Loans: What Are Your Options If You Can’t Pay Them In Full?

Loans: What Are Your Options If You Can't Pay Them In Full?

As everyone knows, life doesn’t always go the way we want it to. Sudden emergencies and financial difficulties can pop out of nowhere and give us trouble at any time and any day.

But thanks to the services offered by licensed moneylenders, it’s easier than ever to get the help you need to deal with such issues on short notice.

Taking out a loan means you’re committed to the obligation of repaying what you owe according to the terms you accepted. There are even services that offer help in repaying debts, such as those provided by approved debt consolidation companies in Singapore.

Sometimes, though, there may be times when repaying a loan in full cannot be accomplished despite one’s best efforts.

Read on to learn the consequences of such situations and the options you can try to turn things around.

The Consequences Of Defaulting On A Loan

Before getting to know your options, it’s best to know the consequences first and foremost.

1. Your credit score will decrease

Your credit score is based on your payment history. Being prompt with your payments in previous loans and completing them without issue is the best way to keep your score in good standing and increase it slowly but surely.

Defaulting on a loan can detrimentally impact your score and decrease it significantly, putting all your efforts to waste.

A lower credit score isn’t the end of the world, but it will make it much more challenging to get approved for future loans or loan higher amounts compared to before.

2. The moneylender can take legal action against you

If you fail to pay off your loan in time, there’s a chance that the moneylender can sue you for breaking the terms of your loan contract. If the loan was secured by an asset, this is more likely to occur. But despite this possibility, they’d much prefer not to resort to those measures.

3. You may lose your collateral

If you took on a secured loan, you could lose the collateral you provided to your moneylender. Such assets will be used to recoup the losses if you default. However, if the asset’s market value is not enough to fully cover your loan, you will still be required to pay off the remaining balance.

What Can You Do And Not Do If You Can’t Repay Your Loan?


1. Negotiate with the moneylender

Being upfront and showing initiative by negotiating with your moneylender exhibits your sincerity about paying off your loan. Receiving an extension or a new refinancing plan is entirely possible if you come up with an arrangement with them, but be aware that they may include additional fees for it.

2. Seek aid from social service agencies

If you’re equipped with the proper knowledge, paying off your loan can become much more manageable. Turning to agencies like Credit Counselling Singapore can net you helpful advice on managing your finances and facilitating a loan repayment scheme with the assistance of a financial expert.

3. Apply For The Debt Repayment Scheme (DRS)

As a last resort, you can apply for the DRS to repay your debts. Under this scheme, moneylenders can’t take legal action against you unless they’re allowed by the court, and you’ll have to repay what you owe over a set period.

Developing your repayment process will be done with the help of an Official Assignee assigned to you by the court. There are a few conditions to be eligible for DRS, so it’s best to check out the full details on the Ministry of Law’s official website first.


1. Pay off your loan with your credit cards

Paying off your loan with your credit cards is highly inadvisable, as not only will you be subjecting yourself to higher interest rates, but you’re also not solving the issue at its roots.


When deciding to take on a loan, it’s always recommended to already have a debt repayment plan in mind well before starting to look for the one that suits your needs. Being fully prepared for both expected and unexpected circumstances can prevent you from ever defaulting on a loan, thus maintaining your credit score and reputation with moneylenders in Singapore.