Did you find yourself unable to repay your payday loan or loans properly? Unfortunately, you are not the first or the last. There are a lot of people who have taken on a commitment they are not able to bear now, especially in recent years, when the popularity of “life on debt” has spread.
The easiest way to avoid these problems is to take a responsible account of your debt and take into account all the pitfalls before you take it (what to look for in order to avoid repayment problems is in the article “What questions to answer before filing” loan applications? “).
If you already have a loan and you are not repaying, in many ways it is unfortunately too late to chase. You need to get the most out of the options you have.
A very important warning is! In the event that you are in a situation where you are unable to repay, deal with it immediately with the provider and actively seek solutions. The worst thing that can be is to overlook, postpone, not admit it, and so on. This is where the worst problems arise, which often result in lawsuits, distraint, etc. Active efforts to resolve can save you from bankruptcy.
Find out all about postponement and adjustment options
This is definitely the first step that you should take if you are facing problems with repayment. Contact your provider immediately and work together to find a possible compromise. In this respect, however, expect the helpfulness of banking providers in particular (although there will certainly be honest exceptions in the non-banking sector).
Find out carefully what are the options to postpone repayment, reduce repayments, extend maturity and any other adjustments to the loan. You may find that there is a solution that will be sufficient for you without having to panic and resort to much worse options (see below).
It is likely that any postponement of payments or other relief will eventually cost you something. Most likely, however, it will be much less evil than penalties and fines for defaults, or even a new loan that you would like to bridge your existing debt.
Never try to deal with debt with more debt
It would seem logical, yet many people – perhaps in a panic and eclipse of mind – want a situation where they are unable to repay one loan, to deal with another loan. This is, of course, a totally misleading reasoning that is discouraged by all finance professionals.
Today, there are a lot of loans on offer, which can easily be used even by people in debt, without income, or even those who are already threatened with execution. The providers of these loans do not care about screening the client’s ability to repay, and therefore virtually anyone can obtain them. For an indebted person, this easy accessibility is a very tempting lure, but the consequences of such a solution tend to be serious and devastating. UPDATES: As of 1 December 2016, it is more difficult to obtain such a loan, see Article What has the new Consumer Credit Act brought?
These loans are usually non-bank and are often secured by the applicant’s property. The conditions are certainly not advantageous. Problems with the repayment of a single loan, which could possibly be reasonably solved, become in this way existential problems, where the person may eventually risk losing the roof over his head and all other property.
Consolidation and refinancing
These two foreign, but popular, words probably sound in the ears of most people who have a larger amount of loans or end up fixing interest rates on a mortgage.
If you run into multiple repayments at once, consolidation can be a good solution. It is simply a combination of several loans into one, which should be more advantageous. If you “consolidate” consolidation, you can save on installments and worries. Although you do not delete the debts, their repayment can be more efficient and easier.
Refinancing is then an option to transfer the existing loan to another lender who offers you better terms. This applies in particular to mortgages after the fixation of the interest rate. Today, however, the situation is that the banks are trying to fight for their clients. Therefore, it is often enough to “scare” your existing lender and negotiate better terms without having to move the loan immediately.