In part because of their flexibility, personal loans are a popular credit product. Now, with millions of people out of work or with reduced hours, many are struggling to make payments. Wave nine of our Consumer Financial Hardship Study showed that nearly one in five of all financially impacted Americans are concerned about their ability to pay their personal loans. These loans don’t have the same protections as federally backed mortgages and student loans through the CARES Act. However, your lender may have a financial hardship plan available.
What lenders are offering
No matter the loan type, financial hardship plans vary by lender. We researched 10 major personal loan lenders and found that several are offering personal loan payment deferrals of at least 30 days. On a case-by-case basis, some allow deferred payment extensions beyond 30 days. We also found lenders who are agreeing to waive late fees. Specific terms of plans may differ by lender, but it’s encouraging that most of those we researched are offering some sort of financial accommodation for customers who need it. Our study backs this up: a quarter of all Americans with personal loans are enrolled in a financial accommodation plan.
Understanding your personal loan hardship plan
Your lender may give you the option to sign up for a financial hardship plan online, while others may require you to call. Either way, it’s important to fully understand how your temporary plan will work. Make sure to ask when your next payment is due. You’ll also want to ask if you’ll be charged any fees for skipping payments or modifying your loan. If you have automatic payments scheduled, find out if you need to pause them manually until the deferment period is over. You may also want to consider making partial payments if your household budget allows and the lender agrees. Deferring or skipping payments doesn’t usually mean they’ll be forgiven, so be aware of how your lender expects you to pay them back.
It’s also useful to ask your lender how any deferred or paused payments will be reported to the credit reporting agencies. For example, your lender may add a natural disaster code to your account. Once you know how lenders will report your hardship plan, check your credit reports to confirm it’s being reported accurately. You can check your credit reports for free every week through April 2021, though you may not need to check them that often since many lenders don’t report more than once a month.
Since every lender and product is a little bit different, financial accommodation plans can seem confusing. But don’t let that stop you from reaching out for help. When missed payments are reported on your accounts, it can hurt your credit. One call to your lenders may help you protect the credit health you’ve worked hard to build.
There are similar accommodations for other credit products you may have. Read the blogs below for more information on hardship plans for other types of loans: