When you apply for a personal loan, you do so with the idea of paying it back based on the terms and conditions. However, with no idea of what your financial future will bring, you could run into trouble at some point.
Should there come a point when you realize that you can’t afford your personal loan payment, it’s critical that you take immediate action. And that doesn’t mean hiding from your lender and hoping for the best.
Here are some basic steps you can take:
1. Review the Current State of Your Loan
While reviewing the current state of your loan, ask and answer these questions as they pertain to your situation:
- What is your current balance?
- What is your current monthly payment?
- What is your interest rate?
- When is your next payment due?
- Have you missed any payments in the past?
As you answer these questions, you’ll gain a better understanding of where things stand and what you can do next to get on track.
2. Contact Your Lender
This is often the most difficult thing to do, as you have to admit to your lender that you’ve fallen behind and need assistance.
Of course, it’s better to contact your lender than to hide and hope for the best. If you do that, it won’t be long before your lender sends you a notice in search of an update.
You may be surprised to find that your lender is more than willing to hear you out and seek an arrangement that works for both parties. But until you reach out, they have no way of helping you.
3. Consider All Your Options
Your lender may present you with a variety of options, such as:
- Refinancing your personal loan for a lower monthly payment
- Allowing you to defer your payment until your financial situation improves
- Providing a lower interest rate for a predetermined period of time
It’s critical that you consider all your options by comparing the pros and cons of each. This is likely to lead you down the path that’s best for your current financial circumstances and your future.
You hope to pay your personal loan off without any hiccups, but things don’t always work out that way.
If you run into any challenges along the way, taking the steps above will help bring some sense of calm to your situation.
Once you work things out with your lender, you’ll feel better about your ability to get on track and remain on track.
Do you have any experience with personal loans? Were you able to repay your loan on time, or did you have to contact your lender for help?