It’s the first day of the month and your loan payment is due soon. Unfortunately, you don’t have the money to make the payment. Don’t panic. Here are some options to consider:
Call Your Lender
A first action to take when you know you can’t make this month’s loan payment is to call your lender. Explain the situation and ask if you have any options regarding this payment, such as making it later in the month or skipping it, just this once. If this is your first time missing a monthly payment, your lender may be more willing to work with you. The most important thing is to be proactive in contacting the lender to explain the situation before they have to call you after the missed payment.
Refinance the Loan
According to “Failed to Make Car Loan Payments? Here’s What to do.”, one option that you may have is to refinance your loan. Refinancing a loan could earn you a lower interest rate and may even shorten the length of your loan. However, the ability to refinance a loan depends on what type of loan it is. For example, you may not be able to refinance your student loans, but you may be able to consolidate several student loans into one.
Meet with a few lenders to learn more about your refinancing options and to compare interest rates and other factors. Your primary goal when refinancing should be to secure a lower interest rate and, thus, potentially lower your monthly payments.
Sell what you Owe Money on
If missing your monthly payment isn’t a one-time occurrence but is due to a lost income or other long term factor, consider selling what you owe the money on. For example, if you owe money on an auto loan, consider selling the car and replace it with a less expensive vehicle. If making your monthly mortgage payments is no longer possible, put your house on the market soon to avoid spiraling into foreclosure.
Increase your Income
Often, one missed loan payment turns into two, three and more. Get ahead of the cycle by increasing your income now. Start working part-time on the evenings and weekends or find work online. Increasing your income will depend on your job field and may require a bit of creativity. If you do find a second job, direct all of the income from that job to paying down your debt. The sooner the debt is repaid, the sooner you can stop worrying about missing future payments.
Consider all Options before Action
Missing a loan payment causes stress and can lead to knee jerk reactions. Avoid taking the wrong action by considering all of your options with care and by fully assessing the situation to uncover the best course of action. For example, before selling your car to eliminate the loan, review your finances to see if other monthly bills such as cable and internet can be eliminated to increase your cash flow.
Knowing that you can’t make a loan payment can be embarrassing. It also causes stress. However, it’s not the end of the world and many options are available to help you overcome the situation. Review those options to take the best course of action.
Shayla Ebsen is a freelance writer and editor with more than 10 years of professional writing experience both in the corporate and freelance settings. Learn more about Shayla here.