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What happens if my payment is late?

The most important thing to remember if something unexpected occurs and you won’t be able to make your loan payment on time is to let your Lending Specialist know as soon as possible.

Proactively reaching out to your branch to let them know your payment will be late will help protect you from falling behind on your loan, and can reduce consequences for late payments.

Unexpected situations like a family emergency, medical expenses and car or house repairs happen to everyone, but often the last thing on a person’s mind when an emergency happens is how it can set back their credit payments. Don’t wait too long to let your creditors know you’ve had an emergency come up; while it might not seem like a big deal to miss a payment here or there, doing so may lead to interest charges, late payment fees and difficulty borrowing in the future.

“Most people have experienced unforeseen expenses in their life,” says Ken Kolt, Branch Manager at the Edmonton, Alberta Fairstone. “If you know in advance that you will be late with your monthly payment, or are uncertain as to when or how much you can pay, the most important thing to do is to phone your local branch.”

Fairstone Lending Specialists are trained in analyzing budgets and can suggest solutions to support customers through a temporary situation. When used proactively, before a customer gets behind on payments, these tools can help protect customers’ credit ratings and often help them save money.

“It can be more difficult if a customer waits months to advise their Lending Specialist of their situation,” says Kory Saran, District Manager in Vancouver, British Columbia. “Our loan solutions are based on daily simple interest, which is why it’s so important for customers to communicate issues early.”

Fairstone Lending Specialists are trained in analyzing budgets and can suggest solutions to support customers."

Managing Interest

Late payments can incur interest charges as a result of the way interest is calculated on installment loans (daily simple interest). While this interest structure causes issues for late payments, it rewards early payments and a bi-weekly payment schedule. Read more about how daily simple interest can help you save money on your loan.

Generally speaking, if you make a payment late you incur more interest on your loan. If you connect with your Lending Specialist before a payment is overdue, your Lending Specialist may be able to offer solutions to reduce interest charges, alleviating stress that can be associated with a tight budget. Your Lending Specialist can also work with you to see if there are underlying causes for your financial stress, like unpaid bills or high credit card debt. A consolidation loan or new loan product at a lower rate might help you financially in the long-term. Try our debt consolidation calculator or speak to a Lending Specialist to see if debt consolidation is right for you.

Maintaining Your Credit Rating

Late payments can also impact your credit rating. Negative or delinquent credit can stay on your credit bureau for up to seven years, causing a lower credit score. A low credit score can affect your ability to qualify for lower interest rates on credit cards, auto loans and mortgages in the future.

Ultimately, our goal is the same as yours: we want to help you stay on track with your loan, avoid interest charges and maintain your credit rating. We are committed to providing solutions designed to fit your needs, whatever your situation.


This article is for informational purposes only. For personalized financial advice, you should contact a qualified financial advisor.