If borrowers are unable to repay their loan, they should act immediately. Difficulties in paying the loan are often caused by no fault of their own. Borrowers do not know how to proceed in this situation. This article will provide you with some information to help you avoid falling into debt .
What do you face if you fail to pay your loan installment?
If a bank loan is taken out, the creditworthiness of the borrower is comprehensively checked. After all, every credit institution wants to have the money it lent back. A loan is only granted if the borrower's income is sufficient to be able to reliably pay a monthly installment. Nevertheless, there can be situations where borrowers can no longer repay a loan. This can result from unemployment, but also from a serious illness. If the borrower does not react, late payment may result in dunning fees and additional default interest. If the reminders are not received, the bank can cancel the loan, which then causes a negative entry in the Schufa . In addition, the bank can seize the wages in order to get their money. When taking out the loan, the borrower signs a declaration of assignment that allows garnishment of wages. This puts the borrower in a position where no bank will approve a loan in the future.
How do you react if the rate can no longer be served?
Unexpected events such as
- the loss of one's job
- longer hospital stays
- broken washing machine
can ensure that borrowers can no longer repay their loan.
If you find yourself in such a situation, you shouldn't hesitate and contact the bank immediately and describe the situation . In most cases the bank will try to find a satisfactory solution for the borrower. This can be, for example, a deferral of the loan . Borrowers should therefore remember to include this option in the loan agreement when signing the contract. Debt rescheduling would also be a solution in order to reduce the installment amount and thus make it affordable.
Residual debt insurance for protection
The borrower is well advised in unforeseeable situations if a residual debt insurance has been taken out. Depending on the reason, this would then take over the installments for up to one year. However, these insurances are very expensive and drive up the cost of a loan dramatically.
If the loan is terminated, there is a risk of a negative SCHUFA entry
If you cannot repay your loan and you do not take immediate action, the bank can terminate the loan. This means that borrowers will have a hard time getting a loan from another bank. As an alternative, only a loan without Schufa would be possible, which often requires a higher interest rate. In addition, the lender can request immediate repayment of the remaining loan amount within 14 days. In addition to serious economic consequences, the bank can charge default interest and processing fees. In addition, there are often dunning and court costs. In the long term, a loan termination ensures that a negative entry in the Schufa puts a massive burden on the borrower's creditworthiness. Future loans , but also contracts in general, are no longer possible for a long time.
Do not let it come to a negative Schufa entry
Being unable to repay a loan can cause the borrower massive problems. By the way, the bank can only terminate a loan if the borrower is in arrears with at least two installments. In order for an extraordinary termination to take effect, at least two reminders must be sent. In addition, the credit cancellation is reported to the Schufa, which reduces the creditworthiness of the borrower in the longer term. Other loans or contracts will then no longer be possible as easily. If you can no longer repay a loan, the bank should therefore be reported immediately. Serious consequences can then be averted.