3 Steps to Take When You Can't Make Your Personal Loan Payment

Trouble paying a personal loan is only a bump in the road, not the end of the road.

An odd thing happens when people hit a financial bump in the road. They momentarily convince themselves that the rest of the world has everything under control, and they're the only ones who've messed up.

Nothing could be further from the truth. Life happens. Whether a person becomes ill, loses a job, or has their identity stolen, some things are outside their control. And sometimes, it's just a matter of not having a proper budget in place.

If you have a personal loan and find yourself struggling to make the payment, here are three steps that can get you over the hump.

1. Contact your lender

The moment you realize that you don't have enough money in your bank account to make your monthly payment, contact your lender. Consider the lender your partner in this situation. After all, no one else has a stake in making sure payments are made.

No matter how tempting it may be, do not wait for your lender to contact you. By then, the matter has already been reported to the credit reporting bureaus and your credit score has taken a hit. Instead, head the problem off at the pass.

2. Refinance the loan

If your credit score is good, your lender may allow you to refinance the remaining balance on your loan. This may not be ideal if the current interest rate is much higher than the rate you initially snagged, but if refinancing means lowering your monthly payment to a more manageable level, it may be worth the trade-off.

3. Tighten your belt

The words "tighten your belt" might be one of the most irritating terms in the English language.Chances are, you're doing everything within your power to maximize your income and minimize your monthly bills. However, in times of stress, it can be difficult to come up with a plan that provides immediate relief. Each of the following ideas are designed to help free up enough money to allow you to get caught up.

Cancel subscriptions

Comb over your checking account to locate any subscription services you can do without. That may mean canceling HBO Max or Britbox for a while. It could lead to canceling a gym membership you haven't used since pre-pandemic. Those small(ish) and semi-regular subscription costs add up.

Cut down on energy costs

Do a quick run through of your home. Are there any windows that need to be caulked? Is the insulation in the attic sufficient? Cutting down on your energy costs is one of the fastest, easiest ways to free up money each month.

Save on groceries

There truly is an app for everything, including some that help you spend less on groceries. Take advantage of an app like Too Good To Go or Flashfood to save up to 50% on your groceries.

Spend less on gasoline

Apps are also a great way to save money on gasoline. Let the app know where you are and it will show you where to find the lowest gas prices near you.

Ask to work from home -- if only temporarily

There's no denying that working from home saves money. If you work a job that can be completed from home, why not ask your employer to allow you to do so? If the employer seems hesitant, compromise by setting a specific amount of time you'll work from a home office.

When it comes to financial bumps in the road, your best bet is always to take control as soon as possible. You take the reins by contacting your lender and coming up with a solution that works for you both.