Have you ever experienced taking up a loan and suddenly realized you don’t have enough cash to repay it?
If yes, you are not alone!
There are times that life will surprise you. Emergencies such as typhoons, home repairs, sudden hospitalization, job loss, and pandemic will hit you at the most uncertain times. These scenarios might push you to take personal loans and hope that you can quickly recover and repay them.
Unfortunately, paying arent always easy. Below are several steps you can take if you can no longer pay your personal loan on time.
Talk to Your Lender
Before missing a payment, call your lender. This might be the last step you will take, but remember, it is essential. Your lender can provide options such as deferring payments for a few months, accepting partial payment, and waiving the fees.
Some lenders also offer other programs to help you recover on your loan payment. Whatever option your lender gives you, try to understand each of them before deciding and stick with it.
Refinance the Debt
Your credit score might remain strong if you have not missed a single payment. Therefore, refinancing the loan is a good option.
Refinancing is the process of taking out a new loan to pay off one or two outstanding loans. Borrowers usually refinance to take advantage of lower interest rates or reduce their repayment amount. If you struggle to pay your loan, you can maximize a longer-term loan with lower monthly dues.
On the other hand, if you have late or missed payments, there’s a possibility that your credit score can be affected. Thus, you can consider taking a secured loan. In a secured loan, your lender requires collateral such as property or a retirement account and typically offers a lower interest rate. However, if you miss or default several payments, the lender will take the collateral to prevent losses.
If you feel your financial crisis is temporary, you can take a secured loan. However, if you aren’t confident that your finances will not improve soon, think carefully and choose other options.
Look Around You, See if You Can Sell Something
If talking to your lender and refinancing your debt are not good options, the next thing you might consider is selling something from your room. Look around. You might own pieces of jewelry, art pieces, classic pieces, collections, dresses, books, exercise equipment, and others that you’re no longer using but might be of good use to others.
If you haven’t used them in six months or more, you might consider selling them and use the money to repay your loan.
Borrow Money from a Friend
While you might feel uncomfortable borrowing money from someone, there’s no doubt that it is safe and easier. Think about a friend or family member who can understand your situation. Make sure to explain the scenario properly – why you are on the brink of a financial crisis and how you will be able to pay them.
Remember that borrowing money from a friend is not borrowing money alone. You are also extending trust. Be responsible for paying and meeting whatever the agreement is.
Do an Extra Hustle or Job
While creating a side hustle requires more time, creating one might be a better option, especially if you don’t want to refinance a loan or borrow money from someone.
Think about a hobby that you love. Choose the one you’re comfortable doing for several hours a week or months. Whether you love teaching, creating crafts, cooking, baking, or designing graphics, these are easier today because you can do most of them online. If you plan on having products, you can also market them online — through Facebook, Instagram, or other E-commerce platforms. Who knows, these side hustles can be the start of a lucrative career or business.
Tighten Your Budget
Tightening your financial belt will always help, even if it sounds simpler. Below are several ways you can do:
- Save on groceries — make a list of the supplies you only need. Try reducing your budget on unnecessary supplies such as chips or eating out.
- Cut down your energy cost — turn off the lights or water when not in use, take shorter showers, check your house for repairs, reuse water to clean the home vicinity or water the plants, and so much more.
- Watch out your subscriptions — Now that you need to save more, maybe it’s about time to pause your subscriptions for a while, such as Netflix, Amazon, or Spotify.
Always revisit your budget and assess where you can save, cut, and improve it.
While missing paying your loan might be a bit stressful, remember that there are ways to resolve it and regain your confidence. Focus on the solutions, and indeed, you will overcome them.
