Managing Loan Repayments When You’re Between Jobs
Losing a job can turn life upside down. As the bank account dwindles, stress levels rise. Critical monthly payments fall due, including car loans, mortgage instalments, etc.
Finding reliable income becomes priority number one. But until that next position comes through, tackling loan repayments remains a major challenge. Federal and state unemployment benefits offer monthly payments to offset lost income. Though not enough to replace a full salary, they certainly help ease financial concerns. Also look into options like benefit loans from direct lenders during difficult times.
With careful planning, savings accounts and severance packages may cover some periods without pay. Building emergency funds for this purpose makes a world of difference. Try limiting unnecessary expenses, too. But when reserves run dry, borrowing again bridges the gap only temporarily.
Losing Your Job and Paying Off What You Owe
When you lose your job, paying back loans gets hard. You have less money coming in each month. But the bills keep showing up and this can cause a lot of stress. Here are some ideas to make it easier to pay back what you owe when you don’t have a paycheck.
Talk to Your Lenders
Call the companies you owe money to and tell them you lost your job. They might be able to lower your payments for now or they could wait a few months before you have to pay. This is called deferment and it can ease some stress when things get tight.
Look Into Payment Pauses
Many lenders let you take a break from payments if you’re out of work. This is called forbearance. You can apply to stop or shrink payments temporarily. Interest still builds up, but it lets you focus cash on essentials for now.
Pick Which Debts to Pay First
Keep paying secured loans if possible – like car and home loans. Try making minimum payments on credit cards, too. Pay the rest of what you really need to get by each day, such as rent, food, gas, and utilities. Cut back where you can to free up funds.
Losing a job makes repaying loans tough. But some options exist to ease the pressure a little. Reach out to lenders and prioritise essential expenses in the meantime. With planning, you can get through this period and get back on your feet.
Needing a 2k loan urgently tempts using offers plastered online for instant money. But rates reaching 60-99% APR turn this fast solution into long-term slavery.
Find Odd Jobs
Don’t just rely on savings to pay the bills. Actively look for extra work, too. Check job boards for temp gigs in your field or other areas. See if friends need help with projects for some pay. Tutor students in what you know best. Drive for a ride share when you have free time. Anything bringing in even small steady funds adds up.
Offer up skills from old jobs on freelance sites to earn something.
- Bartend events if properly certified.
- Edit resumes and papers if strong in writing.
- Work remotely answering customer service calls part-time if you have experience.
- Sign up for task services that let you run errands, clean houses, build furniture and more on demand.
- Act fast, securing multiple mini-revenue streams.
Use Savings As A Last Resort
Don’t completely drain your rainy day reserves right away. Try the above steps first to avoid wiping savings out. But now emergency funds exist for situations like job loss. It’s okay to transfer modest amounts to checking as a last resort if you’re responsible for repaying yourself later. Just have a clear plan and budget for saving again once reemployed.
Getting severed from work cuts off key income. But create new streams based on your talents in the interim. Only dip minimally into savings if the other efforts fall short of meeting loan payments.
Have a plan to add back to savings once reemployed so you’re prepared next time. Curb spending where possible so savings stretch between jobs rather than running dry.
Losing a reliable paycheck makes meeting loan payments hard. But you have options to manage until you start working again. Rank bills by importance, reduce non-vital costs and be smart with savings to get through the tough spot.
Stay positive and determined since this situation is only temporary! Things will work out with diligent effort and support from understanding lenders.
Steer Clear of Desperate Loans
Hard times can tempt people into quick money traps. Avoid high-interest loans like 5k loans even if you are falling behind on bills. But charges equate to insane rates of 300-400% APR with very short repayment terms. Skipping just one balloon payment triggers cascading late fees. Before long, the tiny original loan balloons into thousands owed.
Beware of loans promising instant cash directly to your bank, too. But reading the fine print reveals equivalent APRs up to 60-99%. And if monthly payments get missed, painful penalties get tacked on above already sky-high interest rates.
Credit scores plummet, making all future loans more expensive. Vicious debt cycles trap people unable to meet minimums. Stress compounds while collectors stalk your every move by phone and mail.
Mistakes to Avoid
Desperation leads to poor choices, just prolonging pain. Avoid moves right now making your money hole even deeper.
Don’t Let Bills Slide
It’s tempting to ignore certain payments when short on cash. But missing loan dues entirely tanks your credit status fast. This limits options for years by driving up interest rates. Partial payments still show good faith effort.
Don’t Rack Up New Debt
Put away the credit cards! Compulsive swiping out of panic just worsens existing problems. Minimum payments add up fast without the means to pay off balances. Live minimally on what little cash you have for now.
It’s unwise to wipe out entire emergency funds as a first choice. Make this a temporary bridge only after trying other measures. Withdraw modest amounts sparingly to prevent full depletion.
Conclusion
Slash extra spending to pay only for survival needs like rent, electricity, food budgets, and gas for job hunting. Hit secured debt like mortgages and auto loans first, then unsecured lower-priority card payments. Most lenders offer special hardship arrangements for unusual circumstances like job loss. Reduced or suspended instalments let people catch their breath. Short-term extensions really assist until finding work again. Check guidelines on lender websites or speak directly to them. Each program differs, but most postpone payments free of penalties.
Ailsa Adam is the Editor-in-Chief and former content head at Hugeloanlender. She has been a valuable member of the content strategy team since 2017 due to her abundant experience in the finance sector. Passionate about helping individuals navigate the world of loans and personal finance, she has dedicated herself to acquiring extensive knowledge on various financial products. Before her role at Hugeloanlender,
Ailsa worked as a seasoned journalist and writer, specialising in creating informative blogs and articles on diverse loan types. She is known for her meticulous research and commitment to delivering accurate and engaging content. She holds a degree in MBA Finance and has a keen interest in creative writing and art.
