What To Do If You Can’t Pay Your Installment Loan
It’s all happened to us at some point. We have tons of financial responsibilities; gifts to buy, vacations to pay among other pressing financial issues. The financial burden is so huge that you may have to miss a payment on your installment loan. Besides, you have a mortgage to pay and a car loan on top of it. You may think an online installment loan payment can wait, but is that in your best interest?
While most direct installment loan lenders will allow you to skip a payment, it is not ideal. First, you will bear the consequences when they send you your statement and the late fees accumulated are higher than you had anticipated. Secondly, it could ruin your credit, especially when you skip without informing your lender. You are human, and circumstances may force you to skip a payment. So, how d you go about it so that it does not affect your relationship with your direct lender?
Inform Your Lender if You Can’t Make Your Installment Loan Payments
The first and most important step to take is notifying your lender of your inability to meet your monthly payments. Most lenders have skip-a-payment options, anyway, so you will just e taking advantage of what they have put in place. Your request will certainly attract a fee, but it is better than skipping a payment and not informing them. Also, remember to inform the actual direct lender that’s servicing the installment loan. Not the loan broker It’s not ideal if you find yourself in this situation but most reasonable companies will work with you if you reach out to them.
Do Not Make a Habit of Falling Behind on Monthly Loan Payments
Whenever you skip a payment, you lengthen your loan period. This translates to more interest charges with direct lender installment loans. The monthly finance rates aren’t as bad as a payday loan but they are still going to add up to a large amount. If you skip a payment this month for all your valid reasons, ensure to get back on track the following month. You could easily slip into the habit of making intermittent payments. Doing this would not only increase your liability but also dent your reputation with lenders. Make a provision for your loan repayment each month so that you do not find yourself in a situation where you cannot pay.
Make Up For Missed Payments By Paying Extra
If you can spare some cash, pay more than you are required. If you skipped a month or payment, you could pay double the next month. Or as close as you can come to make up for that last payment. Unlike bank or credit union loans, installment loan financing comes with higher interest rates. The APR on a typical payday loan will check in around 50% or higher and you can expect a lower finance rate with a $1,000 loan that’s paid off in multiple installments. Each day that goes by means your finance charges will increase. Treat this type of financings like a payday or cash advance. The finance charges are high and it’s important to pay off the entire balance as quickly as possible. Of course, this will not save you from late fees but it will take your repayment back to what it was initially. You will hence reduce the interest expense proportionately. As a bonus, you may score some points with your lender, as they will note your commitment to paying off your debt.
Request A Payment Extension From Your Installment Lender
Requesting an extension should be your last option when it comes to paying back the lender. This method will only increase your repayment period and your monthly expense altogether. It can be considered if you foresee an impossibility in meeting your monthly payments. Consider this if you can’t make payments for a period longer than one month. While you will end up paying more over a longer period of time, it would be prudent to ask for an extension. This way, you will have a flexible repayment option and lower your financial liability. You will also not have to miss any other payment or risk having your wages garnished.
Work out a monthly payment plan if you can’t pay your installment loan
An installment loan is a liability that you have to pay off entirely for you to gain your financial freedom back. If you make sacrifices and focus on your expenses, you may never have to take out another loan. That way you won’t need to check out our list of installment loans from top direct lenders! Of course, that advice doesn’t do any good if you find yourself in a situation where the loan is past due. In that case, do everything possible to get back on track. Once things get back to normal, you’ll want to make a budget and do everything possible to pay off the loan as quickly as possible. Another course of action may be to refinance your direct loan. We update and feature a complete comparison of direct lenders. Use our site to find a lender that offers direct lender installment loans in your state. Settle on a decent company and make sure they are willing to refinance or work out a payment plan.
Tim has been working in the personal financing industry for well over a decade. Before that he managed his own team of mortgage professionals at a top lender in California. Now that Tim is firmly entrenched in the online lending industry he’s looking to share his industry expertise and experience.