It is important to know what exactly means and what you should expect if it happens that you can’t pay off the loan you took. If it happens to you that you default on a personal loan, that may come expensive to you and it can do some damage to your credit that might be serious.
If you keep yourself informed that will help you greatly trough getting back on your path to financial stability.
What is a default on a personal loan?
There are different levels and it all depends on the type of loan you took, on the terms of the agreement you got and on your lender, but most contracts are considered defaulted if you miss your repayment by more than 29 days. There are cases per your agreements when the borrower can get sixty to ninety days period before the loan is considered defaulted. Again, it depends on what type of loan and deal you got.
But if you manage to make your repayment somewhere in the thirty days, it won’t be considered as late and it surely won’t hurt your credit score, which is quite important. It is best for you to check your loan contract thoroughly and to contact your lender so you can know for sure.
Did you miss only one payment?
It again depends on your lender but many of them can give you a grace period and will even not charge you with any fee if you miss your payment only one time. The grace period can be for ten to fifteen days but it can be for more, again, it depends on your lender. That is why its important to chose a lender who can allow himself and yourself some adjustment, in order for you to get more options in paying your loan the way it corresponds to your possibilities and needs.
But, after missing one month, you will most likely get a fee the next time you miss your payment if it happens again. The fee is most commonly a percentage taken from your payment due and it is most commonly around five percent. But your lender may have a fixed fee or they might charge you some extra interest instead of charging you with a fee. Again, that is why it’s so important to choose your lender right and to thoroughly read your agreement before signing it.
Your credit score depends on your repayment history and that is why it is important that you pay your monthly due in time. If you default on a loan it can stay on a credit report for years. ‘That means that it will be harder for you to get any future credit.
How to be safe
No matter what happens it all comes down to your lender. If your agreement is reasonable it won’t be so bad for you if it happens that you defaulted on your loan. It is not the end of the world you just need to be sure that you got a loan from a lender who got your back and that in his interest is that you pay off your loan completely, not that he charges you extra for every slip you might make.