What It Means to Be Past Due on a Loan in Australia: 2025 Guide

In 2025, with cost-of-living pressures still biting and interest rates holding steady, being ‘past due’ on a loan is a reality more Australians are facing. But what does it actually mean to be past due? What happens if you miss a payment—and how can you limit the fallout? Whether it’s a mortgage, car loan, or credit card, understanding the consequences is the first step to regaining control.

What Does ‘Past Due’ Actually Mean?

Being ‘past due’ on a loan simply means you’ve missed a scheduled repayment. For example, if your car loan payment was due on the 1st of the month and it’s now the 5th with no payment made, your account is past due. Most lenders in Australia have a short grace period—usually a few days—before late fees kick in, but your payment is still technically late the moment you miss the due date.

• Grace period: Some lenders offer up to 7 days to pay before charging a late fee.

• Arrears: If you continue to miss payments, your account falls ‘into arrears’, meaning you owe not just the current payment but all missed payments as well.

• Default: If your loan remains unpaid for 60 days or more, the lender may list a default on your credit report.

This timeline can vary. For example, home loans and personal loans may have different notification periods, but the principle remains the same: past due means you’ve missed a payment and risk further action if you don’t catch up.

Consequences of Being Past Due in 2025

The impact of missing a loan payment isn’t just about a slap-on-the-wrist late fee. Here’s what’s at stake for Australians in 2025:

• Late fees and higher interest: Most lenders charge a late payment fee—commonly $15–$35 per missed payment. Some may also increase your interest rate after repeated missed payments.

• Credit score damage: Once a payment is 14 days late, lenders can report it to credit bureaus. A single late payment can drop your credit score, and a default (60+ days overdue) will remain on your file for five years, making it harder to get approved for future loans or credit cards.

• Collection action: If the loan remains unpaid, the lender may refer your account to a debt collector or start legal proceedings. For secured loans, like car loans or mortgages, you risk repossession or foreclosure.

• Impact on future borrowing: In 2025, Australian lenders are tightening their lending criteria, especially for applicants with recent arrears or defaults. Even buy now, pay later (BNPL) services are factoring in your credit history more closely than before.

Real-world example: In early 2025, ASIC reported a rise in mortgage arrears across New South Wales and Victoria, with many borrowers facing both late fees and negative credit listings after just one missed repayment cycle.

How to Get Back on Track If You’re Past Due

If you’re behind on a payment, don’t panic—but do act quickly. Here’s how Australians can recover in 2025:

• Contact your lender: The sooner you reach out, the more options you’ll have. Many banks now offer hardship assistance programs, including payment deferrals or reduced repayments for a set period.

• Know your rights: Under the National Consumer Credit Protection Act, you can formally request hardship variation if you’re struggling due to illness, unemployment, or other financial shock.

• Prioritise repayments: Focus on catching up with secured loans (like your mortgage or car loan) first, as these carry the biggest risk if left unpaid.

• Check your credit file: Use free annual credit reports to monitor your status and ensure any default is correctly listed (mistakes do happen).

• Seek support: Free financial counselling is available via the National Debt Helpline (1800 007 007), and many not-for-profit services can help negotiate with lenders on your behalf.

Remember, being proactive is the best way to limit the damage and regain financial stability.

2025 Policy Updates Worth Knowing

This year, the Australian government has introduced tighter regulations for lenders around hardship reporting and responsible lending. Lenders must clearly outline all fees, charges, and the consequences of being past due at loan origination. In addition, the new Credit Reporting Code (effective March 2025) gives consumers the right to request a correction for any incorrect arrears listings within 14 days—a move designed to protect borrowers facing genuine hardship or administrative errors.

For BNPL users, recent ASIC guidelines mean missed payments can now be reported to credit agencies, closing a loophole that previously allowed some debts to go unrecorded. This makes it even more important to stay on top of all repayments, not just traditional loans.