8 worst reasons to skip a loan repayment
If you took a loan lately, there may come a due course of time where you may skip a loan repayment. There could be multiple reasons behind it. It could be financial changes, forgetting to do so, or inability to arrange the complete repayment amount. However, whatever it is, some reasons may not be good and may hurt your credit score.
Missing a short-term loan repayment hurts your credit more than a medium-term loan. This is because short-term loans share competitive interest rates and terms. If unnecessary, pay the dues instead of rolling over to the next month. Additionally, if you need help with payments or re-schedule one due to changed finances, discuss the situation with your provider. But do not miss or skip the repayment because of some reason.
The blog discusses some common reasons that you must avoid when a loan repayment day approaches.
What could be some wrong reasons to miss loan repayments?
No one wants to take you to court or hire debt collectors if they don’t want to. Keeping basic human decency aside, it costs money to chase someone and re-collect dues. Thus, a lender would be more willing to arrange a suitable payment solution than suing you.
If you are on a loan repayment plan, avoid these reasons to skip one:
1) Missing one isn’t a big deal
Around 65% of individuals believe missing a payment wouldn’t hurt their finances much. They usually get casual towards the loan repayments. However, if you skip the payment for this reason, avoid it. It may only hamper your credit score and further payment potential. Moreover, you can lose the eligibility to qualify for better interest loans, credit cards, and other benefits.
2) Cannot go to the lender to pay
The next one of the most common reasons individuals skip loan repayments is- a lack of time to visit the lender to pay in cash. It is better to set up an online repayment plan and get a loan online than offline. Moreover, you can set up direct debits that automatically deduct monthly payments from your relevant account. It will help you skip any loan repayment.
3) Nobody will notice the gap
If you think nobody will notice that you skip the payments among many borrowers, you may be wrong. Your credit report and agency record all your transactions and dues. If you land up at a credit card provider for a new card, he checks your credit report. It is not a good reason to miss a repayment.
Thus, if you have further plans to buy a car, get a mortgage, or finance a business, be regular with loan repayments.
4) Lack of some amount to bridge the repayment
Most individuals skip the complete loan payment if they lack some amount. It is the most common thing among individuals living from paycheck to paycheck. It is because they find it hard to save enough. However, you do not need to miss the payment. It may hamper your credit rating further if it’s already bad.
Thus, if the amount falls short of what you need, facilities like guaranteed loans for bad credit scores may help. It is the one way to improve your chances to qualify. It helps you bridge that extra amount you need at affordable interest rates. Yes, it is possible to get one if you have a regular income source and share the loan affordability.
5) Want to use the money for something else
Individuals never know when they may encounter an emergency or forget about their repayments. For example, you have the amount available but suddenly you encounter a medical emergency and you have to spend it all. However, such instances are rare. Try to save enough for the loan repayments and keep the amount flexible.
It will help you finance the emergencies and keep some for repayments. Discuss whether you can pay only a small amount this time with your lender. Promise to clear the rest with the next payment, respectively.
Don’t take a high-interest loan to pay the dues like payday loans here.
6) You believe you can pay it all with the next
It is one misconception individuals often stick by and find it comfortable to do so. Missing a loan repayment increases the interest rate on the loan. Penalties and missing payment fees increase the overall loan costs. Thus, if you skip the loan payment casually, you may limit your scope to qualify for better rates.
Avoid doing so and develop a healthy habit of clearing the payment on the respective days. It will help you avoid the impending financial dangers. Moreover, a history of regular and timely payment history helps repair your credit report and improves your credit score.
7) Did not understand the balance calculation
It is one of the lamest excuses to make before the creditor on missing a payment. It is because nearly every responsible lender provides a brief about the loan repayment. He helps you understand the loan repayments with a detailed payment plan.
It lists the interest rates, penalty or missed fee charges, and how a term changes the loan repayment. Therefore, you cannot blame the lender if he does not provide everything with transparency.
8) Roommate has not paid his dues
If you share a room with someone, chances are you split the bill or you pay the whole and he pays you later. If you are in such a situation, you may skip a loan payment. However, it is not a cool reason to avoid one. In this situation, check alternative ways to clear the loan payments. If you are only short of £2000, get an instant 2000 loan in the UK marketplace. You can use it to finance the short-term cash need and get it the same day.
Bottom line
These are some of the most common reasons to skip a payment. However, avoid missing payment because of these reasons. One of the most important things is to pay as you remember the due date. Or, if you want to avoid the pre-payment penalty, schedule the payment for the very date. It will help you remain regular with payments. When you know the terms and payment guidelines, budget it wisely. Set up a plan and keep your finances flexible enough to accommodate a payment. No more excuses!
Ailsa Adam is the Editor-in-Chief and former content head at Hugeloanlender. She has been a valuable member of the content strategy team since 2017 due to her abundant experience in the finance sector. Passionate about helping individuals navigate the world of loans and personal finance, she has dedicated herself to acquiring extensive knowledge on various financial products. Before her role at Hugeloanlender,
Ailsa worked as a seasoned journalist and writer, specialising in creating informative blogs and articles on diverse loan types. She is known for her meticulous research and commitment to delivering accurate and engaging content. She holds a degree in MBA Finance and has a keen interest in creative writing and art.
