Take action sooner rather than later.
We all know that it’s important to pay off our debt. But loan repayment can sometimes take a backseat when you’re trying to keep up with other bills and financial obligations. If you happen to miss a payment, there’s no need to panic. If you act quickly, you can prevent ruining your credit score.
KNOW WHAT IT MEANS TO MISS A PAYMENT
It’s important to understand the consequences of missing a loan payment. Lenders typically begin to alert borrowers that they are late on the loan after a 10-day grace period, and they will charge a late fee. The exact amount that you’ll owe will depend on your lender’s policies and the terms you agreed to. But late fees are often a percentage of the missed payment amount.
At SpotMe, one rule applies to all – if your bank declines one of our direct debit instructions, you will be charged a $25 dishonor fee and may also incur an additional dishonor fee from your bank.
Lower credit score
Typically, if your payment is more than 45 days late, it will be reported to the major credit bureaus. This can cause a dent on your credit score, and it will take several months of on-time payments to boost your score back up.
If you continue to miss repayments and your account goes into arrears, you will be charged a daily fee. At SpotMe, it is $5 to cover administrative expenses. This may continue until the total amount owed reaches 200% of the principal amount borrowed, at which point your account is then capped. At SpotMe, if we are unable to recover the money and close your account, we may pass your account over to an external collection’s agency. Should this happen, we are then legally entitled to register a default on your credit file, which could remain for up to 5 years.
This, however, is always a last resort. If you think you might not be able to meet your repayment obligations, do contact us straight away to discuss further.
HOW TO AVOID MISSING A LOAN PAYMENT
If you’ve missed a loan payment and are struggling to get back on track, there are a few steps to take:
Communicate with lenders
If you have taken a SpotMe loan and there is a good chance you are going to miss the repayment schedule, you must contact us immediately through our online chat, so that we can help you with options and potentially reschedule your next payments.
Switch to automatic payments
The easiest way to remember to pay your loan is to have the money taken out automatically. Certain lenders even offer a discounted APR for enrolling in automatic payments.
Pay more often
Instead of paying every month, make smaller payments every week or every other week. Incremental payments might feel easier to manage than a lump-sum payment once a month.
WHAT IF I NEED FINANCIAL HARDSHIP ASSISTANCE?
If you need to apply for Financial Hardship Assistance, please contact your lender right away. They will discuss with you the process for completing a Financial Hardship Application Form and what supporting documents would be required.
You also have the option of applying through the courts to have your loan contract amended. However, we recommend you seek legal advice first before going down this road.
MISSING PAYMENTS: IT’S NOT WORTH IT
Missing payments and failing to repay your loan can have serious financial consequences both now and in future, and can damage your ability to acquire credit for many years. If you now facing financial difficulties and may struggle to make repayments, speak to your creditors to see what options and help they may be able to provide.