The spread of COVID-19 and stay-at-home orders has created challenging times for many. While financial obligations can always lead to stress, our current climate can surely exasperate those concerns. Being in a position where you are unable to pay your debt can be challenging but there are some steps that you can take to help lessen that burden. Of course, no one looks forward to talking to lenders about their inability to pay. The thought of calling a lender can even feel overwhelming, and many people avoid it. However, making that initial call to a lender as soon as you realize that you may be unable to pay, is the crucial first step in making sure that you can get through your financial troubles as quickly and pain-free as possible. Below you will find information about talking to auto loan, personal loan, and credit card lenders that can help you feel more confident and knowledgeable in having these difficult conversations.
Although an auto lender can take your car, they don’t want it. Lenders are not car salesmen. The process of repossessing a car and then determining what should be done with the car to receive as much of their investment back is not a fun process for lenders or banks. If there is something a lender can do to prevent you from getting to this point, they will try. It’s important to remember that there are more options available before you become delinquent.
Creditors with unsecured loans (no collateral) are most likely to participate in renegotiating your loan with you. This is simply because the loan has no security/collateral. Due to COVID-19, many lenders are currently extending their services and creating specialized programs to help their customers navigate through these devastating times. There are more flexible options to avoid default now, than ever before. Call your lender and see what new plans they have integrated into their policies to extend help during this pandemic.
Credit Card Lender
Some credit card lenders offer a zero-interest period where they may stop interest on your credit cards for up to 6 months to allow you to skip payments or pay down the principal balance. Many will temporarily lower your interest rate as low as they possibly can. It’s important to remember that they want you to pay. Be prepared, as they may temporarily lower your credit line to prevent you from going farther into debt. While this isn’t good for your utilization percentage, its best to prevent any further debt and delinquency. Some credit card lenders also offer personal loans with significantly lower interest rates. Be sure to read the fine print as these may come with an origination fee. Credit card companies may allow you to sign up for a hardship plan personalized to their company, be sure to ask about it. Many credit card companies have already automatically deferred payments until July 2020. Be sure to check your emails/mail, as well as ask your card company if that includes you.
Regardless of the type of lender you may have, they all share one common goal; to make sure they are successful and helping you stay current. Calling a lender to ask for help doesn’t showcase a failure. It highlights a responsible consumer attempting to create a prevention plan.
Join me this afternoon at 2 p.m. for an interactive class where you will be able to gain more knowledge of the specific topic, as well as ask specific questions.
Tamika Staten, Financial Education Coach