What Happens If You Can’t Make a Personal Loan Payment?

Depending on your loan terms, you may also have a grace period or qualify for lender assistance.

Missing a personal loan payment may result in late fees and a credit score impact — but the consequences depend on your lender’s policies and how quickly you act.

Below, we explain what typically happens, what options may be available, and how to reduce the impact.

What happens when you miss a loan payment

Missing a personal loan payment may trigger several outcomes, depending on your lender’s policies and how long the payment remains unpaid. While it’s always best to check the details of your specific loan, there are some common consequences borrowers may experience.

Late fees

When a payment isn’t made by its due date, lenders may charge a late fee after a short grace period. The amount may vary by lender and loan agreement, so check your specific loan agreement for details.

Credit score impact

If a payment remains unpaid long enough, it may be reported to credit bureaus. Payment history is one of the most important components of a credit score, and late payments may negatively affect a borrower’s credit report, according to the Consumer Financial Protection Bureau.

Lenders may report missed payments once they reach certain thresholds:

• 30 days past due
• 60 days past due
• 90 days past due

Each stage of delinquency may have a larger potential impact on your credit profile.

Risk of delinquency or collection

If missed payments continue, the account may become a delinquent loan. Eventually, the lender may transfer or sell the debt to a collection agency. At this stage, borrowers may begin receiving communication from collection representatives requesting repayment. Collection activity may also appear on your credit report.

The exact timeline and process depend on the lender’s policies and the terms of the loan agreement.

Options if you’re struggling to make payments

If you anticipate difficulty making a future payment, reaching out to your lender early may help you explore potential solutions before the situation escalates to a missed payment.

Lenders may offer assistance options, but availability may depend on the borrower’s circumstances and loan terms.

Adjusting payment timing

Some lenders may allow borrowers to adjust their payment dates. This may be helpful if your income schedule changes. Shifting the payment due date may help align it more closely with when you receive your income.

Note: This option may not be available with every loan, so contact the lender early to determine whether an adjustment like this is possible.

Exploring hardship or temporary assistance

Some lenders offer financial hardship programs that may be available in certain situations, such as job loss, medical emergencies, or other temporary financial difficulties.

Depending on the lender, borrowers may have access to tools or support to help manage payments. Some platforms, like Upstart, may have loan assistance options designed to help borrowers navigate financial challenges and explore possible repayment solutions.

These programs may include temporary adjustments that help borrowers manage payments during difficult periods, but eligibility and program details vary by lender and situation.

Refinancing or restructuring

In some cases, borrowers may explore refinancing their loan or restructuring payment terms.

Refinancing may allow a borrower to replace their current loan with a new one that has different terms, such as a longer repayment period. This may reduce monthly payment amounts, though it may also increase the total interest paid over time.

Approval for refinancing may be similar to initial loan approval. Because lenders evaluate these variables differently, loan options may vary from borrower to borrower.

How to avoid missing payments in the future

While unexpected financial disruptions can occur, there are steps borrowers can take to help reduce the likelihood of missing payments in the future.

Set up autopay or reminders

Nobody wants their credit score to drop or pay late fees due to a missed payment. Automatic payments are an effective option to help ensure monthly payments are made on time.

Many lenders offer autopay features that allow them to automatically withdraw the payment from your bank account on or before the due date. This may help reduce the risk of forgetting a payment.

If you prefer not to use autopay, setting reminders through a calendar or budgeting app may also help prevent missed payments. 

Budget for monthly obligations

Creating a monthly budget can help borrowers track their income and expenses more clearly.

A budget may help you:

• Identify essential expenses
• Plan for recurring bills
• Build an emergency fund

Only 63% of adults said they could cover a $400 unexpected expense without borrowing or selling assets, according to the Federal Reserve’s 2024 Survey of Household Economics and Decisionmaking (SHED). Proactive budgeting may help you be more prepared for an expense and reach a higher level of financial stability.

Track payment schedules

Besides budgeting, keeping track of loan balances, payment schedules, and due dates can help borrowers stay organized. Using tools that help you track your loan and payment schedule may reduce the risk of missed payments. Some lending platforms offer digital dashboards and reminders that allow borrowers to monitor repayment progress and upcoming due dates.

How missing payments may affect future loan approval

A missed loan payment does not necessarily prevent someone from getting credit in the future, but it may influence how lenders evaluate future applications. Negative information can stay on your credit report for up to seven years, according to the CFPB. 

When reviewing a loan application, lenders often consider several variables, including:

Recency of missed payments

More recent missed payments may weigh more heavily in lending decisions.

For example, a late payment from several years ago may have less influence than one that occurred within the past few months.

Overall credit profile

Lenders typically evaluate the full credit profile rather than focusing on a single item. A recently missed payment can negatively affect your credit profile, but lenders do consider all the variables. 

This may include:

• Credit history length
• Credit utilization
• Payment history across accounts
• Types of credit used

Income and debt-to-income ratio

Lenders will also evaluate a borrower’s ability to repay. This often includes reviewing income and debt-to-income (DTI) ratio, which compares total monthly debt obligations to monthly income.

A lower DTI may suggest that a borrower has more financial capacity to manage additional debt.

Some modern lending platforms also evaluate a broader set of financial variables to assess creditworthiness, which may provide additional context beyond traditional credit scores.

Can’t make a loan payment, now what

Missing a personal loan payment can be stressful, but it’s a situation borrowers may face at some point. While missed payments may lead to late fees, credit reporting impacts, or potential collections activity, there are often steps borrowers can take to manage the situation.

Contacting your lender early, understanding available assistance options, and using tools to track payments may help reduce financial strain and prevent future issues.

Understanding your loan and taking action early may help you avoid additional financial pressure. Many lenders provide tools that allow borrowers to stay informed, manage payments, and explore available options before financial challenges escalate. If you’re exploring your loan options, you can check your rate through the Upstart marketplace without affecting your credit score.

Frequently Asked Questions

What happens if I miss one loan payment?

If you miss one personal loan payment, the lender may charge a late fee, depending on the loan terms. If the payment remains unpaid long enough, it may eventually be reported to credit bureaus. However, the exact outcome may vary depending on the lender’s policies and the length of time the payment remains overdue.

Will my credit score drop immediately?

Your credit score won’t necessarily drop immediately if you miss a personal loan payment. Many lenders do not report late payments to credit bureaus until the payment is 30 days past due. However, policies may vary, and reviewing your loan agreement or contacting the lender can help clarify their reporting timeline.

Can I still get a loan after missing payments?

Yes, it may still be possible to obtain a loan after missing payments. Lenders often evaluate several variables, including credit history, income, current debts, and the recency of missed payments when reviewing applications.

How long do missed payments stay on my credit report?

Late payments may remain on a credit report for up to seven years, according to the CFPB. However, their impact on credit scores may decrease over time, especially if the borrower establishes a consistent pattern of on-time payments afterward.