What happens if I miss a finance payment?
Contact the lender before it happens rather than after. A missed payment usually triggers a fee and, if it continues, is recorded on your credit file. New Zealand law also gives you the right to apply for a hardship variation if circumstances change, and that option is far more available before an account falls behind.
The detail
The worst thing you can do is nothing. Lenders deal with changed circumstances constantly and have processes for it, but those processes are much easier to access early.
Under the Credit Contracts and Consumer Finance Act you can apply for a hardship variation if you are unable to meet payments because of illness, injury, loss of employment, the end of a relationship or similar. That can mean extending the term, reducing payments for a period, or postponing them. It is a legal right, not a favour.
If an account falls a long way behind on a secured loan, the lender can ultimately repossess the asset. That is a last resort for them as well as for you, and it is almost always avoidable if the conversation happens early.
Related questions
Will one missed payment go on my credit file?
Not usually straight away. Lenders generally report arrears once an account is significantly overdue, though a fee may apply immediately. Policies differ, so ask.
What is a hardship variation?
A formal change to your agreement when circumstances make the payments unmanageable. You apply to the lender in writing, and there are rules about how they must consider it.
Can I talk to you rather than the lender?
Yes. If we arranged the finance we can help you work out what to ask for and who to ask, though the agreement is between you and the lender.
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