10 Tips for Repaying Personal Loan After Job Loss

Losing your job can be a difficult and stressful experience. It is even more challenging when you have financial obligations to meet, such as paying off a Personal Loan. Unfortunately, if you are unable to pay your Personal Loan due to job loss, it can lead to serious consequences such as piling late payment fees, additional interest rates, and a negative impact on your credit score. 

Thankfully, there are ways to repay a Personal Loan when faced with job loss. This blog lists 10 of them. Read on!

10 Tips to Repay Personal Loans When Faced With Job Loss

Here are the top 10 tips that will help you repay your loans amidst a financial crisis:

1. Explore Government Schemes for Financial Assistance

If you are experiencing financial difficulties, you can explore financial assistance schemes provided by the Indian Government. These schemes offer financial support, placement, and training opportunities. However, first check the eligibility criteria for these schemes to see if you qualify for them.

2. Communicate Your Situation to the Lender

As soon as you are unable to pay your Personal Loan EMIs due to job loss, you must communicate your situation with your lender. An honest and clear conversation with your lender can help you explore possible options to repay your loans. Your lender might offer available alternatives, such as an extended loan repayment period to help you manage your financial burden.

3. Request for Loan Restructuring

Loan restructuring allows you to redraft the loan’s existing terms and conditions. You may check loan restructuring possibilities with your lender. It can help you with an extended repayment tenure or reduced monthly instalment requirements. However, the decision for eligibility depends on your lender. If approved, this strategy can help you deal with your financial crisis until you get a new job.

4. Request for Loan Moratorium

A moratorium is a grace period given by a lender where you need not pay any EMIs. You can request your lender to offer a moratorium period when you are facing a financial constraint. After carefully evaluating your payment history and other eligibility, your lender may approve your request for a loan moratorium.

5. Consider Balance Transfer

Balance transfer helps you transfer your outstanding loan amount to a new lender. If you have a good credit score, a loan balance transfer can help you access better loan terms with lower interest rates. This strategy will help you decrease the monthly payment requirement and the overall burden of interest. 

6. Look for Alternative Income Sources

During job loss, you can look for alternative income sources. You can search for part-time opportunities through online platforms to generate cash flow. Freelancing can also become an excellent option for managing your finances and debts. These alternatives can help you until you get a job or have a permanent solution.

Also Read - Loan Repayment: Meaning & Types of Loan Repayment Methods

7. Seek Help from a Financial Advisor

A financial advisor can help construct a tailored repayment plan while offering valuable insights into debt management and exploring possible solutions. Moreover, the advisor can guide you about the latest market changes, helping you navigate unprecedented and complex financial challenges.

8. Liquidate Your Investments

One way to quickly generate cash that can help you sustain for a while is by liquidating your investments. This can provide you with extra funds that can be used to mitigate your current financial crisis. Additionally, you may consider pausing any monthly SIPs to reduce your monthly cash outflow and manage your expenses more effectively. Before selling off your financial assets, you must analyse your portfolio and identify the assets that can be easily liquidated with the least potential losses. Avoid liquidating long-term investments.

9. Avail Loans Against Assets

Getting a loan against your assets can be beneficial in managing your debts during unemployment. You can get loans against fixed deposits or property. This option can alleviate your financial burden until your financial stability is restored. However, you must carefully assess the repayment conditions and loan terms before taking out such loans.

10. Review the Monthly Budget

Reviewing your monthly budget can help you identify areas where you can cut expenses. You should effectively differentiate between ‘needs’ and ‘wants’. Consequently, prioritise only the necessary monthly expenses while allocating sufficient funds to cover obligations. This will help you to save money for loan repayments.

Also Read - How to Plan Your Personal Loan EMI Repayment Better

To Conclude

Navigating through financial turmoil when you are unable to pay Personal Loan dues to job loss can be daunting. However, you can find your way back to financial stability by leveraging Government financial assistance schemes, communicating openly with your lender, restructuring your loan, exploring additional income sources, and wisely managing your finances. Remember that taking proactive steps and making informed decisions can help mitigate the stress and burden of loan repayment during challenging times.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Personal Loan disbursal is at the sole discretion of Poonawalla Fincorp.
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