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What Can You Do When You Can’t Make a Loan Payment?

Sometimes life brings big surprises. If you can’t make payments on one or more of your loans, its best to take action sooner rather than later. It’s important to act quickly and not turn a blind eye if you can’t make a loan payment. Moving quickly helps you minimise the damage to your finances.

Perhaps more importantly, the eventual cleanup is less stressful when you prevent things from getting worse. Sometimes the solution is easy. For example, if you can’t afford your car payments, it might be possible to sell the car and switch to a less expensive but safe vehicle – or even do without a car for a while. Unfortunately, things aren’t always easy, but several strategies help you stay on top of things.

If You Don’t Pay

It might help to talk about the worst case scenario first. If you stop paying on a loan, you eventually default on that loan. The result: you will owe more money as penalties, fees and interest charges build up on your account. Your credit scores will also fall. It may take several years to recover, but you can rebuild your credit and borrow again – sometimes within just a few years. Don’t give up hope.

When you Realise You Can’t Pay

Hopefully, you have time before your next payment is due. If that is the case, you can take action before you are officially late on any payments. You may still have several options at this point, including:

  1. Pay Late: It is best to make loan payments on time, but if you can’t do that, slightly late is better than really late. Try to get your payment in within 30 days of the due date. In many cases, those late payments are not even reported to credit bureaus, so your credit will not be damaged. This leaves you the option of consolidating or refinancing debt.
  2. Consolidate or Refinance: You might be better off with a different loan. Especially with toxic loans like credit cards and payday loans, consolidating with a personal loan results in lower interest costs and a lower required payment. Plus, a new loan typically gives you more time to repay. For example, you might get a personal loan that you repay over three to five years. Taking longer to repay might end up costing you more in interest – but it might not. Especially when getting out of payday loans, you could easily qualify for a new loan. Lenders don’t want to approve somebody who is already behind. Where should you borrow? Start by applying for unsecured loans with banks and credit unions that work in your community, and online lenders. Apply for these loans at the same time so you minimise damage to your credit and go with the best offer.
  3. Try Secured Loans: Consolidating with a secured loan can help you get approved if you want to pledge assets as collateral. However, you risk losing those assets if you can’t make payments on the new loan. If you put your house on the line, you could lose it in foreclosure, making things difficult for you and your family. Having your vehicle repossessed may make it hard to get to work and earn income.
  4. Communicate with Lenders: If you foresee trouble making payments, talk with your lender. They might have options to help you, whether its changing your due date or letting you skip payments for several months. You might even be able to negotiate a settlement. Explain that you can’t make payments, offer less than you owe, and see if they accept.
  5. Prioritise your Payments: You might need to make difficult decisions about which loans to stop paying and which ones to keep current on. Conventional wisdom says to keep making payments on your home and auto loans, and to stop paying unsecured loans if you must. The rationale is that you really don’t want to get evicted or have your vehicle repossessed. Damage to your credit is also problematic, but it does not instantly disrupt your life in the same way. Make a list of your payments, and make a conscious choice about each one. Make your safety and health a priority as you choose.

So, they were a few tips on what you can do if you need to pay back your payday loans later or if you are unable to afford to pay back your payday loans on time, we hope that this blog has helped you with what you can do with paying back payday loans now.

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