Everybody makes mistakes. If you recently missed a loan payment, you may be trying to gauge what the fallout could be. The consequences of this may include:
- Additional interest charges or fees. Lenders have different policies for late payments. Contact your bank or credit union to see whether you’ll incur any additional fees or interest.
- Damage to your credit. Missed payments are recorded on your credit report and hurt your score. A less favorable credit score limits your borrowing power. Commit to future on-time payments to improve your credit score over time.
- Repossession. Don’t panic–while this is a very real consequence of not making loan payments, it’s typically a last resort for financial institutions that they would only take if a borrower missed several payments in a row. If you miss a loan payment, ensure it doesn’t become a pattern.
If you’re currently in this situation, take a deep breath! While it’s not ideal, a single missed payment is not the end of the world, and there are steps you can take to get your financial life back on track.
Missed a loan payment? Here’s how to rebound your finances
1. Set up automatic payments
You may have had the money to make a loan payment and simply forgotten to submit it! If so, setting up automatic payments is a fantastic way to make sure this doesn’t happen again. Putting these payments on autopilot will take one less thing off your plate, but you should still verify you have the available balance each month! Accomplishing this is easy. Simply enroll in Online Banking or download your financial institution’s mobile app to check balances. Or, set up account alerts to notify you if your balance falls below a set threshold. Both methods will help you avoid overdrawing your checking account.
2. Reevaluate your budget
If you missed a loan payment because you didn’t have enough funds to cover it, it’s wise to review your spending habits to see what could be eating away at your budget. For example, you may notice an uptick in the number of times you ate out last month and try to reel this in moving forward to keep your payment schedule on track.
Tools like Money Management make budgeting for loan payments easy. You can set spend limits per category, assigning different amounts for things like food, gas, health and wellness, and loan payments. Each category is represented as a bubble. A bubble will turn red if you overspend in the category or yellow if you’re close to doing so. If the bubble is still green by the end of the month, you came out under budget. This gives you a visual of spending over time that’ll make it simple to identify spending categories that need work.
3. Contact your financial institution
If you’re in a period of financial hardship, explaining your situation to your lender may be beneficial. The best financial institutions understand that things happen and may be willing to work with you on a solution that satisfies both parties. Give your bank or credit union a call to see what options are available to you.
At General Electric Credit Union (GECU), we realize that life can get busy–and expensive. Whether you simply forgot to make a loan payment or are struggling to come up with the funds, we offer a range of tools and resources to help you get back on track. From Money Management, available to Online Banking and mobile app users,1 to account alerts that notify you when a payment is due, overdue, or complete, GECU is your trusted borrowing partner after a missed loan payment.