Credit is one of the cornerstones of modern society that lubricates the economy and promotes commercial activity. However, credit enables people to spend money they don't have, spend more money than they earn, use credit for ordinary purchases, use credit even when they have cash and use debt to pay off debt. It's a vicious form of a loan cycle. The use of credit and poor money management skills often leads people into a situation of over-indebtedness where they are unable to service their credit agreements. Though, there are individuals that are able to use credit facilities as the tool that it was meant for. If you’re reading this, you’re one of them!
Fincheck knows that the unexpected can become reality. Countless individuals have been faced with the inability to make the payment on their loans. If you find yourself in this situation, relax and read on, there’s a way out.
What are the consequences of not making payment for your loan?
If you foresee that you won’t be able to make the minimum payment on your loan, or if you absolutely know that you can’t afford it anymore, you’re risking getting ‘blacklisted’. Simply put, this entails a credit provider placing a bad status on your credit record at the applicable credit bureau. This will negatively impact your future financial endeavors.
Before resorting to the court, your lender may try different techniques to get you to pay your debt. If you have checking or savings accounts with that specific institution, they can seize any money you may have in your account. If you’ve used your house, car, or other possessions as collateral, they may be repossessed as well. Finally, if there is no collateral to be seized, the bank will hand your file over to a collection agency that will attempt to retrieve the amount you owe - often in a rude or annoying way.
Don’t let this happen.
Before these even get the chance to materialise, the best thing you can do is to contact your lender and negotiate with them. You’ll be surprised to see that in most cases they are willing to negotiate the terms with you and can provide you with a few options. Never keep silent if you know that you won’t be able to make your repayment, this is the number one mistake that individuals in these stressful situations make. Thus, be open about your situation and don’t hinder to contact your credit provider and ask for help. Always remember to keep your lender updated on your progress and all will be fine.
Here at Fincheck, we’ve seen many individuals get themselves into sticky debt situations for whatever reason, but – they got themselves out of them by taking initiative and asking for help. Feel free to go the National Debt Mediation Association of South Africa for expert advice.