Get approval of the loan application is not an easy task if you have a blemished credit record. Even one spot in the credit file due to delay in last loan repayment can put an individual in a difficult situation while availing the loan approval. The delay in making repayment bring many consequences which will affect the approval of the new loan. Lenders are not interested in knowing the reason for the delay they simply see it as a black mark in your credit report and give their decision.
Affects Of Delay In Loan Repayment On New Loan Application
There are many consequence coming up when lender informs credit agencies about the repayment delay. They put it on the credit report of the individual which start affecting his/her financial life. Here are some effects of delay in loan repayment that you will see while making the new application:
• Low Credit Score Affect Loan Approval Negatively
It is important to note that delayed payment can negatively affect your credit rating. It will lower down your credit rating which makes it difficult for you get the approval of the new loan. There are many lenders who don’t even consider the loan application having a bad credit rating. Having stained records in your credit report bring a number of hurdles in your way while getting the approval of needed loan.
• High Interest Charges
Another effect of late payment is the high rate for the new loan. There are some specialized lenders that can provide you the loan amount despite of your blemished records but for that they charge a high interest rate. They charge high rate in order to cover their risk of offering loan amount to the person having delayed payment records in the past. Lenders believe that person having unfavorable credit records got the tendency to repeat mistakes that it is why they charge high rates which make people pay installments on time to avoid extra late payment charges.
• Unfavorable Terms And Conditions
Loan seekers must keep in mind that if they have an unfavorable credit rating then they have to get the loan with unfavorable terms only. It means you might to take the loan less than your requirement or with less tenure you want for repayment. Reduced credit limits can make you fulfill your need in limited funds only. Usually lenders decide the loan terms after checking the overall financial position and credit history of the borrowers. So, you have to bear some harsh terms also in case you actually need loan amount to meet some of your urgent necessity.
Advice
These are some of the effects that your delayed loan payment can bring on your new loan application. That is why; it is advisable that you must make a budget before availing the loan so you can make payment on time and avoid these consequences. In case, you are delayed in making payment due to any personal reason then you must talk to your current lender about your problem and request them to not to inform credit agencies about the delay. You must do everything that you could avoid the delay to record in your report to secure yourself from these effects.
