Behind on a Loan Payment? Make This Call Before the Due Date

If a loan payment is due soon and the money won’t be there, you have more room than it feels like tonight. Late payments do their damage on a predictable schedule, and the first stretch costs fees, not credit.

One missed $147.62 payment can pick up about $105 in fees within two weeks: a $15 late fee, then two bounced debits at $15 from the lender and $30 from the bank each time. Those fees are hypothetical (yours could be higher, lower or zero), and most can be avoided with one call made before the due date.

Here’s the plan, stage by stage, with the words to use. Lenders, contracts and state laws differ, so check it against your own paperwork.

• Options open, no fees yet
• Fees, usually no credit mark
• Credit damage and collection

Before the due date: three numbers, then one call

First, find three numbers in your paperwork.

• The late fee and grace period. The “Late payment” line on your Truth in Lending disclosure.
• The returned-payment fee. Usually in the loan agreement, charged by the lender per bounced debit.
• Your bank’s NSF or overdraft fee. In its fee schedule. Some banks charge per bounced item; some decline the debit without a fee.

Also find the section on default. It says when the lender can treat the whole loan as due.

Then call. Lenders usually have more room to help an account that’s still current. Once a payment has bounced, you’re often talking to a different department with fewer options.

Write down the date, the person’s name and what they agreed to. Ask whether they’ll also stop or move the automatic debit, and don’t count it as done until you see it in writing.

What to ask for depends on how big the gap is

A specific request gets further than “what are my options?”

• You can pay within the grace period: pay then, and ask them not to run the debit early.
• The money arrives within about two weeks: ask to move your due date to a few days after payday. Some allow it once a year or once per loan.
• You’ll miss one full payment: ask for a deferral (skip-a-payment), which pushes one payment to the end of the loan. Interest usually keeps building; ask whether it’s added to the balance or due at the end (the second usually costs a little less).
• You’ll be short for several months: ask for a hardship plan: reduced payments for a few months after a job loss, illness or similar. Ask how long it lasts and what the payment becomes afterward. A free session with a nonprofit credit counselor can help too.

What does a deferral cost? Lorraine, a hypothetical borrower, took a $2,500 loan at 36% APR over 24 months, paying $147.62 a month. After eight on-time payments she sees she’ll be short, so she calls ahead and asks to defer one.

Day 1: the debit runs, so get ahead of it

On autopay, the lender tries to debit your account on the due date. If the money isn’t there, the debit can bounce and both sides may charge a fee. Many lenders retry, sometimes more than once, and each retry can bring another pair.

For certain high-cost loans (cost of credit above 36% where the lender can debit your account), a CFPB rule bars a third try after two failed attempts in a row without your new, specific permission. The CFPB has said it isn’t prioritizing enforcement and plans to revisit the rule, so we wouldn’t lean on it. Tell the lender you’re revoking or changing the authorization, and if needed give your bank a stop-payment order at least three business days before the debit. Our guide to loan payments and your bank account has the wording.

Around day 15: the late fee lands, and you still have time

Some contracts allow several days, often up to about two weeks, before a late fee applies. Others allow none.

A fee is annoying but recoverable. What you’re protecting now is day 30, so catch up by then if you can. If it’s your first late payment, ask whether they’ll waive the fee. Some lenders will; none have to.

Day 30 is the line that matters for your credit

Most lenders report a payment as late once it’s 30 days past due, then at 60, 90 and beyond. A few days late usually costs a fee but stays off your credit report. A 30-day late mark doesn’t, and negative information can generally stay for seven years.

For an account that’s charged off or sent to collections, that clock is set by when you first fell behind, so paying it off later doesn’t restart the seven years (though a paid account usually looks better to lenders than an unpaid one). If you agree to a deferral, ask how the lender will report that month. If a late payment shows up that you believe was reported in error, you can dispute it with the credit bureau and with the lender.

Day 60 and beyond: default, charge-off and collectors

Around day 60 to 90, the lender may declare a default and demand the full balance, as the contract allows. Often after four to six months without payment, it may charge the loan off and hand it to a collector or sell it. A charge-off is an accounting step. You still owe the money.

Collectors play by different rules. Regulation F, the CFPB’s debt collection rule, generally covers third-party collectors and debt buyers, not your original lender collecting in its own name (some state laws reach lenders too). Under Regulation F:

• More than seven calls in seven days about one debt, or a call within seven days after you’ve spoken to the collector about it, is presumed to break the rule.
• Calls before 8 a.m. or after 9 p.m. your time are generally presumed inconvenient.
• The collector must give you a validation notice showing the debt and a dispute deadline, usually about 30 days after you receive it.
• If you dispute in writing by that deadline, collection must pause until the collector sends verification.

Send it by the collector’s portal or certified mail and keep a copy. Disputing doesn’t erase a debt you owe, but it stops you paying the wrong amount or the wrong company.

At any stage, don’t fix it with costlier debt

• A new high-APR loan to make this payment. It adds a second payment to a month that couldn’t cover one.
• Debt relief that wants a fee up front. Under FTC telemarketing rules, companies selling debt relief by phone generally can’t charge before they settle or change a debt.
• A “collector” who wants a gift card, wire or payment app. Ask for the validation notice and pay only through a channel you can verify.

For a short gap, freeing up money elsewhere is often cheaper than new credit. See our alternatives to borrowing, or let the borrowing alternatives tool sort them by your situation.