Only take on debt that you know you can comfortably repay. If you're having trouble making loan payments, you should contact your lender and ask for some additional time to collect the money you'll need to settle the debt. Most lenders will give you a grace period if you ask nicely. If you want to know what happens if you don't pay back a loan, you should read the fine print. Lenders have the right to report late payments to credit bureaus and even take back collateral if payments are not made on time. That might make matters even worse for your credit.