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Consequences of Not Making Loan Repayment on Time

During financial problems, getting a personal loan may seem to be a great idea. Assuming that you can pay it back in your next paycheck or maybe in several months. But unfortunately, situations arise that lead you to untimely payment your loan amount dues.

Generally, personal loans are proven useful during a financial struggle. They tend to keep you afloat for some time for you to bounce back and regain financial stability. However, the consequences of skipping loan repayment can lead to more problems than you actually have.

Taking out a loan from a licensed money lender gives you a bigger responsibility. The obligation to pay back the lender the proper amount due should be done religiously to build or retain a good credit score and skipping it can lead to higher payment amount and interest rate.

Collection Process

When you fail to pay back your existing debt, the following situation applies. Depending on the type of loan you get, whether student loan payment, mortgage payment, home loans, and other types of loans. The following results can occur to the borrower.


Unsecured Loan

When you fail to pay the loan payments due to an unsecured personal loan, your money lender may be required to write off the debt as a consequence of skipping the payment. Your credit report may also be affected as one of the consequences.

Secured Loan

When you have taken out a personal loan that is secured, the security you put in will be determined by your money lender. A secured loan like home loans and mortgage payments can lead to the seizing of an asset if payment is not done accordingly.

When you have taken out a loan with a moneylender, the debt has possibly increased a few times over. This is owing to the late penalties and high interests charged.

The licensed moneylender may even get a debt collector who will chase after you. These will negatively affect the credit rating to whatever loan you took out.

Consequences of Not Repaying Your Loan

Not settling your outstanding loans can affect your life significantly, whether you are due for a mortgage payment, home loan payment, or student loan payment, you are obliged to pay whatever the amount you owed. That’s one of the biggest responsibilities a borrower has when taking out a loan.

Defaulting to paying your loan will significantly reduce your credit score, hinder you from getting loans in the future, and seize your property in return to unpaid amount dues. In situations that you are likely to default on your payment, then ask your service provider to restructure your loan.

Below are several possible adverse effects of not repaying your loans:

1. Limit to accessing credit

By holding a bad credit score, the credit bureau could limit your access to any credit or additional loan in the future. It can also increase the interest rate way higher than you are supposed to get on your next loans.

Even when you have a stable salary, you may be unable to access a home loan for instance or an additional credit card line thus making it harder to access more benefits. This will even prevent you from growing some equity in the property because of the interest and penalty incurred from the unpaid loans.

Singaporeans who are not able to access educational loans might struggle to pay for their schooling. This can affect their ability to land better job opportunities. This could also mean getting promotions as well.

2. Difficulties in getting hired

Borrowers need to remember that all defaults will be included on your credit record. It is also possible that potential employers will ask for your credit record before they can hire you. When you have failed to make payments on the loans. Yet you have not tried even to repay them, the interest increases thus this interest will bury you into deeper problems.

This default can remain on your report indefinitely. Several companies could consider this to be some sign of having irresponsible behavior. This will make it also just about impossible for you to get work. This is especially in industries like in finance when you hold a bad credit report.

3. Accounts getting blocked

When you have some savings in your account yet, you have not settled your existing loans. These funds could be seized when the moneylender thinks that you have some money. However, you refuse to pay your monthly loan payments, credit card dues, home loan dues, and even simple personal loans. They could probably initiate some legal proceedings.

One must follow the loan agreement that has been signed for a credit card or loan. By law, you are obligated to repay your debts. When you have some savings, it could be wise to use these funds to pay off your existing debt. It is not worth it to damage your credit status only by not repaying your loan.

4. Phone harassment

When you are several days late in making the monthly loan payment, you will likely start getting calls from the lender. However, based on whether the money you owe us from a banking institution or a moneylender. It could also be from a loan shark; then, there will be a difference in the calls. That is from polite to outright threats.

What you should do: when you know that you will not make your payment on time. Make sure that you contact the lender to ask about whether it can be delayed. When you, however, have frequent difficulties in making repayments.

The lender will offer even to restructure your current loan. Therefore be cooperative with your moneylender by not ignoring phone calls from them. When you try to hide, it can only worsen the situation.

When you are over 30 days late yet, you have not made attempts to repay your loan. The lender could take much severe legal action against you.

5. Bankruptcy

When your loan exceeds $10 000, yet you cannot settle it. You stand to face bankruptcy. When you submit a bankruptcy application to the law court, but your credit totals below S$100 000, the law court will refer the lender to the IPTO (Insolvency and Public Trustee’s Office ). This is aimed to assess the borrower’s eligibility to get into a Debt Repayment plan (DRS).

In case of bankruptcy, the Official Assignee (OA) can scrutinize your existing assets. Then sell all the possible assets to pay off your debtors. It could also be required that you chip in a part of whatever income you are currently getting.

Even then, bankruptcy has more severe effects. You cannot challenge any organization in court for instance. Another instance you cannot fly to another country without the persimmon of the OA. You are not permitted to continue holding a public office or even become a director of an organization.

Bankruptcy also will be included in your credit report. This can make it rather hard for you to access any credit cards, loans, or mortgages in the future. Being bankrupt will affect your way of life dramatically. It will also affect your relations with friends, family, as well as employers.


In light with these scenarios or real life cases, you should choose a moneylender that is flexible and able to provide you better payment terms. Legal moneylender site like Instant Loan can help you get the best loan deals in town, it can offer you options to choose from by just putting in the information needed and requirements you have.

In just a matter of seconds, you’ll get the best loan deals and decide for yourself which one is catered to your financial needs. Check out Instant Loan today and receive the finest loan deals in Singapore!

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