What Will Happen If I Fail To Settle My Loan?

Feb 1, 2021

By agreeing with the terms and conditions of a loan that you applied for, it shows that you are aware of your responsibilities as a debtor. However, there are times that you can’t get full control of what’s happening in your life. Fortuitous events such as calamity or a pandemic, emergency, and job loss can weaken your financial stability. Thus, the situation may result in not being able to pay your loan on time.

Usually, what happens when you fail to pay for your loan?

If your loan is a secured one, the lender may just run after the collateral that you put up. But when it’s an unsecured loan, you still have to face a few consequences for failing to meet the due date. With Blend.ph, our loan products are unsecured, which means that there are specific steps that we follow, including legal actions, when people fail to make repayments.

Simply put, you have to think of options to settle the debt because no matter what happens, the lenders have to get their money back.

If you fail to make your Blend.ph repayment, this is what will happen.

Blend.ph appreciates that you chose our platform as a borrower. However, each loan has its own specific Terms & Conditions that you have to understand and follow. A few of the important things you should note are:

  1. Any time you miss a payment or you fail to settle the full amount, the Blend.ph credit and collection team will reach out to you. This includes sending you SMS, calls, snail mail, email, and messages to your social media accounts. At this point, we just want to send a reminder for you to make the payment, in case you just missed it in some simple way.
  2. If you fail to pay within two days beyond the deadline, your account will be tagged overdue. At this point, the collection team will continue working on our efforts to reach you.
  3. If 7 days pass and still no payment have been made, the loan repayment charges will get an additional 25% increase as a payment penalty. Aside from this, there are other possible fees related to collection that might be included in the total charge.
  4. If the loan remains unpaid after three months, the loan will be classified as a default. In line with this, the borrower will be sent a default notice and termination notice. Now, the borrowers are required to settle the total loan amount, as well as all other penalties and fees.
  5. After the notice has been sent, the borrower will be given 17 days before Blend.ph sends a report to the credit bureaus. At the worst case, legal ramifications may happen as well, especially with Post Dated Checks.

Important Things to Note about Blend.ph Loan Repayment and Loan Default

  1. All the scheduled repayments you will have with your Blend.ph loan will be reflected on your loan contract. You don’t need to worry about being reminded as all the details will also be available on your account on the Blend.ph platform.
  2. Blend.ph will allow you to repay the entirety of the loan early on. However, you have to pay a pre-termination fee, which is equivalent to one month interest.
  3. If your post-dated check for repayment was not honored by the banks, you will receive a notice of dishonor.
  4. At the worst scenario, the borrower can be criminally charged under BP22 or An Act Penalizing the Making or Drawing and Issuance of a Check without Sufficient Funds or Credit and for Other Purposes. Aside from this, you may be charged with the legal fees, attorney’s fees, and other costs.
  5. Finally, your credit score will be affected. The credit score is a huge factor that lenders consider when assessing if your loan application should get approval. Thus, if it drops drastically because you failed to pay, expect an arduous loan application later in other financial institutions.

Different ways to be a better borrower

If you have realized that your money will be short for prompt payment, you should not wait until the debt becomes due. Here are some ways to lessen the possibilities of defaulting on your loan:

  • Communicate with your lender

Yes, you can tell your lender about your situation. In that case, they can propose another solution for your temporary setback. You can both agree to defer some of your payments or make the loan term longer. The advantage of extending your loan term is that you have to deal with a smaller monthly payment.

  • Seek support from your family and friends

Before banks and other financial institutions, our family and friends have been there to help us with our financial needs. Sometimes, they even refuse to ask for interest. However, they might demand you to return the money once they need it. Thus, you should evaluate how much you should borrow. And for convenience, choose to put the agreement into writing.

The best thing that you can do is to set aside a portion of your monthly income. So, when it is time to pay the debt, you have enough funds to give. It is easy to avoid default if there is nothing unexpected that will injure your financial capabilities. However, life is full of uncertainties. Circumstances might severely affect you in some aspects.

A pandemic, for example, has caused a lot of people to lose their jobs and businesses. It becomes a reason why borrowers have failed to meet their obligations on time. For that reason, some financial institutions have provided solutions that may help their borrowers. Hence, you can tell your lender about your situation. After that, they will give you options.

Final Thoughts: Be A Responsible Borrower

Defaults have corresponding consequences. But if you are active in communicating with your lender, you can understand what options are available for you. That way, they can also ensure that you are willing to pay your obligations in whatever capacity you can. The next thing that you need to do is to manage these options successfully. Then finally, you can get through this hurdle.

If you want to take care of your finances and improve your credit rating, you should take your borrowing behavior into consideration. Remember, it is essential to practice smart financial management and make better choices towards the road to a secure and bright future.