5 consequences of defaulting on a loan

“Money makes the world go round”

You’ve probably heard that saying before…

And it’s true, money does make the world go round.

This is why people never joke with their money or anything that could threaten their source.

At Irorun, we never want you shying away from hard money conversations or making problematic money decisions. That’s why today we want you to know about 5 consequences of defaulting on a loan that would help you make better borrowing decisions.

Court charges

Look, not paying your loan on time doesn’t make you a criminal but it will land you with a court order and a refusal to show up in court could get you arrested.

Going to court doesn’t automatically mean you’re going to prison ; every offense has its own punishment after all.

If you fail to repay your loan by the due date, after a set number of days, you’ll be labeled a defaulter, blacklisted and possibly even sued (avoid wahala o!) 😩 The court will issue a warrant to enforcement agents who then have the authority to collect the money you owe.

Even as a defaulter, you still have certain rights that must be respected; the right to adequate notice, right to humane treatment, right to fair valuation of assets and right to getting balance proceeds.

Blacklists

When you default on loan payments, you may be blacklisted by the lender.

We’ve mentioned blacklist a lot so let me give you a little insight.

A blacklist is like a database that shows the name and offenses of defaulters and can be accessed by multiple loan agencies.

This means that being blacklisted affects all chances of getting a loan (that’s not to say you can’t get a loan, it just makes it harder).

You can get your name out of the blacklist though, and we promise to walk you through it in our next article. Stay tuned!😉

Just try not to get on it for now.

Forfeited collateral

You know that car you set up as collateral, that tokunboh Toyota Camry, you’ll lose it if you default on your loan.

Taking long walks is good for your health … but don’t you want to do it by choice? 👀

You made a promise with insurance, and failing to deliver on that promise can cause you to lose it. It’s like the bets you made when you were a child with chewing gum and sweets.

When you fail to pay back a loan you secured with collateral, , you have no other choice but to forfeit the collateral.It becomes the property of the lender as you lose all rights to it as stipulated in your lending contract. (Ma please read and re-read your contract). 🧐

Tainted reputation

It’s probably better to have no reputation at all than a bad one.

In the world of lending, a good reputation is gold.

Being blacklisted and facing court charges for defaulting are two things that ruin your reputation in the eyes of lenders.

No one wants to lend to someone with a bad reputation and no lender would willingly put themselves through that. (We don’t like stress). 🥺

Loan ineligibility

Court charges, blacklisting, tainted reputation, all these tie in with your loan eligibility.

These are things that lower your chances of getting your loan approved.

It’s best to take your chance with a loan type that has a low risk of you being unable to pay it back. (In other words, cut your aso-oke according to your size) 😌

Defaulting puts you in an uncomfortable position with lenders as it lowers your trustworthiness so it is best to avoid doing that at all. (Segun please avoid wahala na!)😩

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It’s important to note that defaulting on a loan does not give lenders the right to violate your data privacy. SMS broadcasts to your contacts with your details, labeling you a defaulter are unethical. It is also illegal where this data is accessed without your consent or the consent of the receiving party. Always remember that Irorun will never misuse your data and we always want your borrowing experience seamless and free of struggles.

Shoot us an email at support@irorun.com to get talking with us on the best loans that’ll suit your needs and ability to pay back.