Don’t Be Fooled; Here’s What Happens If You Stop Paying Your Loans
30 October 2024
The consequences of not paying your microloans can be longterm, as your credit score may be impacted.
All actions have consequences and finances are no exception. If you apply for a personal loan and pay on time, you will surely build a healthy and solid credit history that will allow you to access a larger line of credit or other loans such as an auto or mortgage loan. But what happens if I stop paying my personal loans?
Surely you have listened to supposed financial gurus who, through social networks, talk about different fintech or digital microloan platforms, and assure that nothing happens if you stop paying your credits.
However, the worst thing you can do is to follow their advice without being aware of what really happens when you stop paying a credit, either bank or through digital platforms.
Failing to pay your personal loans in Mexico can have several negative consequences ranging from an affectation of your credit bureau to legal actions, in some cases.
It is essential to take your financial obligations seriously and seek solutions before the situation gets out of control. Remember that open communication with your lender and seeking professional advice can help you find a viable solution.
Among the most common consequences of defaulting on a personal loan are:
1. Affecting your credit reputation: If you fail to pay your loans on time, this will be reported to the credit bureau, which will negatively affect your credit history and lower your score.
2. Default interest: Lenders will start charging additional interest for as long as the debt remains unpaid, which could result in an unpayable snowball in the long run.
3. Legal implications: The lender may initiate a legal process to recover the money owed, which means, for example, a lawsuit and, in extreme cases, a seizure of assets, so plan your finances well or approach your lender to design a payment plan, in case you are in danger of late payments due to some situation beyond your reach.
4. Difficulty in obtaining future credit: With a damaged credit history, it will be more difficult to obtain new credit in the future.
5. Financial stress: Unpaid debt can generate great emotional stress and affect your general wellbeing and even affect your health.
Among the main reasons for nonpayment of a personal loan in Mexico are: income level, job stability and credit history. Fortunately, in recent years, there has been a downward trend in personal loan delinquency in Mexico. This may be due to greater consumer financial awareness, better risk assessment practices by financial institutions and greater economic stability.
If you are facing difficulties in repaying your loans, it is important to seek solutions before you default, and not take harmful advice from people who are not financial specialists. You can negotiate with your lender or consolidate your debts, that is, if you have multiple debts, you can consolidate them into a single loan with a lower interest rate.
At Credmex we are here to support you: do not hesitate to contact us in case you need advice on payment arrangements.