These days, when COVID-19 left many Pinoys jobless and
businesses closed, being closer to a loan default adds up to so
much bad trip to many. Then there might be some medical
emergencies and rising costs that can easily make you decide to
put off your loan payments for the meantime. However, that is
definitely not a good idea if you don’t want to get yourself in
a much tighter spot! So what really happens if you get tired of
paying your loans? Here are a few eye-openers to give you an
idea:
You get more debt
My fingers and toes can’t count all the friends I know who, in
one way or another, have encountered problems with debt—and I
always end up telling them this: Money taken from loans is money
borrowed. It’s as simple as that! You need to pay off a portion
of what you borrowed at a given due date to keep money moving
for others who are also trying to get loans and so that lenders
can also provide the same (I guess that’s just how the ‘circle
of life and debt’ really goes). So when you don’t pay off the
money you borrowed in due time, you will get higher interest
rates and add more debt on your plate. And believe me, so many
people are already so full they’d like to throw up! Usual
interest rates for late payments range from 7% to 10%, which can
quickly turn into bigger amounts if you pass on payments. Worse,
when your loans reach a default, you’ll be asked to pay for
everything in full—your overdue balance, plus interest,
penalties, and other add-on charges. Fail to do that too and
lenders will pass you off to collectors who can really cast some
high-level stress and pressure on you until all you can say is…
‘di ko na keri to besh!
You lose what does not belong to you
Let’s get one thing straight about home and car loans. Unless
you’ve paid the full price of a car or house from the bank or
lender where you borrowed money from, that property isn’t really
yours. If you fail to make your payments, lenders can easily
take away your house or car even after you’ve already spent a
big amount of money for them. Let’s think about this for a
second. Your car and house are two of the most important
investments you’ll ever make in your lifetime and the worst
things you or your family can lose because you decided to stop
paying your loans. So before entering into any loan agreement,
carefully review the terms and conditions, then ask yourself
this one important question: Kaya ko ba bayaran itech?! There
will always be risks even in secured loans so study your
contracts like your life depended on it (‘coz it might), before
you sign that dotted-line. Banks and lenders will always stick
to a system that reviews delinquent loans or those that are not
being paid, and then move forward to repossessing cars or
foreclosing houses for public auction. When malas strikes and
it’s too late, I’m sorry besh but you really can’t do anything
to save your car or home.
You get a losing credit score
Most people would define the word ‘score’ as a number of points
in a game or for Pinoys, the ability to get something for free
(e.g. Pa-score naman nyang tsibog mo o). For the financial
industries, ‘score’ is not related to any games or anything free
at all! Your credit score is what lenders look into first before
deciding if your application is either havey or waley.
Non-payment of loans simply equals to lower credit scores, which
will eventually disqualify you from making any secured loans in
the future. If your loans reach a default, expect to get really
bad credit scores that will also disqualify you of any financial
assistance when you most need it. Banks and lenders are required
to report unpaid loans to the Credit Management Association of
the Philippines (CMAP), which then computes credit scores and
determines corresponding penalties that can forfeit you from
applying for new loans for at least five years. Now, if by some
stroke of luck you do get approved while still having a bad rep
on your pending loans with other banks covered by CMAP, you are
also sure to get higher interest rates that may lead to even
bigger debt.
You get less benefits from the government
Government-owned and controlled corporations (GOCC) that provide
loans like the Social Security System (SSS) or Government
Service Insurance System (GSIS) are also strict with
non-payments by deducting balances, penalties, and interests
from your claimable benefits. These include your disability
benefits and life insurance, as well as your retirement or
maternity benefits, which means less help for you and your
family during the most important times in your life. On the
other hand, keeping up with your payments for loans from GOCCs
puts you in good standing and keeps your benefits safe and
secured, while making you eligible for future financial help.
What do you do when you can’t pay?
It’s not true that banks and lenders don’t have any pity on
problematic loans. For example, given the current pandemic
situation, most of them have issued some kind of leniency in how
they collect loan payments. Recently, the Credit Information
Corporation (CIC) issued a memo to banks that freezes loan
defaults during the lockdown periods because consumers like us
really have it tough these days. However, if you find yourself
still unable to pay even after the pandemic has been resolved
and government leniency has been lifted, the best way to get out
of your difficult situation is to let your bank know that you
still exist. All it takes is one call to your loan provider,
show your willingness to settle your obligations, and ask for
help as a solution to get you out of debt. Immediately taking
action by still continuing with your payments in whatever
capacity you can or by resorting to solutions such as refinanced
or consolidated loans can make things easier for you through
longer payment terms and much lower interest rates. One reliable
loan provider that can help you manage your IOUs and money
matters better is Home Credit, which is a part of the globally
established consumer finance expert Home Credit Group. This loan
provider aims for financial inclusion, which means they are out
to help even those who are struggling with their credit scores
so they can stay afloat, improve their standing, and be able to
apply for future loan assistance.
Learn more about how[ Home
Credit](https://revamp-pilot.homecredit.ph/homepage) can help
you with your money matters by downloading their dedicated
[app](https://play.google.com/store/apps/details?id=ph.homecredit.myhomecredit&referrer=utm_source%3Dwebsite%26utm_medium%3Dgoogle-play-button%26utm_content%3Ddownload%26utm_campaign%3Dwebsite-downloads)
now!