Before starting the process of requesting a personal loan we must have the maximum security that we can repay it without problems. Not being able to return the financing obtained from a lender or a bank will bring us more expenses and negative consequences, from losing the possibility that no one else will finance us to loss of assets. Below we explain the main effects of not paying loans. We can help if you need help paying off payday loans.
3 consequences that you will not like if you can not pay your loan
Not paying a loan on time will affect us not only economically, but it can also affect our assets and cloud our financial file forever.
1 Interest on late payment is generated
If we stop paying a fee for our loan, the entity may cover the monthly payment with an overdraft. However, if our bank does not do so, it will charge us a surcharge with interest for late payment, which consists of the following charges:
- Commission for claiming debit positions: the mere notification that we have an unpaid installment will have a cost that can vary between 25 and 35 euros.
- Interest on late payment: the bank will charge us an extra interest for unpaid monthly payments. In the specific case of personal loans, the percentage of interest on arrears may not exceed the interest on financing by two points.
2 Display in delinquency file
The prolongation in time of the debt may have as a consequence that the entity includes us in a file of defaulters. Although it is not an economic consequence, it is a penalty as well, since to appear in a file of defaulters will hinder us from requesting financing in the future, since the entities will refuse to grant us a personal credit or a mortgage and, we will not be able either hire a credit card.
3 Judicial demand and seizure of property
Although before initiating legal action, the entity may resort to a recovery company, the next step is usually the filing of a lawsuit. If the complaint goes ahead, the judge can sentence the seizure of our property and our salary if we do not have enough money to pay the total amount of the debt.
In loans where the guarantee is only personal, the wage garnishment is the most common option. If the loan has a mortgage guarantee or presents assets as collateral (vehicle, business, etc.), they may also be seized to settle the amount owed.
Finally, if a third party has endorsed us, it can ultimately be seized if it can not pay the outstanding debt.
Alternatives that will help you pay your personal loan
If we foresee that we are going to go through a specific economic shortage that can significantly reduce our liquidity, before incurring in the non-payment of a loan installment, what we have to do is communicate it to our entity and negotiate an alternative way. For example, request a deficiency, through which we can postpone the payment of all or part of the quota for a specific time. Finally, we can also negotiate a term extension that reduces the amount of the monthly payment.
But to be in a position to negotiate we cannot have outstanding debts, that is, we can not sit down to talk with our entity with one or several outstanding installments.