contacting your lender and asking for some time to get to grips with your finances with the aid of an independent advisor is the advised thing to do.
If you have more than one type of debt, you might find it helps your financial situation to consolidate your debts. By borrowing enough to cover all of the debts, means that you may save money on interest and the assurance that all of your debt is in one place.
A way of doing this is through a credit card balance transfer, a process that can both save you money and buy you time on making your repayments. When using a balance transfer credit card, remember that fees can be applied and be mindful that you don’t use the card for additional purchases. It should just be used as a way of paying off your existing loans.
If you’re looking for specialist advice over what to do, there are a number of charities out there, including Citizens Advice, the National Debtline and StepChange, all of whom have supportive staff who can give you advice on how to manage your finances more efficiently. This advice is free. However, there are some companies who offer debt advice to people struggling charge a fee; while their advice is useful and can help you, you may find yourself having to pay more money by way of the fee.
If you find yourself in financial difficulties, the worst thing you can do is ignore it. Loans that you have taken out will not just go away if you neglect to pay them. Seeking help as soon as you become aware of your difficulties will ensure that you’re in the best position to get a grasp on your debts and not let them spiral out of control.