3 steps to take when you can’t make your personal loan payment
Difficulty paying a personal loan is just a roadblock, not the end of the road.
- Call your lender the moment you realize you’re going to miss a payment.
- It’s in your lender’s interest to help you get your loan payments under control.
- Catching up can involve tightening your financial belt and earning the extra funds you need.
A strange thing happens when people encounter a financial bump in the road. They momentarily convince themselves that the rest of the world has everything under control, and that they’re the only ones screwed up.
Nothing could be further from the truth. Life happens. Whether someone gets sick, loses their job, or has their identity stolen, some things are out of their control. And sometimes it’s just a matter of not having a proper budget in place.
If you have a personal loan and are having trouble making the payment, here are three steps that can help you get over it.
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The moment you realize you don’t have enough money in your bank account to make your monthly payment, contact your lender. Think of the lender as your partner in this situation. After all, no one else has an interest in making sure the payments are made.
As tempting as it is, don’t wait for your lender to contact you. By then, the matter has already been reported to the credit bureaus and your credit score has taken a hit. Instead, fix the problem at the pass.
2. Refinance the loan
If your credit score is good, your lender may allow you to refinance the remaining balance of your loan. It might not be ideal if the current interest rate is much higher than the rate you originally got, but if refinancing means lowering your monthly payment to a more manageable level, it might be worth it.
3. Tighten your belt
The words “tighten your seatbelt” could be one of the most irritating terms in the English language. Chances are you’re doing everything in your power to maximize your income and minimize your monthly bills. However, in times of stress, it can be difficult to find a plan that provides immediate relief. Each of the following ideas is designed to help free up enough money for you to catch up.
Comb through your current account to locate subscription services you can do without. This may mean canceling HBO Max or Britbox for a while. This could result in the cancellation of a gym membership that you haven’t used since pre-pandemic. These small, semi-regular subscription fees add up.
Reduce your energy costs
Take a quick look around your home. Are there windows to be caulked? Is the attic insulation sufficient? Reducing your energy expenditure is one of the fastest and easiest ways to free up money each month.
Save on groceries
There really is an app for everything, including some that help you spend less on groceries. Take advantage of an app like Too Good To Go or Flashfood to save up to 50% on your groceries.
Spend less on gas
Apps are also a great way to save money on gas. Let the app know where you are and it’ll show you where to find the lowest gas prices near you.
Ask to work from home – if only temporarily
There is no denying that working from home saves money. If you have a job that can be done from home, why not ask your employer to allow you to do so? If the employer seems hesitant, compromise by setting a specific amount of time you’ll work from a home office.
When it comes to financial bumps in the road, your best bet is always to take control as soon as possible. You take the reins by contacting your lender and coming up with a solution that works for both of you.
The Ascent’s Best Personal Loans for 2022
Our team of independent experts have pored over the fine print to find the select personal loans that offer competitive rates and low fees. Start by reviewing The Ascent’s best personal loans for 2022.