What It Means to Be Past Due on a Loan, Plus Consequences
Definition of 'What It Means to Be Past Due on a Loan, Plus Consequences'
When you take out a loan, you agree to make regular payments according to a set schedule. If you miss a payment, you are considered to be past due. The number of days that you have before you are considered to be past due depends on the lender. Some lenders may consider you to be past due if you miss a payment by one day, while others may give you a grace period of 10 or 15 days.
**Consequences of Being Past Due on a Loan**
If you are past due on a loan, there are a number of consequences that you may face. These consequences can include:
* Late fees: Your lender may charge you a late fee if you miss a payment. The amount of the late fee will vary depending on the lender.
* Interest rate increase: Your lender may increase your interest rate if you are past due on a loan. This can make your monthly payments more expensive.
* Collection fees: If you continue to be past due on your loan, your lender may send your account to collections. Collection agencies can charge you fees for their services.
* Wage garnishment: If you still do not make your payments, your lender may garnish your wages. This means that they can take money directly out of your paycheck to pay off your debt.
* Bankruptcy: If you are unable to pay off your debt, you may have to file for bankruptcy. This can have a negative impact on your credit score and make it difficult to get credit in the future.
**How to Avoid Being Past Due on a Loan**
There are a few things you can do to avoid being past due on a loan. These include:
* Make sure that you understand the terms of your loan before you sign it.
* Set up a budget so that you know how much money you have coming in and going out each month.
* Make your payments on time, even if it means making sacrifices in other areas of your life.
* If you know that you are going to be unable to make a payment, contact your lender as soon as possible. They may be able to work with you to make a payment arrangement.
Being past due on a loan can have a number of negative consequences. By taking steps to avoid being past due, you can protect your credit score and your financial future.
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