Why do people fail to payback their loan?

[Ayuba Ernest]

People take up loans for different reasons. Most to start up their business, others to complete projects or other problems. But the truth is most people who take up loans fail to pay back in due time. Other never really got what they planned for causing a failure to loan repayment in the due date. Here are some of the reasons why I think people refused paying up their loan.

1. They might be afraid
We take loan not because we want to, but because we had to. Loan is the last thigh that comes to someone's mind and if taken and not executed well, you might find it hard to repay back. Most lender get scared and terrified when they think they're incapable of repaying back. This makes them take series of actions they aren't suppose to take. Some will pay off a minima amount and hope the other would be forgotten even in years to come.

2. It might be a deliberate act
Most people find it really hard paying loans they've acquired not because they don't have the money or means to do so, but because they're used to collecting loans and not paying back. This is a very bad and inhuman behavior and one should be punished when caught.

3. Confusion
Confusion can be another reason. Before thinking of getting a loan, you should have a means or source of income which you would make use of to pay back in the case everything crashes. A detailed plan should be made on how to use loans collected and prevent further problems and confusions. Confusions can arise from failed plan or other causes, this could keep lenders from paying back at a due date or rather, thinking of running away without paying back.

 

[Ajebo25]

For me I always ask my self this questions before taking a loan "where will I get money to pay back" without this thinking you will not only borrow more than you need but at the end of the day you won't be able to pay back the loan which shouldn't be so.

You should also have a backup plan in case things don't go as planned or in case you don't get the money from where you hoped to get it to pay back you will be able to use your plan B and know what to do next.

Another thing is that you shouldn't borrow money which you won't be able to pay back some people borrow loan with the intention of running away after getting the money this shouldn't be so, you should borrow an amount that even when the bank or wherever you took the loan comes for the collateral you won't be left with nothing.

 

[Mataracy]

I belive that before any one will collect any loan they must have had already plan on ground before. The way people do respond to paying of the loan depend on the place where they collect the loan from. There some institution that can nor give out their loans to anybody any how because they don't want to run at lose so they will make sure thatere is collateral should in case there is default by the borrower.
Though one may not be able pay back if they did not plan the business they want to do well

 

[Jasz]

People fail to payback their loan due to many reasons. Let us take a deeper look into some of them:

1. Loan amount is too high:

This is the most common reason among all. People take loans which are too high for them to repay back. They think they will be able to pay it back when they receive their paycheck, but they don’t consider the other expenses they have to cover with the paycheck. For example, an individual took a loan of $100000 and he was expecting his monthly income from his job will be $9000, so he thought he could easily payback the loan amount in 12 months. But what he did not consider is that his monthly expenses are about $8000, so obviously, paying back the loan amount of $100000 in 12 months is not possible with an income of $9000 per month.

2. Expenses are too high:

This also comes under the above-mentioned point. If your expenses are too high then you won’t be able to payback your loan amount even if it is low enough for you to repay back within a short period of time. For example, an individual took a loan of $20000 and he was expecting his monthly income of $9000, meanwhile he already made expenses of $75000 before month end.

 

[Augusta]

I think the most about this is lack of money. When once the money that was received can't be recovered it becomes a problem, paying back would be difficult. This is why it isn't advisable to get a loan especially with high interest because pay out wouldn't be easy at all.
Another issue with pay back failure is when the amount received was very high they are highly to fail in payment. if the amount was small payment will be faster than with a higher amount. This is the most reason why banks have the rule of presenting a collateral to avoid issue like this.The bank knows this and that's why the rule is instituted.

Lastly they are the people that right from the onset didn't just want to make any payments. So even when the repayment period is near, they don't care. This is why bsnks and other financial services are taking drastic measures to keep criminals away from getting their loans.

 

[Yusra3]

People may fail to pay back loans for several reasons: job loss or reduced income making payments unaffordable, unexpected major expenses straining budgets, poor financial management and overspending despite obligations, deceiving lenders about true ability to repay, or simply irresponsible attitudes disregarding the seriousness of debt commitments. Unforeseen hardships, lack of budgeting skills, and willful negligence can all contribute to defaulting on loan agreements and facing damaging credit consequences.