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It depends on the terms of your loan agreement, and the type of loan you're dealing with.

Generally, there aren't any criminal penalties - failure to pay a loan is a civil matter between you and the lender. That isn't to say, however, that the consequences can't be severe.

First, many loan agreements have "acceleration clauses" meaning that if you miss a specified number of payments, the entire balance becomes due and payable immediately. If you can't or won't pay the entire balance, your creditor can sue you for failure to pay.

The creditor will probably win, resulting in a judgment against you. This judgment could be enforced in a number of ways. The most common would be wage garnishment - basically, the creditor would be able to take a percentage of your wages until the entire debt is paid off.

If the debt is secured (a mortgage or car loan, for example), they can repossess the collateral (your house or car). If it's unsecured, they'll have to sue you and hope for the best.

Furthermore, failure to repay a loan can destroy your credit rating, making it difficult or impossible to get loans in the future.

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โˆ™ 2009-08-13 18:26:29
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Q: What is the penalty of not repaying a loan?
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Related questions

What Consequences for not repaying a loan?

Negative impact to your credit score, and your car could get repossessed.

What happens if I can't repay an easy payday loan on time?

When you signed your contract for a loan, by law there should have been an obvious penalty clause that explains the interest penalty if you are late repaying the loan. This is typically includes both a flat fee and an incresase in your interest rate. Your contract will have your specific details. If you cannot repay a payday loan on time, then you will be charged a penalty by the lender. What the amount of the penalty is, depends on the contract you signed with your lender.

How long does a student typically have after graduation to begin repaying a Stafford loan?

The student usually has six months after graduation to start repaying a Stafford Loan.

Where can one find advice about repaying loan debts in the US?

There are many places where one can find advice about repaying loan debts in the US. One can find advice about repaying loan debts in the US at popular on the web sources such as Forbes and Consumer Finance.

If you have problems repaying your loan you should contact?

A. The Direct Loan Servicing Center .

Can you be sued for not repaying a pay day loan in Texas?


When do you need to start repaying your student loan?

6 months after you leave school

When repaying an amortized loan the interest payments increase over time?


What is the procedure for bank undertake a property for non repay loan in India?

First the bank remain about the amount repay to their customer, secondly the bank remain the last date for repaying loan to the customer, thirdly the tell to customer like if not repaying will in court and last but not least the bank post a letter like they have applied in court for repaying the loan. then they can follow the courts procedure.

Can a parent get a student loan for a child if the parent files bankruptcy?

Probably not. What the loan is for isn't the issue. His record of repaying loans is.

If a creditor is taking your car to be sold as payment and you still owe money on the car what happens once it is sold at auction does part of the money go towards repaying the loan on the car?

Yes. all of it should go toward repaying the loan. That is why they reposessed it...because of the delinquent loan.

What is the penalty if I am a month late repaying express pay day loans?

The penalty is detailed in the contract for the loan. It is likely that fees will be added to your principal balance (as is the interest) and that the interest will be increased to the maximum allowed by law. It is possible in the case of a payday loan to end up owning 500% to 600% percent of what was borrowed in just a few short months after penalties and interest are added. Nothing screams "Buyer Beware" like a payday loan.

Can a warrant be issued for you in the state of Florida for not repaying back all of a payday loan?


Does a bad loan affect the cosigner?

Yes. That is the whole purpose of having a co-signer. They are liable for repaying the loan if the primary borrower defaults.

Cassandra is repaying an installment loan of 3500 with 20 equal monthly payments of 196 each what is the annual percentage rate of the loan?

C 12%

What is clean loan?

Loan granted by the bank without accepting any security is called a clean loan. But the bank will safegaurd themselves by checking the repaying capacity based on the salary cerificate.

What is the meaning of loan amortization?

Amortization is A method for repaying a loan in equal installments. Part of each payment goes toward interest and any remainder is used to reduce the principal of the loan

What does a prepayment penalty that is Not Applicable mean?

If you have prepayment penalty clause in your agreement with lender, then if you pay off the entire loan amount with in the maturity period of your loan. You have to pay some amount of money as penalty. If prepayment penalty is not applicable means, even though if you pay off the the loan amount with in the maturity period. You need not pay any penalty.

What is the law in Virginia for not repaying a payday cash advance loan?

Payday loans are illegal in West Virginia.

What is the purpose of a prepayment penalty on a mortgage loan?

To discourage the borrower to payback a loan to quickly

How many months does the student have before he or she needs to begin repaying the direct stafford loan?

College savings plan

What is the penalty for early withdrawal of 401K loan?

The penalty is 10%. All in all you will pay your tax bracket + 10%. Actually that is incorrect. The question was about a 401k loan. There are no taxes on 401k loans unless you default on the loan. If the loan defaults then yes you would owe 10% penalty plus Federal and State taxes at tax time.

Can a cosigner for a loan be relinquished from repaying the loan?

Only one way, have the borrower consolidate the loans without you being a cosigner. Then the original loans are paid off, and a new loan is made in only the borrowers name.

Do you still have to repay your loan if you file bankruptcy?

If you file chapter 7 or 13, your loan may discharge in bankruptcy. This is not an automatic process you need to prove to the bankruptcy court that repaying your loan would cause undue hardship.

When cosigning do they check the cosigner's credit and use his income as well for repaying the loan?

YES to checking CR. No, to using co-signors income. The debtor must be able to pay the loan.