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4 Crucial Consequences of Defaulting on Personal Loan

We are sure that the word “defaulting” is no one’s favorite word yet we have seen that sometimes people default on their personal loans. It is better to stay away from defaulting since it calls for serious impact. Below we share with you 4 major after effects of not paying your loan on time:

  1. Heavy Penalty – As per your loan contract, there will be late interest and late penalty charged on missing a single installment and even two or three such cases could mean increased financial burden on you. You would not only have to pay your installments that has been accumulating over the months but also the penalty on it. It is best to stay away from such a scenario. In case one does default at repaying their personal loan, it is best to quickly pay the outstanding installment (s) along with penalty as soon as possible and to ensure not to repeat such incidents.
  2. Credit Score Gets a Hit – It is difficult to see how a single non payment of any of your loan installment could lead to bad credit score. In case you have taken a secured loan in Singapore, your credit score gets impacted negatively too when you don’t make the payment on time. However nothing is permanent, and when such a thing does happens, it is best to pay all payments on time and within a few years your credit score may be restored.
  3. Financial Pressure and Health Risks – It is obvious that the additional burden of paying two or more installments could increase the financial burden on you and your family. Not just that there are other health risks such as tension / depression etc that can easily be avoided by ensuring that you pay off the loan amount on time.
  4. Unable to Get Another Loan in Future – In case you don’t pay off your personal loan, it is very likely that money lenders in Singapore could refuse to give you even a secured loan. They will be skeptical that you would be defaulting on your loan just like in earlier case. They will definitely be looking at your credit history and this could lead you to only depend on your personal contacts and friends for any loan in future. We suggest that it is ideal to be responsible in paying off the loan amount on timely bases to avoid damage to your credit score and not to increase further financial burden on yourself.

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