What happens if I miss a loan payment?

When a borrower misses a loan payment, several potential outcomes may occur. Initially, the loan servicer, such as Edfinancial Services, may assess a late fee, especially if the payment is not made within a grace period, which is often stipulated in the loan agreement. This fee can vary based on the loan terms and can increase the overall balance owed. In addition to financial penalties, missing a payment can lead to negative impacts on the borrower's credit score. Payment history is a significant factor in determining a credit score, and a missed payment reported to credit bureaus can lower the score, making future borrowing more challenging. It is important for borrowers to be aware that payment delinquencies may remain on their credit report for several years, further complicating their financial situation. Furthermore, if multiple payments are missed, the account may be considered delinquent, and the loan servicer could take additional steps, possibly reporting the account as default, which can lead to serious consequences such as wage garnishment or additional legal action, depending on the type of loan. To avoid such situations, borrowers are encouraged to communicate with their loan servicer if they anticipate difficulties making payments. Resources such as payment plans or deferment options might be available for those facing financial hardship. It would be prudent for borrowers to review the specific terms of their loan agreement and explore the Edfinancial Services website for relevant information regarding their policies and potential assistance options.