What Happens If I Miss a Personal Loan Repayment in Australia?

Missing a personal loan repayment doesn't put a default on your credit file — but it starts a clock, and what happens next depends on what you do before that clock runs out. One missed payment is recorded, not reported as a default. Sixty or more days unpaid, and your lender can list one. In between, you have a legal right to ask for help that most people don't know about, and don't use, until it's too late to matter as much.

The short answer

What actually happens, step by step

The payment is missed

Nothing dramatic happens the moment a direct debit fails or a payment doesn't go through. Your lender's system flags the account as overdue, and depending on your loan contract, a late fee may apply. This is the point where contacting the lender proactively costs you nothing and can prevent everything that follows.

It's recorded in your repayment history

Under `CCR` (Comprehensive Credit Reporting), your lender reports your repayment status to your credit file each reporting period — whether you paid on time, and if not, roughly how overdue the account is. This is a real mark on your file, and it can affect your credit score, but it is not the same as a default. It's the difference between a mark on your record and a formal, five-year listing.

The lender makes contact

Most lenders will attempt to contact you — by phone, email, or letter — once a payment is missed, and again as the account remains overdue. This isn't just collections activity; it's also your opportunity. A lender that hears from you with a realistic plan behaves very differently from one that's had no response at all.

Sixty days overdue — default risk

Once a debt has been unpaid for 60 or more days, the lender is legally permitted to formally list a default on your credit file, after providing the required notice. A default is a five-year record, separate from and more serious than a repayment history mark. For the full detail on what a default means for your credit file and any future loan applications, see What Is a Default on Credit File Australia.

Definition — hardship variation: A formal change to your credit contract's terms — such as a temporary repayment pause, reduced repayment amount, or extended loan term — agreed between you and your lender because you're experiencing financial hardship. You have a legal right to request one under section 72 of the National Credit Code, at any point, whether or not you've already missed a payment.

A worked example — two very different outcomes from the same starting point

Say your personal loan repayment of $380 a fortnight is due on the 1st, and your hours got cut the week before. Here's how the same situation plays out two different ways:

If nothing is done: The 1st passes with no payment. By the 15th, still nothing — the lender has called and emailed with no response. By day 60, the account is still unpaid, the lender sends the required default notice, and a default is listed. That single event is now on your credit file for five years, regardless of when you eventually pay it off.

If you call on the 1st: You tell the lender you can't make this fortnight's payment and give a hardship notice under section 72. They ask about your situation and what you can afford — say, $250 a fortnight for the next two months while your hours recover. They agree, confirm it in writing, and adjust your repayment schedule. No default. No missed-payment marks beyond the adjustment itself. Your credit file shows a hardship flag for up to 12 months, not a five-year default — and it isn't used to calculate your score at all.

Same starting point. The only difference is which day you picked up the phone.

Your right to ask for help — before, during, or after

This is the part most borrowers don't know: you don't have to wait until you're in trouble to ask for a hardship variation, and you don't have to wait until it's too late once you are.

Section 72 of the National Credit Code gives every Australian consumer the right to give their lender a hardship notice — you can do this verbally over the phone or in writing, and you don't need to have missed a payment yet to use it. If your lender agrees to vary your contract, they're required to confirm the new terms to you in writing.

A hardship variation typically looks like one of:

• A temporary pause on repayments while your situation stabilises
• A reduced repayment amount spread over a longer period
• An extended loan term, lowering what you owe each period

What to actually say

You don't need a script, but something like this covers what your lender needs to know:

"I'm calling to give notice of financial hardship under section 72. My situation has changed — [briefly, what changed]. I want to arrange a variation to my repayments that I can actually keep to. What are my options?"

Have a rough idea of what you can genuinely afford before you call. If you're not sure, the Loan Repayment Calculator lets you model a lower repayment against a longer term, so you're proposing a real number rather than guessing.

If your lender won't help — AFCA is free

If your lender refuses to engage, doesn't respond to a genuine hardship request, or offers something that doesn't reflect what you can actually afford, you can escalate to the Australian Financial Complaints Authority (AFCA) — free, independent, and outside the lender's control.

Lodging a complaint with AFCA also generally pauses debt recovery action against you while it's being considered. You can lodge directly at AFCA — financial hardship complaints.

Does a missed payment or hardship arrangement follow you forever?

No, and the two situations are different:

A repayment history mark (from one or two missed payments, resolved before 60 days) fades in significance over time as it's replaced by ongoing on-time repayments under CCR. It's a mark, not a life sentence.

A hardship arrangement can appear on your credit file as a flag for up to 12 months — showing that an arrangement is in place, not the reason for it — and by law cannot be used to calculate your credit score. As long as you keep to it, you're shown as up to date the whole time, and the flag clears after 12 months.

A default (60+ days overdue, formally listed) is the one that carries real weight — five years on your file, and it changes your outcome classification if you apply for a new loan while it's active. This is exactly why acting before the 60-day mark matters so much: it's the difference between a manageable, private conversation with your lender and a five-year public record.

If a default has already been listed

If you're reading this after the fact — a default is already on your file — the situation is different but not hopeless. The single most effective action is settling the debt: paying an unpaid default moves your loan outcome classification from Unlikely — needs improvement to Possible — lender dependent, and it's the highest-impact step available once a default exists. For the full picture on what that involves and what to do next, see Can I Get a Personal Loan With an Unpaid Default?

What to do the moment you know you'll miss a payment

1. Contact your lender before the due date if you possibly can. This is genuinely the highest-leverage moment — before anything is overdue, before any fee applies, before the clock on default risk has started.
2. Work out a number you can actually keep to. Use the Loan Repayment Calculator to see what a lower repayment over a longer term would look like — go into the conversation with a realistic figure, not a guess.
3. Give the hardship notice — verbally is fine. You have the legal right to do this under section 72, and it doesn't need to be formal or in writing to start the process.
4. Get whatever's agreed in writing. Once your lender confirms new terms, keep the confirmation. It's your protection if there's ever a dispute.
5. If you're not getting anywhere, get free help. The National Debt Helpline (1800 007 007) connects you with a financial counsellor who can make these calls with you, at no cost.

Read more on what a default means for your credit file in the defaults hub.

*This is general information only and not financial advice. Results are indicative and may vary by lender. We do not guarantee approval or recommend specific lenders. Please consider seeking independent financial advice.*