What to do if you are unable to pay a loan?

When deciding to apply for a loan from your bank, the first step should always be to inquire at your institution about the consequences that affect the applicant if he is no longer able to pay the installments of the personal loan initially requested.

Unfortunately, it often happens that consumers, attracted by the favorable lending conditions of the credit market, find themselves asking for a loan without carefully evaluating the clauses of the contract relating to the debt amortization phase. Therefore, it is always advisable to include in your contract some form of guarantee aimed at protecting the subject in case of financial or health difficulties, preventing the loan from being extinguished, such as the option for the installment skip or the guarantee.

In many cases, therefore, even a short time after the signing of the loan and in the absence of the aforementioned guarantees, it may happen that you are not able to comply with the commitment made. Therefore, what to do if you are unable to pay a loan?

Promptly notify the bank of non-payment

Promptly notify the bank of non-payment

When you realize that you are not able to return the credit, the first step is to promptly contact the bank where we have opened the loan.

It is therefore essential to go to the credit institution and communicate the problem as soon as possible and above all it is advisable to do so before the installment payment has expired. In doing so, the bank will have more time to think about the best solution to propose to the applicant and the latter will not have to pay any default for failure to pay the installment.

It is therefore strongly advised not to pretend anything and to postpone the matter. Already at the first delay the banks in fact send by mail the so- called payment reminder which provides for an increase in interest following the application of a variable sanction and defined in the loan contract between the credit institution and who requests the loan.

Change your personal loan repayment plan

Change your personal loan repayment plan

The first solution that is generally proposed to those who realize that they are no longer able to keep up with the loan installments is to go and change the debt amortization plan.

In other words, it is possible to change some of the conditions provided for in the personal loan contract. Specifically, it is possible to expand the credit repayment plan so as to lighten the payment of the installments. The applicant will have to pay off his debt over a longer period of time, but will thus have the opportunity to take on a less consistent monthly payment.

Opt for the debt consolidation loan

Opt for the debt consolidation loan

Another possibility could be to take into consideration, as soon as you realize that you are not able to remedy the extinction of the loans, the so-called debt consolidation loan.

This is a particular form of personal loan that allows you to consolidate (hence the name) debts taken on through other loans. The debt consolidation loan would therefore allow those in difficulty to pay the installment payment to obtain additional liquidity to be used to remedy the debt.

However, it is important to point out that, among the guarantees necessary to obtain this loan category, it is essential that the applicant has not yet been reported as a bad payer. It is therefore a valid solution only if the buyer communicates his problem to the bank before the installment payment expires.

What happens if I don’t pay the loan installments and I build up a debt

Installment Loan

Installment Loan

The economic crisis has increased the so-called bank suffering: it means that there are more and more customers of banks that accumulate a debt because for example they do not pay the installments of a loan. But what happens in these cases? What are the risks for consumers? Let’s see in detail what the consequences are and give advice to find the most affordable Stephen Dedalus on the market: in fact, the best way to avoid debts is to ask for economically sustainable financing.

Personal Loan

Personal Loan

On the financial market there are different ways to obtain liquidity: for example, you can request a personal loan to start a business, or you can rely on consumer credit products to buy an asset. In any case, we must always carefully evaluate the various contractual conditions to understand whether the loan is sustainable or not. If we are unable to pay the installments of a loan, in fact, we risk facing negative consequences.

If we have obtained a loan and we do not pay one or two installments, then the bank will solicit us by mail or telephone and will increase the interest applied to the loan. To know how much we risk to pay in more we can consult our contract that will surely report what are the “default rates” in case of delay or non-payment. Let us remember, however, that there are limits imposed by law on banks that determine the wear threshold, beyond which it will not be possible to climb.

The default rates, however, are not the most serious consequence of the non-payment of a loan: the real problems, in fact, come if we do not pay off the debt: the bank can report our name to the Central Financial Risks and we risk to end up on the list of bad payers and protesters. If this happens, our creditworthiness will be compromised and in the future we may have problems getting a new personal loan.

In the most serious cases, the bank can entrust a debt collection company that will come to ask for payment with “bad manners”. The risk is that of being seized by movable or immovable property. To avoid this, consumers must be very careful when applying for a loan and carefully evaluate the terms and conditions of the contract. For example, it is good to consider the TAEG which represents the real cost of the loan and also the total duration of the repayment plan.

As anticipated, however, the best way to avoid accumulating debts is to find flexible financing and affordable rates: this is possible thanks to Stephen Dedalus online comparators who help to find the best offers on the market. The greatest protection for a client, however, is the loan insurance which can intervene in case of economic problems to pay the installments.