If you have personal loans, car payments and due bills, you might be having a problem paying them back on time. In this regard, an installment loan can cover anything from two loan repayments through to a 30-year house mortgage. This form of personal loan can also involve paying for a car or any other item. Student loans are another form of installment loans. These forms of loans are still a better option than pay day loans where money is taken straight out of your wages. Title or Collateral loans are also dangerous because you could, say, lose your car if you used that as your loan collateral. In addition, possibly the worst form of getting a loan is becoming too reliant on credit cards.
With installment loans, you pay back the capital plus interest.
What the solutions are
You can opt for forbearance or deferments, which will suspend your loan payment every month.
There are also alternative repayment plans. These will increase the time you have to repay the loan and allow you to change the loan terms. In some circumstances, a loan can be canceled altogether.
What you should do
Pay back each installment on time. If you can’t, this may affect your overall credit rating. Set up a “direct debit” or something similar in your bank account. This way, the money is taken from your account automatically. Pay the debt off early if you can. Also prioritize your debts. Which are the most critical ones that need to be dealt with first?
What to do if you have serious problems repaying installment loans
You could start getting into difficulties paying back a repayment loan on time. This might be because you lost your job. The first thing you must do is to inform the parties you borrowed from, explaining in detail what problems you are having. You should do this as quickly as possible. If you have had a good relationship with your lenders and your bank and have a good credit history, then it may be possible to sort out a solution.
If this is not possible, then you may face legal action. You may have to look to selling off personal items. This will depend upon the size of your installment loan. It could mean selling off or “downsizing,” say, the car you owned. If you own your house or apartment and do not have a mortgage, you would be in a strong position, as you could find a way to use your house as collateral. This could be dangerous however, as it could lead you to losing your house. If you are renting a property or have a mortgage, this, of course, will not be an option.
Your personal circumstances are also very important. If you are on your own with no family support, then your situation is possibly a lot more difficult. On the other hand, if you are married or have a partner who is employed, then they can help take some of this strain. You may get support from your parents or even grandparents. They could have paid off any mortgages and have money tied up in their properties. You can explore ways to unlock this.
Who you took the personal loan out with in the first place is also very important. A bona fide financial institution or bank is far more likely to be helpful than loan sharks and unregistered lenders. A registered and reliable lender will look at all the possibilities. A helpful tip when borrowing online is to look for the OLA (Online Lenders Alliance) seal. This could mean rescheduling the installment loan and looking at your whole situation. A lot will depend on your personal circumstances and which country you live in. The size of your repayment loan may seem overwhelming while you are a student. However, you may have good employment prospects, and with a differed repayment loan, you will be able to clear your debts. If, on the other hand, you are on your own, middle aged, and unemployed, then it could be a whole different story. You may have to consider going bankrupt. This varies from country to country. This may mean you won’t have to pay back the loan. It will also stop bailiffs from taking away all your property.