Avoiding loan penalties

Posted by admin on 07/07/2009 under Debt consolidation | Be the First to Comment

Have you ever been late on a loan or other kind of credit repayment? It appears that exactly at the time that you least need it, banking companies and other creditors slap huge loan penalties on your account.

This is the very last thing you need, especially since you’re already finding it hard to maintain your repayments. It’s like a spiral, you’re late on a payment, so you get a late fee, then this charge makes it even tougher to fulfill your following payment so you get an additional late fee, or a late fee from one of your other accounts. Before you know it all your money is going on loan penalties rather than on the payments themselves.

So how do you handle this situation?

Well, the number one thing to be aware about is that you can under no circumstances be charged a loan penalty  for being late on repaying an existing late fee. For instance, imagine you owe $100 on a charge card. If you were late you might receive a $20 loan penalty. On your following month you will still owe the $100 plus interest, but you will as well owe the $20 late fee. If you exclusively possess enough for the $100 plus interest, pay that, and tell the creditor in your bill payment that it is for your normal payment. You will still owe the $20 late fee, but you can’t be charged late loan penalties for not repaying it on time.

So a piece of advice in the event that you’ve got more than one account, is to try and stay up to date on all but the late one. Don’t be late on one account this month, and another account next month. You prefer to stay late on the same account for both months. The reason for this is that the account you’re late on can exclusively charge you so many fees. If you allow yourself to get late on various accounts, each one of them can slap you with loan penalties.

What you should do whenever you can’t pay on time

If you deem you’re going to be late on a repayment, the best thing you’ll be able to do is give the creditor a call and tell them. This is definitely better than in the case that you simply allow the bill to go unpaid without any explanation. Several creditors will indeed allow you to reschedule your payments, or allow for extra time without charging you for this. The thing is that they normally prefer to work with you on getting the bill paid, rather than letting the bill go unpaid and leaving them in the dark as to your intention.

If the creditor you’re going to be late on doesn’t allow you to reschedule the payments, you might prefer to try with some other of your creditors, and then let that one get a bit late instead.