Uh oh! So you’ve found yourself in a situation where you can’t repay your loan, have you? That’s a sticky situation to be in, and it’s going to be difficult to get yourself out of it.
Of course, we’re hoping that you’ve taken all the necessary measures to fix the situation so far. Talk to the lenders and see whether you can work out an agreement to benefit the both of you. Many companies like Ferratum Australia offer customizable payment plans to suit your needs. Manage your budget more effectively and do what it takes to get that money. You really don’t want to be in a position where you can’t pay it back. However, if you can’t see any way out of it, here’s what to expect.
It’s important to understand that failing to repay a loan will result in varying consequences based on the type of loan you’re dealing with. Obviously, there are big differences between personal and business loans. For example, secured personal loans are offered based on collateral, so you could stand to lose your house or car based on your inability to repay. Unsecured loans aren’t as a risky, but your possessions could still be seized from you eventually if you fail to pay that money over a long period of time.
Your credit score is going to take a massive hit in these circumstances. From here, you’ll struggle to obtain any other loans in the near future. The longer these proceedings continue, the worse it’s going to get. It takes around seven years for the damage to drop off your statement, so don’t expect to be taking out a mortgage anytime soon. Of course, if you can make that missed payment on time, your credit score won’t be affected.
In most cases, the lender will try and get in contact with you multiple times. You’ll probably receive phone calls and letters with ultimatums. If you don’t respond to these, the case will eventually be passed over to a collection agency. From here, things become more serious and they’ll pursue the case much more aggressively. Ignoring this communication never works out the way you hope it will, so it’s best for everyone if you remain cooperative.
We’re not trying to scare you here. Remember that these consequences are a result of the worst case scenario. As long as you pick your loan carefully, you won’t fall into this trap. Manage your budget effectively and plan in advance. Make sure you can always pay back what’s required.
Remember; loans are there to help you. They can provide you with quick cash in your time of need, but don’t be fooled by the promise of free money. Make your decision rationally and you’ll be able to ensure you don’t suffer from these issues later on. Don’t be tempted to take out a loan without doing the proper research and planning in advance. If you’re worried; talk to friends and family and get them to help you before jumping to any decisions.