How BMO Loan Payments Work and What Happens If You Miss One
How BMO processes your loan payment
When you make a payment on a BMO personal or student loan, the money moves through one of three routes: online through your BMO account, by phone, or by mail. Most payments arrive the same day if you submit them before the bank's cutoff time (usually 5 p.m. Eastern). The payment first goes into a holding account, then BMO applies it to your loan balance the next business day.
BMO uses ACH transfers for most online payments — a system that moves money directly between your bank account and BMO's. This is different from a wire transfer; ACH is slower but costs nothing. If you set up automatic payments, BMO withdraws the amount on your chosen date each month, which means you control when the money leaves your account.
The payment is split between interest and principal. BMO calculates interest daily based on your loan balance, so the earlier in the month you pay, the less interest accrues. If you pay more than the minimum, the extra goes straight to principal, which shortens your loan term and saves you money on future interest.
Key Takeaways
- BMO processes online and phone payments the same business day if submitted before 5 p.m. Eastern, and automatic payments withdraw on the date you choose each month.
- Each payment covers interest first, then reduces your principal balance, so paying early in the month saves you money on accrued interest.
- Missing a payment triggers a late fee within 15 days and can lower your credit score, even if you pay within 30 days.
- If you cannot make a payment, contact BMO before the due date to discuss deferment, forbearance, or a modified payment plan.
- Automatic payments are the most reliable way to avoid missed payments, and many lenders offer a small interest rate reduction for enrolling.
What happens when a payment is late
A payment is considered late the day after your due date passes. BMO typically charges a late fee between 15 and 30 days after the due date, depending on your loan agreement. This fee is added to your balance, so you owe more than you originally did. The late fee is not negotiable after it is charged, though you can ask BMO to waive it once if this is your first miss.
More damaging than the fee is the credit report entry. BMO reports late payments to the three credit bureaus (Equifax, Experian, and TransUnion) once you are 30 days past due. A single 30-day late stays on your credit report for seven years and can lower your score by 100 points or more, depending on your current score and credit history. This affects your ability to borrow for a car, home, or credit card, and can raise the interest rates on any new debt you take on.
If you miss two consecutive payments, BMO may declare your loan in default and begin collection efforts. At that point, the bank can pursue wage garnishment or a lawsuit to recover the balance. Default also appears on your credit report and is harder to recover from than a late payment.
How to set up automatic payments with BMO
Log into your BMO online account or mobile app and navigate to the loan you want to pay. Select "Set Up Automatic Payment" or "Manage Payments." You will choose the amount (minimum, fixed, or variable), the date each month the payment should withdraw, and confirm the bank account it will come from. BMO will send a confirmation email with the details.
Automatic payments begin on the date you choose in the following month. You can change the amount or date anytime through your account, and you can pause or cancel the payment if your circumstances change. Some BMO loans offer a small interest rate reduction — typically 0.25% — if you enroll in automatic payments, so check your loan documents or call BMO to confirm whether yours qualifies.
The main risk with automatic payments is overdraft: if your bank account does not have enough money on the withdrawal date, your bank may decline the payment and charge you an overdraft fee. To avoid this, keep a buffer in your account or set your automatic payment date a few days after you normally receive income.
Options if you cannot make a payment
Contact BMO before your payment is due, not after. The bank has three main tools to help: deferment, forbearance, and income-driven repayment (for federal student loans only). Deferment pauses your payments for a set time, usually 6 to 12 months, and interest does not accrue on subsidized federal loans during this period. Forbearance also pauses payments but interest continues to accrue on all loans, so you owe more at the end.
For personal loans, BMO may offer a temporary payment reduction or a one-time skip of a payment, though this is at the bank's discretion and not may provide. Some borrowers negotiate a modified payment plan that lowers the monthly amount but extends the loan term. Any of these options should be documented in writing so you have proof the bank approved the change.
If you are struggling with multiple debts, a credit counselor can help you prioritize which payments to make first. The National Foundation for Credit Counseling (NFCC) offers free or low-cost counseling and can sometimes negotiate with lenders on your behalf. You can find a counselor at nfcc.org or by calling 1-800-388-2227.
How to make a one-time payment to BMO
Log into your BMO account online or use the mobile app, select your loan, and choose "Make a Payment." Enter the amount you want to pay and confirm the date. The payment will process the same business day if submitted before 5 p.m. Eastern. You can also call BMO's customer service line (the number is on your loan statement) and make a payment over the phone with a representative.
Mailing a check is slower but still an option. Write your loan account number on the check, mail it to the address on your statement, and allow 7 to 10 business days for it to arrive and post to your account. If your due date is within that window, mail your payment early or use online or phone payment instead to avoid a late fee.
Understanding your loan statement and payment breakdown
Your BMO loan statement shows the payment due date, minimum payment amount, and how much of your last payment went to interest versus principal. Early in the loan, most of your payment covers interest; as the loan ages, more goes to principal. This is normal and is called amortization.
The statement also lists your remaining balance, interest rate, and the total interest you will pay if you make only minimum payments for the life of the loan. If you want to see how much you save by paying extra, BMO's website has a loan payoff calculator where you can enter a higher payment amount and see the new payoff date and total interest.
Frequently Asked Questions
Can I pay my BMO loan with a credit card?
No, BMO does not accept credit card payments directly. However, you can use a balance transfer or cash advance from a credit card to fund a bank account, then transfer that money to BMO. This is not recommended because credit card cash advances charge high fees and interest rates immediately.
What if I pay extra toward my loan?
Extra payments go directly to principal and reduce the total interest you pay over the life of the loan. There is no penalty for paying early or paying more than the minimum. You can make extra payments anytime through your BMO account without changing your regular payment schedule.
Does BMO offer loan forgiveness or discharge?
BMO personal loans do not have forgiveness programs. Federal student loans may have forgiveness through Public Service Loan Forgiveness (PSLF) or income-driven repayment plans, but these are federal programs, not BMO programs. Check your loan documents to confirm whether your loan is federal or private.
How long does it take for a payment to show up in my account?
Online and phone payments typically post within one business day. Mailed checks take 7 to 10 business days. Automatic payments post on the date you selected. If a payment does not appear within this timeframe, contact BMO with your confirmation number to track it.
Can I change my payment due date?
Yes. Log into your BMO account, select your loan, and look for "Change Due Date" or "Manage Payment Schedule." You can usually change the date once per year without penalty. If you need to change it more often, call BMO customer service to discuss your options.