Paying bills on time isn’t really one of the most exciting things to talk about. Yeah, getting approved for an auto loan and driving off the lot in a new car is an amazing feeling. But making that payment on the same date each month for the next few years is kind of boring…
Did you know a whole slew of good things happen when you make your payments on time? On the other hand, some not so good things can happen when you don’t make your payments on time.
Keep reading to get a behind-the-scenes look at how making your loan payments on time affects your credit score and ability to get good rates on future loans. Discover some of the digital tools available that make it easier to pay your loans on time, every time.
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Keeping a good credit score
Your payment history is one of the most highly weighted factors when it comes to determining your credit score (about 35 percent of your FICO score). When you make your loan payments on time, your score could consistently go up if you’re meeting other requirements, too. A higher credit score will help to make sure you get approved for more favorable rates on loans in the future.
Unfortunately, making a late loan payment can significantly impact your score. It could possibly affect your credit score for years, making it harder to secure affordable financing in the future.
Did you know that you can monitor your credit score directly within online + mobile banking? In addition to getting a daily, updated score, you’ll also receive in-depth analysis about what goes into it. You’ll be able to set up an action plan with steps on how to better improve it, too.
Avoiding late fees, penalties and higher interest rates
If you’re only a day late for a credit card payment, your card issuer could start to charge you an exorbitant penalty rate. It doesn’t really seem fair (we don’t charge a penalty rate with our credit cards), but it’s a common practice. A penalty rate leads to you accruing higher interest charges, which means more money you’ll owe to pay off your debt.
In addition to penalty rates, credit card companies can charge late fees up to $32 (we only charge a maximum of $25). If you have a solid payment history, you could possibly have late fees waived, but you’ll have to contact your lender through its customer service channel, and who has time to do that?
Make sure you make your payments on time, every time. Login to your Arsenal online + mobile banking account and check out some of the automatic bill pay features that are free for you to use. If you have loans with us, you can set up automatic payments to take the guesswork out of billing.
Building stability for the future
Think of each on-time loan payment you make as an investment into your future. Because your credit score goes up, you’re “buying” yourself access to more advantageous financing options in the future. If you’re just starting off in your early twenties with a credit card or a loan on a used car, this is going to payoff big in a few years when you’re in the market for a house and want an affordable payment.
By keeping late fees, penalty rates and higher interest rates to a minimum, you can also plan your monthly budget better. This gives you more stability to hit your savings goals.
Preventing legal action against yourself
In the worst-case scenario, failure to pay your loans could result in your lender taking legal action against you. If you wind up defaulting on a loan, lenders could pursue actions such as wage garnishment. Failure to make payments on a vehicle loan could lead to repossession of the automobile. If you fail to make a payment on a home equity loan or mortgage, the lender could put a lien on your house to recover unpaid debt.
Any of these actions taken against you could most likely result in the inability to secure financing in the future.
What if I can’t make a payment on time?
We know there’s a sense of dread that can start to become overwhelming if you can’t make your loan payments on time. Take a minute to sit back and relax. Sometimes you just don’t have the money to make your payment. Most lenders understand that and are willing to work to give you some leeway or develop a repayment plan.
If you have a loan at Arsenal and are struggling to make a payment, here are a couple of options you can consider:
- Skip a payment: You’re able to skip a payment on certain loans (auto, personal, etc.) directly within online + mobile banking if you need a short payment break. As of July 2025, you’re allowed to skip a payment up to five times during the life of your loan, once every six month period. There’s a $25 fee associated with skipping a loan payment, and interest will continue to accrue on the unpaid balance during the month of your skipped payment.
- Hardship assistance: If you’re struggling financially and can’t make your loan payments, we want to help. Visit our Loan Assistance page and fill out the form. A team member will contact you to discuss help on your loan.
- Contact us: If you’re in immediate need of help, reaching out to us as soon as possible quickly enhances your options. Call a team member directly at 314.962.6363 (option 7) for assistance, or start a live chat at the bottom-right corner of the screen.
