Fiarimony gives temporary financial relief to their users by offering instant collateral-free loans to those who need urgent loans to meet their financial needs.
While their loan term is flexible, defaulting on a Fairmoney loan comes with heavy consequences. If you fail to repay your Fairmoney loan on the agreed date, you may be liable to pay late fees and penalty fees. Your credit score may also be affected, among other consequences.
Hence, it makes sense to pay off your loan on or before the due date to avoid the consequences that come with defaulting on a Fairmoney loan.
Benefits of Timely Loan Repayment
There are lots of benefits that come from repaying your loan on time. Some of the benefits are:
- Timely loan repayment will help build your credit score
- It will help increase your credit limit
- Building of trust and good reputation with the credit company
- Enable you manage your finances judiciously
What to do if You Don’t Meet Up Repaying your Loan
If you have financial difficulties that made you not pay off your loan, it is important to reach out to the Fairmoney customer care unit and explain what you are passing through and tell them the efforts you have taken to repay the loan.
If you are lucky enough, your repayment plan may be adjusted, and even if your repayment plan is not extended, they may not report you to the credit bureau, thereby keeping your credit score intact until you pay off your loan.
Consequences of Defaulting on a Fairmoney Loan
If you fail to repay your Fairmoney loan, there are lots of consequences that come with it. They include:
1. Effect on Credit Score
One of the major consequences of defaulting on a Fairmoney loan is that it will negatively affect your credit score. If your credit score is affected, it will reduce your chances of accessing loans in the future because your creditworthiness has been affected.
2. Late Fees
If you fail to pay the Fairmoney loan, you’re liable for late fees, which increase your loan amount. Although the late fee varies according to the loan term, it will add up, and your overall loan amount will be increased.
3. Increased Interest Rate
Another effect of defaulting on the Fairmoney loan is that the interest rate will be increased by 1% on a monthly basis. So, if you fail to repay your loan for months, the interest will accrue an extra 1% of the amount you borrowed. Hence, your loan will almost double the amount you borrowed.
4. Report to the National Credit Bureau and Subsequent Blacklisting
Fairmoney may also report you to the National Credit Bureau, which will further affect your credit score and subsequent blacklisting if you continue to default. Once you’re blacklisted, you won’t be able to access loans from any financial institution in the country until you pay your loan with all the necessary fees.
5. Damage to Your Reputation
Your reputation may also be affected if you default on a Fairmoney loan. This is because the lending platform won’t be happy with you for failing to repay your loan and they may go the extra mile to damage your personality, even to the extent of calling contacts on your device, including your parents and close friends, and informing them of your credit status. This will damage your image, which is not good for your reputation.
6. Legal Action
If you continue to default on the loan, Fairmoney may take legal action against you by involving a collection agency to enable them to recover the funds.
This experience is usually frustrating; hence, it is better imagined than experienced. So, it is best to avoid the action of the collection agency by repaying your loan because they can track you down to any place.
Defaulting on a Fairmoney loan comes with lots of consequences, ranging from late fees, a negative effect on your credit score, an increased interest rate, damage to your reputation, reporting to the National Bureau, and legal action. Hence, it is important to pay off your loan on or before the due date to avoid the consequences that come with defaulting.