How to Deal with Personal Loan Debt

Taking out a personal loan means obtaining a fixed amount from a lender or creditor and repaying through fixed monthly instalments for a certain period of months or years.

In this manner, you are aware of how much you have to repay every month throughout the duration and how long are you going to endure the payments.

Most loans carry interest charges that are based on the amount you borrowed, the repayment terms and your credit rating.

Moreover, most personal loans are not secured against your asset, such as your home. On the contrary, if your loan is secured against your home, it might be at risks of getting repossessed.

Updates on the Available Help During the COVID-19 Pandemic

The FCA or Financial Conduct Authority declared variety of changes that can impact consumer credit. Below are being in place for three months to help consumer cope up with the financial crisis.

  • Overdrafts amounting up to £500 free of interest charge
  • Payment holidays for store cards, credit cards, personal loans, conditional sale or hire purchase, catalogue debts, car finance and high costs credit
  • Payment holidays due to COVID-19 or coronavirus outbreak will not impact your credit file
  • Extension of moratorium period in Scotland for people with debts from 6 weeks to 6 months. This means creditors are prohibited to consider further action to compel debt payments. Also, should you need a moratorium, you have to get the aid of an approved money adviser.
  • Mortgage payments holidays are taken into account for individuals with financial difficulty. If you don’t have any arrears, you can apply for one without any proof that your finance has been affected by COVID-19.
  • Also, there are other means to cushion the impact or coronavirus on your finances. You can ask to lower or reduced your debt payments or request for payment breaks regardless of whether you were affected with COVID-19 or not.

Struggling with Personal Loan Debt?

If you are barely coping up with your personal loan arrears, you should communicate with your lender and see if they can help. Some lenders or creditors may agree for a payment break or reducing your payments.

If you are barely coping up with your personal loan arrears, you should communicate with your lender and see if they can help. Some lenders or creditors may agree for a payment break or reducing your payments.

It is important to settle your arrears the soonest you can. If you fail to do so, you’ll likely to get a default notice. You will be given enough time to settle your debts once you get a default notice. You are likely to get this notice if you missed 2 to 3 debt payments.

Once your account is on default, your creditor can seek further action to recover the debt. Some of the steps taken by creditors are as follows:

You must not neglect or ignore any letters from your creditors. Besides, you should get debt advice if you find it hard to deal with your debt problems.

Factors to Consider when Taking Out a Loan

If you think of getting a personal loan, you have to be aware of certain factors before stepping into an agreement. The following are some of the things that you need to consider before entering a personal loan agreement.

Interest Rates

Loans mostly introduced their interest rates or APR as part of their adverts. However, the interest rates of your loan are based on your payment duration, the type of loan that you’re getting and your creditworthiness. This means, most of the time you won’t be getting the promised APR seen on their adverts.

Some of the personal loans differ in terms of their interest rates and charges. If you prefer an affordable loan, taking out a personal loan is not an option.

Loan Terms

Taking out a loan with longer payment terms can have lower payments each month. However, the longer you endure paying each month, the more money you pay towards your interest rates, making you pay more than what you owe.

Getting a longer term may seem advantageous, however, you should ask if you can sustain paying through the duration.

Comparing Lenders 

The best thing to do before jumping into a loan offer is to compare lenders and determine which offer is more affordable. Besides, you can check on the website and compare lenders for better alternatives.

Most of the time, credit unions are cheaper as alternative o banks or other means of borrowing such as your payday loans. Credit unions are also more willing to offer helo if you’re on a low income, have poor credit or when you don’t have any credit history.

The Purpose of the Loan

The purpose of getting a loan should be determined whether essential or not. There are individuals who took out a loan just for large purchases that aren’t even essential.

Loans can be tempting especially when you want to secure fast and easy money. It may sound appealing yet repaying it can be a burden on your part especially if your budget can’t suffice to repay the loan.

Available Help with Personal Loan Debt

Once you feel exhausted with debt payments, or when you notice that you are compromising your essential living costs to pay your debts, contact us. We can help you deal with your circumstances. We have debt experts who can help you determine the best alternatives to solve your debt problems. For free debt advice, you can calls us or use our online deb advice tool.

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