Paying Your Bills On Time

Paying your bills on time can be a balancing act but making timely payments is important for a variety of reasons.

When you sign a financing contract, you enjoy the benefits of having money to spend or, in the case of auto financing, a vehicle to drive when you need it. The creditor, in return, expects you to repay that money according to the terms of the agreement.

If you’re not able to make your payments on their due dates, there can be consequences for you as a borrower, both now and in the future, including late fees, extra interest charges and your ability to get new credit.

Reasons to make timely payments
Avoid late fees
Initially, a late payment may result in a fee that is added to your next bill and becomes an additional expense on your account.

Avoid added interest charges
A late payment, from a day late onward, could increase your interest costs as more interest will have accrued by the time the payment is received. Most auto loans are simple interest loans that accrue interest daily. The amount of interest charged will depend not only on how many days late the payment is but also the rate of interest within your loan terms. The added interest may then result in a balance to be paid at the end of your loan.

Protect your credit scores
As a consumer of credit, it’s important to understand the effect late payments can have on your credit scores.