When you take out a loan, it comes with a contracted term—essentially, the amount of time you’re expected to make repayments before the loan is fully paid off. But what happens when things don’t go to plan? Arrears can accumulate, potentially leaving you in a financially stressful situation.

 

How Arrears Accumulate

If you miss a scheduled loan repayment or only make a partial payment, the unpaid amount becomes arrears. This means you’re behind on your repayment schedule.

But it’s not just the missed payment that can cause issues—interest continues to accrue on the full balance of your loan at the time, including the arrears. Over time, this can snowball. Even small arrears can grow due to interest, pushing your loan past its expected end date and increasing the total amount you repay.

 

Arrears: The Cost of Falling Behind

When arrears build up:

  • You end up paying more in interest overall.
  • Your loan term can be extended beyond the original agreement.
  • It becomes harder to catch up, especially if your income fluctuates.

Periods like Christmas or school holidays often mean fewer work hours for many people—so falling behind earlier in the year can make those times even more financially stressful.

 

Why Small Extra Payments Can Make a Big Difference

Here’s some good news: we don’t charge fees for early repayments. That means if you’re able to pay a little extra—even as little as $10 or $20 here and there—it can go directly toward reducing your loan balance and interest.

Extra payments now can help you:

  • Stay ahead of your loan schedule, giving you breathing room if things get tight.
  • Reduce the overall interest you pay, because you’re lowering your balance faster.
  • Create a buffer so that if you do have to miss or delay a payment in the future (like over the holidays), you’re not immediately falling into arrears.

 

Plan Ahead, Stay in Control

Life doesn’t always run smoothly, but planning ahead where you can makes a big difference. Making small extra repayments now, while things are manageable, can help you stay in control of your loan and reduce your financial stress later on.

If you’re unsure about your current loan status or want to talk about repayment options, our team is here to help. We’re committed to helping you stay on track and in a strong position, no matter what the season brings.