Are you aware of the consequences of failing to repay your loan?
It can happen to anyone. Inadvertently, through lack of foresight or an unexpected charge to your account, you fail to pay the loan instalment. What are the consequences? In this post, we will try to clarify your doubts:
- You should look at what your loan agreement says. It will specify whether your bank will charge you late payment interest, at a higher rate than ordinary interest, but subject to certain limits. If the agreement provides for a past-due notification fee, it will indicate what the conditions are. It should also specify in which cases a loan can be terminated early and the possible penalties you may face should that occur.
- Remember that these loans are backed by a personal guarantee, and the bank may therefore initiate a procedure to attach your current and future assets in order to recover the full amount of the loan.
- Moreover, if the loan has additional guarantees from one or more guarantors, the bank may require them to pay the outstanding amounts in the agreed form.
- Bear in mind that, once you have signed the loan agreement, the bank is under no obligation to change its terms and conditions.
- Lastly, if you have taken out payment protection insurance for the loan, check the terms of the policy to find out if it covers the situation you find yourself in (for example, unemployment or sick leave).
Don't forget that, even if you are in debt, you are still entitled to obtain information about the loan: in fact, if any amount is charged for default (such as default interest), this should be reflected separately in the corresponding statement.