What happens if you miss a personal loan payment, and can you head it off?

Summary

The CFPB's advice is to contact the lender as soon as possible, because options such as deferment, forbearance, or a payment plan may be available. If the payment is missed without that call, a late fee can follow, and at Avant a payment still unpaid 30 days after the due date can be reported to the credit bureaus. Negative payment history can stay on a credit report for up to seven years.

Before the due date

The CFPB describes those three options as ways to postpone payments, make partial payments, or lower the interest on the loan. Which ones exist depends on the lender, and the only way to find out is to ask. Avant, for instance, has a help page for borrowers who aren't sure they can make the next payment, and it asks them to call.

Some lenders let you move the due date itself. Upgrade allows a change of up to 15 days before or after your assigned payment date, as long as the account is in good standing. What Upgrade won't do is lower the monthly payment once you've chosen your rate and term.

If a lender does agree to defer or restructure payments, ask whether interest keeps accruing and how much longer the loan will run. You can put the new payment and term into the calculator on this site and compare the total with the original schedule.

What four lenders say about late payments

Upgrade: a late fee of up to $10 if the full payment isn't received within 15 calendar days of the due date, charged once per late payment. Interest continues to accrue daily, and a failed electronic or check payment costs another $10.
Avant: late fees may apply, with the amount and timing varying by state. If the full payment isn't made within 30 days of the due date, you may be reported 30 days past due to Equifax, Experian, and TransUnion. Avant reports monthly.
Discover: no fees of any kind on its personal loans.
LightStream: its FAQ says its loans do not have any fees.

Whether a late fee applies, and how much it is, also appears on the disclosure you get before signing. The article on reading that disclosure shows where.

After the first month

Credit reporting companies can generally report negative payment history for up to seven years, according to the CFPB, and no one has the right to remove an accurate late payment. For accounts sent to collection or charged off, the Fair Credit Reporting Act starts that seven-year clock 180 days after the delinquency that led to the collection or charge-off began.

Lenders sometimes hand unpaid balances to third-party debt collectors. The collector has to send you validation information about the debt, usually in its first contact or within five days of it, including the end date of a 30-day period for disputing the debt. If you dispute in writing within those 30 days, the collector must stop collecting the disputed amount until it has adequately responded.

Sources

Written by Kaz (pen name). Figures are copied from providers' published pricing pages on the dates shown. We have not used these products. Corrections: contact form.