Where’s My Money?

Where’s My Money?

The principles for borrowing money from someone you know are the same as the principles for borrowing money from a bank. You ask for a loan, they give you the money, and you pay them back – when you said you would. The person you know and the bank both hope it will go in that order and very smoothly. However, we all know that it does not always go that smoothly. Things happen. Something unexpected comes up. Then you are not able to make a payment or the payment to pay off the loan. Here we go with choices again! Of course, there are only two choices – with many variations. You can let the person or let the bank know that you will not be able to pay them and make arrangements to pay them later. Or you can avoid them until you get the money to pay what you owe. What would you do? Unfortunately, many people choose the latter option – not a good choice.

The bank that loaned you the money from is not a person but the Banker or lender is a person. I know it may seem like they will not miss the money and it is not a big deal if they wait a couple of weeks or a month until you can come up with the money that you owe. In the big scheme of things it is not a big deal but for the person who is responsible for late loans, it’s a big deal. You have the choice to make this situation personal or impersonal. When you are late making a loan payment, you show up on a list showing that the payment was not made. After a certain number of days you will receive a letter or a notice stating that the payment is late. If the payment still is not paid, then you will either get another letter or notice. Finally, you will get a phone call to tell you what you already know and to arrange for the payment to be made. By that time the next payment is probably also due. Not to mention the fact that the Banker is probably frustrated because you did not respond to any of the earlier notices. Sound familiar? Like I said, it works the same way for friends who lend money.

Here’s a tip. If you should get in a situation where you are not able to make a loan payment that is due, call the bank and/or Banker to let them know that you are having difficulty making the next payment and would like to make a payment arrangement. I cannot guarantee that you will be able to make a payment arrangement but the chances are good that you will be able to make one. Bankers are human and do not like to chase after people to get their money. You know that you owe them and they know they you owe them, so it is best to take responsibility and try to work things out. I know from experience that I feel better about the person who takes responsibility and contacts me as soon as they know they will not be able to make the payment on time. On the other hand, I am thinking that the person who got 3 or 4 notices and waited 30 days or so to try to make an arrangement doesn’t respect me and doesn’t really care. That might not be the case but that is how it comes across.

As mentioned here, making payments on time is very important to your credit score. Depending on the arrangement, your credit score may not be negatively affected. Also, the likelihood of getting another loan is improved if you have a good relationship with the lender and make an effort to work things out. However, if you don’t make the payment, your loan could be sent to collections and you have even bigger problems. Your credit score could drop significantly. This may seem like common sense to many people but there are people out there who need to know this. I’m sure your friends will appreciate it and so will your bank. We all make mistakes or get in unexpected situations. The important thing is how we handle it. Take responsibility and do the right thing. You’ll be glad you did. All the best!

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