Default On A Loan? Here's What You Need To Know

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Default On A Loan? Here's What You Need To Know

26 June 2020
 Categories: , Blog

During a time in which so much feels uncertain, you may have a lot of questions about how you are going to fare in the economy. Many people are unable to work or maintain a full-time workweek. If this is the case for you, it's natural you are worried you might default on loans. Whether you have title loans or default loans, you are right to wonder.

If you are at risk for defaulting, this is what you need to know.

First, Understand What It Means to Default

If you default on a personal loan, it means that your account is at least 30 days past due. In some cases, specific companies will consider your loan to default based on specific circumstances, like if your payment is 90 days past due. Speak with your lender for specifics about your case.

It is after this point that a company may send your account to collections. Once your account is sent to collections, you may see that your credit score suffers. When you have a low credit score, it impacts your ability to rent a home, secure a mortgage, and obtain other financial loans and credit lines.

Keep in mind that "default" is different from "delinquent." Your loan is delinquent when your payment is late at all. Many companies offer a grace period before they report anything to a credit reporting organization. In most cases, this is 30 days.

You Need to Check Your Credit

First, you will notice that your credit score suffers. Unfortunately, a default on your loan can stay on your report for seven years. This can make it very difficult for you to qualify for more credit in the future.

Expect to Receive Some Phone Calls

After you default on your loan, you might get calls and letters from debt collectors. These collection agencies will seek to collect the balance owed on the account, and the calls can become quite frequent.

Remember this: in some cases, a company has the right to seize property from you. For instance, you may have a loan on a car. If you fail to pay, the company can take back your vehicle.

Talk to a Loan Company

If you suspect you could default, you need to stay in touch with your loan company. The lender may be willing to work with you, especially during this time where so many people are struggling to make ends meet. If you don't speak up, your lender might not realize the troubles you are facing right now. Get in touch today to learn more about title and personal loans.