I cannot even begin to stress enough at just how important it is that people repay back their debts once they take them out. Failure to make such a repayment will nearly always result in severe negative consequences for the people involved and most people as a result will always try to avoid this from ever happening. It will not matter whether a person has borrowed short term or installment loans, credit cards or even mail orders they have to be repaid and must be done so as agreed with the finance company who grants it. Below is three stages that can occur if the repayments are not made on the above types of borrowing.
When repayments are missed on instalment loans and other borrowing, that now debtor can often expect to be chased for the money owed. The lender will need to contact their customer to see why firstly the required repayment was missed and then what they intend to do about this, for example are they paying at a later date perhaps. Calls can be made to the debtor on all contact numbers such as their home, mobile and work numbers. It will then also be likely that text messages and emails are frequently sent to the person as well as letters being sent to their home address. For certain aspects of contact such as calls to work, this could possibly lead to other people finding out about the debt and no one will want this.
When repayments are missed again on installment loans, this can affect the person’s credit file. This as a result can make it harder for people to get approved for future finance or it can often become more expensive. When lenders review any applicant’s application they can most likely check that person’s credit over a high number of years to see how likely it is that they repay the debt should they manage to be approved. Someone then who has decent credit and a strong payment history, these are far more likely to be approved for any finance than someone who has struggled with other debts in their past. However, having just said that some lenders such as payday lenders actually aim what they offer in terms of borrowing towards such people who may struggle to borrow finance elsewhere.
When any financial account becomes overdue, the balance on the account will increase. This in turn can then make it harder for the person to then repay back the debt. Balances will of course increase when they are overdue and it is likely on some accounts people will have to incur late fees on missed payments as well as daily interest until the account becomes settled. With some borrowing like payday loans, these can increase very steeply and very quickly, this can mean someone can repay back what they owe within just a few days yet their balance has increased much higher than what was originally due. If that then means the account cannot be settled, it will then remain overdue meaning the balance will carry on increasing.