Obtaining a loan has traditionally been a mandate (obtain is to get, mandate is responsibility or duty, the one who obtains is a client, banks are providers, it should read, providing loans has traditionally been a mandate of banks) of banks, but the increase in demand for loans has seen the emerging of specialised risk finance organisations like LoanCentre SA finding themselves in the same bracket with big banks. When obtaining a loan, people often overlook the most important aspect that has a bearing on their credit record.These are the implications associated with non payment of loans.
LoanCentre SA is a nationwide registered National Credit Regulator brokerage that is helping people to obtain personal loans of up to R20 000. In this article, we will focus on some of the implications associated with anyone who in the event of obtaining a loan, do not oblige to his agreement with the creditor. (Implications associated with non-compliance to credit obligations)
It’s common knowledge that any creditor would penalise its client if they don’t own up to the agreement; default fees will be charged for missed payments and interest will continue to be charged on the unpaid amount.
It’s of paramount importance for any potential borrower to know that if any payment is dishonored, returned unpaid, or otherwise missed for any reason, this will put his loan agreement in arrears and they will be charged a late fee, which will be added to their account. In addition, creditors such as LoanCentre SA can in this case initiate procedures and a client’s credit score may be adversely affected if his payment obligations are not met in full.
Some clients often go into “hiding” when they face challenges; LoanCentre SA says such clients “would be handed over to the internal collections department to see if a solution to the problem can be found.” If an agreement can’t be reached, “the lender can make use of external collections company or an attorney. This will lead to an increase in fees and interest.”
Such a scenario will negatively impact on the client’s credit record such that he will find it impossible to perform any transaction through credit means or get any form of finance simply because the client has been listed with all major credit bureaus. No financial institution would want to associate themselves with a bad debtor hence in this case no bank will allow such a person to open an account with them.
Paying back creditors for money owed to them is also a challenge taking into account that it requires legal help to get consent from the client’s creditors to remove the name from the listings.
Meanwhile, LoanCentre SA says good debtors will always enjoy the relationship with their creditors, “if a client is up to date with his loan payments, they may qualify for a second or third loan depending on the criteria as set by the loan company.”