Did you know that the average personal loan is $9,928.62? Whether you’re using a personal loan to cover medical expenses or fund home renovations, it can be easy to fall behind when life throws you a curveball.
As a result, you can get into trouble quickly if you miss a personal loan payment. If you’re in this situation, it’s essential not to ignore the problem. You’ll need to learn what steps to take to address the issue immediately.
Keep reading this guide to learn everything you need to do when you can’t make your loan payment on time.
The first thing that occurs with missed loan payments is late fees. It’s essential to realize late fees are added to the loan amount you already owe. These fees vary depending on your lender, so you’ll need to check your agreement to determine this amount.
Late fees can accumulate quickly and significantly affect the monthly payment you already owe.
If you begin missing multiple loan payments, you’ll start to experience other problems, such as:
If you’re only a few days late, this typically won’t be reported to the major credit bureaus. However, once you’re 30 days late, it will go onto your credit report and negatively impact your credit score.
Late payments past 60 and 90 days are also reported to the credit bureaus, affecting your credit score even more.
In addition, once you’re 30 days late, you technically default on a loan. This time frame can vary from 30 to 90 days.
If you don’t contact your lender during this time, they will assume you aren’t planning to make payments. Eventually, your loan will go to collections for loan non repayment. Defaulting on a loan can impact your credit score by as much as 100 points.
Your first step is to contact your lender and let them know you cannot make a payment. Communication with your lender is essential and can often stop your loan from going into default.
Sometimes lenders can help you by changing the due date or coming up with another loan payment plan. They may also allow you to make late payments for a few months.
Unfortunately, not all lenders will do this, so you’ll need to take other steps, which include:
Your next step is to sit down and review your current budget to see where you can cut costs. Remember, there is a good chance you aren’t doing everything you can to cut expenses, so it’s vital to take an honest look at your spending.
Something you can do immediately is to cancel subscriptions you have, like Netflix or HBO Max. Perhaps you have a gym membership you haven’t used in a while. Any subscription services you have should be cut out of your budget until you can get back on track with your loan repayment.
Another thing you can do is assess your home to see how you can save on energy costs. What is the quality of insulation in your attic? Do you have windows that need caulking? If you can cut down on your energy costs a little each month, it will free up more money.
Be sure to look at your food cost too. Your first step is reducing the number of times you eat out each month. If you’re buying lunch at work every day, make a point to bring lunch from home.
You can also use various apps like Ibotta or Checkout51 to save money at the grocery store.
Another thing you can consider is taking on an extra job or a side hustle to bring in some extra cash to make your payments. You might consider selling items you don’t need, such as clothing.
You could also use existing skills to offer services like dog walking, graphic design, or website design. Remember, earning any extra money will help stabilize your budget and enable you to start making your payments on time again.
If you have a good credit score, ask your lender if they will allow you to refinance the loan. You might also be able to get a refinance loan from another lender.
When you refinance the loan, it allows you to replace your current debt with a loan that has a more favorable interest rate and different loan terms. A lower interest rate will allow you to have a lower monthly payment. A different term length can often give you a more convenient payment structure.
If you’re considering refinancing, it’s best to do this as soon as possible. Remember, missing payments on your existing loan will reduce your credit score and make it more difficult for you to qualify for a refinance loan.
If you have a lot of existing credit card debt in addition to your loan payment, you can consider taking out another loan to pay off your credit cards.
Doing this allows you to have access to lower interest rates and consolidate your credit card payments into one payment each month. These types of loans can also improve your credit score as long as you make your payments on time.
Finally, you’ll free up more money each month, allowing you to make your personal loan payments and get your budget under control.
Much like a refinance loan, you’ll need to take steps to do this immediately before you miss personal loan payments.
Now that you know what to do if you can’t make a personal loan payment, you can start putting these steps into action.
If you’re looking to refinance your existing loan or consolidate your credit cards, you won’t have to look any further than FastLoanDirect.
We offer access to loans up to $35,000 with interest rates as low as 5.99% from various lenders. You’ll also have the chance to qualify for flexible loan terms with up to a 72-month repayment term.
Be sure to visit our website today to get started!