May 13, 2025
How To Avoid Late Payments?
By : Ellie Brown
When you get a car loan, payday loan, or mortgage, you receive an agreement. It lists the total costs, repayment terms, interest rates, APR, missed payment costs, and installments to make. It lists the dates by which you must pay the instalment. However, sudden emergencies can delay the payment. Other reasons could be forgetfulness, not setting direct debits, or job loss. Whatever the reason, late payments are not a good sign.
It leads to penalties and affects your financial balance. It is because you ultimately pay more than what you ought to on a loan. Therefore, it is better to analyse your payment affordability and avoid late payments. The blog lists the best ways to avoid late payments. It will help individuals with consistent and part-time income sort out the right solution.
Strategies to pay the bills timely
Consider the situation –
“You have a pending debt of £25000 on the mortgage. However, you failed to set the direct debit. It is a facility that automates the bill payment. You forgot to pay the bill on the due date. Now what? The creditor may issue notice for the payments. You decide to pay the dues on a specific date after the actual one. Your payments increase, your credit score falls, and CCJ stands at the doors. You are shocked to see the difference.
The bill is now £35000. Scaring situation, right? How paying more over a bill could be better? But now, you must. Otherwise the interest and penalties may increase. Therefore, understanding how a mortgage late payment works may help you. Here is the brief from the Lending Tree which may help you understand how late payments work on mortgage.
You can see from the above situation – paying the bill timely is important. It helps you avoid the unnecessary trouble.
Here are some ways that may help you pay the dues timely:
1) Identify and align your budget
Having a detailed budget that tracks your monthly spending can help you take stock of your income and bills. While it may seem overwhelming to start a budget, it is necessary. Identify your basic expenses, income, and savings. Check how much money you spend on unnecessary items. It will help you boost your total savings. Create a list of the bills you must pay, how much you owe, and payment dates. Keep it somewhere you visit the most. You must save a copy of it online and offline.
2) Set up auto-payments
After analysing your pending payments and bills, set direct debits. For this, you must follow a few aspects:
- The highest monthly payment
- The total monthly savings
- Flexibility to increase income
- Possibility of a bank account with a direct debit facility
Generally, paying off costly debts is better. It makes your credit report credible in the eyes of future loan providers. It is because paying a heavy debt boosts your credit rating and reveals responsible take. Alternatively, check a bank account with a direct debit facility. If you don’t have it, then you must open one. Getting the facility frees you from setting reminders. Instead, it auto-pays on the due date.
3) Set aside an emergency fund
One of the most common reasons for missing a payment is- emergencies. One uses almost all or a part of the saved money to cover emergency costs. It may prove a relief. However, it may hamper your finances later. You will not be able to repay the dues timely. Thus, set up an emergency fund. It helps you counter critical cash needs without affecting important payments.
You can start by saving just £100 initially. Continue the progress for 6-8 months. For example- saving even £1000/month, may help you collect £6000 within 6 months. It increases after adding the savings interest. Therefore, you can use the fund to cover the emergency needs.
4) Pre-pay on some debts
It is one of the best options for individuals who can legally repay the dues early. This is because most loan providers don’t offer such facilities. However, if one does, you can be at a profit. You can repay the dues when you have the financial flexibility.
It is ideal for part-time workers, business owners, and self-employed. It helps save you money on interest costs and the overall loan amount. However, check whether paying over affects your basic living expenses. Move ahead only if you can counter them effortlessly. It helps you avoid the fear of paying late fees. Moreover, it brings down the liabilities and helps you get debt-free early.
5) Negotiate the repayment structure
Most individuals struggle to repay their dues due to financial crises. Here, they can avoid the late fee by negotiating the deal. You can re-schedule the payments or try to negotiate the amount you owe. The former is easier than the latter. This is because no creditor will agree to reduce the debt amount unless you have valid proof. Thus, you can provide a notice or a debt settlement letter. Under this, you can cite the amount you owe and how much you can pay.
You must provide the relevant proof to add reliability to your application. It increases the chances of convincing the creditors to arrange a debt payment plan. However, you must adhere to the agreement after approval. The new agreement meets the borrower’s current financial situation. It helps you clear the dues without affecting the basic lifestyle payments.
6) Review your finances timely
You may think that you are on the right payment radar. However, sometimes, the finances may shock you. Therefore, it is always better to keep in touch with your finances. Record recent changes and its impact on the debt payments. For example- if you buy a car using car loans, it affects your repayment ability.
Thus, identify the other aspects that you may cut on or halt until you pay the dues. Shifting the financial gear periodically helps you recover from debt. Channelise increment, windfall gains and inheritance towards debt repayment. If not whole, dedicate a portion towards the clearance.
Bottom line
These are some ways to avoid late payments as an individual. Understand your responsibility well when you engage in a financial agreement. Knowing your liabilities and stakes helps you plan accordingly. Cut on unnecessary monthly expenses and boost savings. Dedicate a separate account for emergency expenses. It will help you avoid spending your basic savings on uncertainty.