Unpaid loan – what are the consequences?

Borrowing requires the return of not only borrowed capital, but also interest and all additional costs. What if, for various reasons, we are unable to pay our liabilities on an ongoing basis? An unpaid loan usually has financial consequences.

Every lending institution, including not only Fine bank, but also banks and credit unions earn money by borrowing money, so they carefully supervise repayment timeliness. Modern IT systems help them in this, which not only automatically records repayments on clients’ accounts, but also informs about possible delays. Their occurrence usually begins a separate procedure, which aims to clarify the situation and lead to the settlement of outstanding obligations by the customer as soon as possible, while charging additional costs.

Unpaid loan – consequences

Unpaid loan - consequences

Let’s get to the specifics and examine the consequences of an unpaid loan. If you did not pay the installment because you just forgot how to settle the liability as soon as possible and most likely it will end up with small costs associated with penalty interest or the costs of the debt collection process.

The situation is slightly different in the case of arrears caused by financial problems. It is not worth underestimating such a problem and wait for the moment when our financial situation will improve. It will be wiser to contact the lender and find a solution together. Postponement of installments (so-called credit holidays), spreading repayments into more convenient installments or simply freezing costs related to debt collection are just a few of the scenarios that may work in such a situation.

The costs associated with minor arrears are usually not excessively high, although this is not the rule. The consequences of prolonged non-repayment will be much more severe for us. If the debt is at least PLN 200 and the arrears last at least 60 days, we are at risk of being entered in the register of debtors. Such an entry may in the future make it very difficult for us to apply for more loans. And even if we can find an entity for which this will not be a problem, the cost of the loan will be higher.

Termination of the loan agreement

Termination of the loan agreement

An unpaid loan may also, according to the concluded contract, result in its termination by the lender. After the notice period has expired, we will be required to pay the liability once. This means that we will have to pay back the entire loan with all additional costs accrued for the day, not just the current arrears. At the initial stage of the debt collection process, the lender will conduct it without the court’s involvement and then proceed to court recovery. What is the difference? Debt collection carried out without the participation of a court involves sending reminders and requests for payment, for which, of course, additional fees are charged. If, despite taking such action, the commitment still remains unregulated, the case goes to court and usually ends with a bailiff’s execution.

Unpaid non-bank loan and checker

Unpaid non-bank loan and checker

If you think that information about the timely settlement of liabilities is transferred to the Credit Information Bureau only by banks and credit unions, you are very wrong. Currently, most loan companies also provide such data because they want to act not only in their own interest, but above all without harming their clients. This means that they are guided by the principle of responsible lending, and the reporting of unpaid loans is to protect consumers from incurring / adding another financial obligation that may be attached to the debt.

In addition, each debt collection process requires the lender to be extra involved, to take certain steps and to draw conclusions to avoid such a situation in the future. The growing number of customers who are unable to pay their liabilities on an ongoing basis can lead to serious financial problems for the lender.

Therefore, remember to always contact the lender in case of arrears or risk of their occurrence and try to find the best solution. You will save a lot of time, nerves and money. An entry in checker may effectively hinder you from incurring further liabilities for a period of up to five years. If the delay is a day or two, you should not worry too much, but in any other situation the consequences can be much more severe.

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