Bad Credit Loans Blog

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Bad Credit Personal Loans & Late Fees

Don’t let late fees accrue on your Personal Loan or at least not for a very long time.  That should be the end of this blog right there.  Unfortunately, so many ignore this money saving rule.  One reason for this I believe is the misconception that a late fee accrues only once per late payment on the loan.  The thinking is “I was late on my January loan payment, and, although I have not made a full payment to make up that payment, I will only accrue one late fee if the future payments clear.”  This is a mistake that will swell up the amount owman thinking of feesed on your debt.

So, How Do Late Fees Accrue?

Example:  Let us assume you don’t make your January 1st Personal Loan payment of $100.00.  February 1st comes along and you make your regular loan payment of $100.00.  America’s Loan Compay’s late fee is $15.00 that accrue after a payment is more than 10 day late.  Therefore, the $100.00 paid on February 1st will be used to make up January 1st payment, plus late fee.  That leaves February 1st loan payment still outstanding.  Then, no extra full payment is made in February and March 1st comes along.  A $100.00 payment is made on March 1st.  But, because February’s personal loan payment was still outstanding, a $15.00 late fee has now accrued for February.  The March 1st payment is then used to cover what was due February 1st, plus late fee.  As you can now guess, this leaves the payment for March 1st still outstanding.  Unless you make an extra full payment, in addition to the regular payment, between March 1st and April 1st, the process will repeat and you will keep accruing late fees.caution high fees

What Is Ihe End Result Of Accruing All These Late Fees?

So, what’s the big deal with a few late fees?  For one it will take longer to payoff the debt.  There will be a bigger principal balance at the end of the loan term.  Also, extra interest will accrue since less principal is paid every time part of a payment it taken to cover a $15.00 late fee.  In the example above for instance, if an extra full payment is not made to account for the February 1st missed payment, within an eleven month period in that same year alone, you will have accrued $165.00 in late fees ($15.00 x 11 months). 

This may also have a negative effect on your credit.  America’s Loan Company does report your credit to TransUnion.  A late payment that is not made current may make your credit history appear as if the account is constantly a payment behind.  

What If I Can Not Make A Full Payment Immediately?

If a payment is missed on your poor credit personal loan and you can’t make it up before the 10 day grace period is up, an option we give is to make a few extra payments over several installments until enough to cover a full payment is collected.  You will be paying late fees over a few payments.  But, it will reduce the total amount of late fees that will accrue otherwise.  For the example above, a person could make an extra $25.00 over the next 4 installments after January 1st.  So, by May 1st a total of an extra $100.00 will have been collected to make up the one full payment that the account is behind.  A total of $60.00 in late fees will have accrued by May 1st. But after May 1st no more late fees would accrue.  In the end $60.00 in late fees over 4 months is better than $165 over an 11 month period in that same year.

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