What do I do if I get into loan repayment difficulties?

If you get into loan repayment difficulties you actually have quite a few options. One of them of course is to do nothing, simply burying your head in the proverbial sand. This is NOT a good idea, and will only make things worse. If you are not paying, but have yet to enter a dialogue with your lender, then they will have to assume that you are messing them around. They don't like this.

In fact, should you approach a good >lender honestly and tell them about your problems as early as you can, they may very well be sympathetic to your cause and come to some arrangement with you, whereby perhaps you can extend the term of the loan to make your monthly payments lower, or maybe even take a payment holiday. But you must make sure that any new arrangement is realistic - because if you have to go back to them again, they are unlikely to be as sympathetic as the first time. However, that doesn't mean you should shy away from going back to them, bad debts are not what banks want, so they'll still try to help you.

Also available to you are some of the voluntary agencies, who are an excellent source for you to use should you need help. The Citizens Advice Bureau is one of these, but if you're looking for specialist help, then the National Debtline, which is a free support service giving advice over the telephone, has been set up especially to try and help you out if you get into difficulties.

Be careful though, with those firms who advertise themselves as non-profit making, voluntary type agencies who are essentially offering you debt consolidation loans. This is where all of your debts are consolidated into "one easy payment". Yes, it is one payment that you will have to make. Yes, you will probably be paying less monthly than you were with your old debts. BUT, and this is a big but, they are not a way for you to actually pay less on your loans in total. In almost all cases, you will end up paying more on your loans than necessary.

Your monthly payments are smaller because the terms of the loan is longer, but that means you pay more interest overall. Brokers for these loans make a lot of commission out of them. The majority of people taking out debt consolidation loans actually end up further into debts AND, as these loans are normally secured loans, risk losing their home as well.

So speak to a truly voluntary agency, and get advice from people who actually care about your position and are probably more knowledgeable that anyone else you'll get to speak to.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

© AskFinancially.com 2008

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