How To Repay A Personal Loan When Faced With A Job Loss?
Lost your job while repaying a personal loan? Here are 8 tips to manage repayment, from informing your lender to seeking financial aid
Losing a job is difficult for everyone, but it is more traumatic for those who have taken a personal loan. Of course, the default on payments triggers fear and panic. Some would spend their emergency savings, while others might accept a job that pays substantially less. Honestly, though, not everyone will have access to these choices. People stuck because of genuine problems, such as job loss, may need to consider solutions.
Mentioned below are some tips to help you stay afloat during such trying times:
Inform The Lender:Reach out to your lender about your job loss and inability to repay the loan. Discuss your situation and explore possible options to assist borrowers facing financial difficulties.
Review The Loan Agreement:Carefully review the terms and conditions to understand the provisions related to missed or late payments, penalties, and any grace periods the lender provides. If you have taken a credit shield along with your personal loan, you may be eligible for coverage in case of a job loss.
Explore Loan Restructuring:In India, some lenders offer loan restructuring or loan moratorium options during periods of financial distress. These options allow borrowers to temporarily reduce or suspend loan payments until their financial situation improves. Check with your lender if such provisions are available and how you can apply for them.
Liquidating Investments:You can liquidate your investments to get relief from your outstanding loan. It depends on how many assets you want to sell and at what price. This way, investments can save you from high-interest mounting on your overdue loan.
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Defer Paying EMI -After you have informed and explained to the lender that you have lost your job and are unable to pay the personal loan, chances are that the lender may defer the EMI payment by a month. However, note that they will charge a late fee for the delay.
Seek Financial Assistance Schemes:The Government of India has implemented various financial assistance schemes and programs to support individuals facing financial challenges. Explore if you qualify for any such schemes, especially those to relieve personal loans repayment during a job loss or economic crisis.
Check Your Budget And Expenses:Take a close look at your budget and identify areas where you can cut back on expenses. Prioritize essential expenses and allocate funds to cover living costs and loan payments.
Consult A Financial Advisor:If you're finding it challenging to navigate your financial situation, consider seeking advice from a financial advisor or credit counselling agency. They can guide managing debts, negotiating with lenders, and exploring potential solutions.
All loan defaulters must first understand that "loan payment default is not an acceptable practice". It's crucial to speak with your lender and honestly discuss the circumstances in which you have lost your job and are unable to pay the personal loan. Many lenders know the difficulties borrowers experience and may be prepared to cooperate with you to find an appropriate solution for your personal loan repayment.
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