The consequences of unpaid loans and credits are numerous and can generate quite serious problems. It always depends on the type of loan, the financial institution and the amount requested. In general, this is what happens if you do not pay the installments of a credit or are not able to repay a loan on the day it is due:
Interest on late payment
When paying the fee for the first time or being unable to repay a loan in full on the expiration date of the contract, the financial institutions will apply late payment interest, higher than normal interest rates. In addition, you may be charged several additional fees, for claiming debtor positions, etc. These interests and commissions are accumulating to the original debt so that each month the total amount of the debt will be larger.
Continuing without paying what was agreed, most of the entities enter your data in some list of delinquent ASNEF type. From this moment you will complicate the possibility of getting any other loan or credit. These lists are searchable by all loan and credit institutions, which will make it difficult or even impossible to obtain external financing in the future.
In the end, the financial entity that operates your debt can initiate a legal claim. In this case, what happens will depend on the type of credit contracted and the assets you own. If your unpaid debt does not exceed $ 1000, the default will probably result in an entry in delinquent files, remaining there pending until the debt is canceled. Due to the small amounts, the entities do not want to enter into judicial expenses. For this reason too, the interests of mini loans and microcredits are so high, to protect themselves from high delinquency rates.
However, if the unpaid loan is for a higher amount, be it a personal loan or a bank loan, the lender can take legal action against the customer in default. If you take out a personal loan, you guarantee all of your present and future assets. Thus the judge can order the seizure of your home, car, accounts, payroll or any other good necessary to settle the debt. It is logical that if there are any guarantors, they will also be subject equally to liability over the debt.
It is already clear that the consequences of delay can be very serious and can produce a series of problems and influence your economic situation in an unpleasant way. Timely payment of your loans or credits should be a priority in front of other monthly expenses since stop paying, far from being a solution, is the principle of greater debts and lack of control of your finances.
Before applying for a loan, consider all of the above and consult the particular conditions of the lender. You can choose to pay the loan early by making an early repayment. Financial institutions are required by law to allow a refund in advance. Some may request fees that may vary depending on the type of loan or particular credit, however most private lenders agree to offer a free early repayment. Also consult the policy of extensions or deferment of payments of the particular lender