Losing your job is a stressful and difficult phase in life. It becomes even more challenging if you have some financial obligations, like paying off a personal loan. If you apply for a personal loan and cannot repay it on time due to job loss, it could lead to a major financial burden in your life. Some serious consequences could be late payment fees, a negative impact on the credit score, and additional interest rates.
However, you can easily come across useful ways to repay your loans even with a job loss. Let us find out!
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Look for Government Schemes
In case you are facing financial difficulties, you can go through different types of financial assistance schemes supported by the Indian Government. These schemes deliver ample financial support along with offering access to training and placement opportunities to help you find a new job. Before applying for such schemes, it is recommended to check eligibility criteria to acknowledge whether you are eligible or not.
Government aids are specific finances offered by the government under specific conditions. Unemployment benefits tend to be one of the most common types of assistance out there. In some conditions, these types of assistance can help you obtain a new source of income as well when you are searching for a new job.
The money that you obtain from such government programs can be utilized to repay debts related to ongoing personal loans. This helps you avoid a loan default.
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Look Into Loan Restructuring
In case you are not able to repay the loan amount after a job loss, you can discuss the possibility of a loan re-negotiation with the lender or the financial institution. Conditions related to debt refinancing depend on altering one or more provisions of the loan agreement when it comes to repayments. This is a great solution if you perceive a long-term financial problem due to job loss.
You have the option of increasing the length of the loan repayment period. This is known as restructuring. One of the best ways to repay the loan amount is to extend its period such that the payments will be expected at a later time with low incomes.
However, you should be aware that such conditions can imply a higher interest rate in case your loan is spread out over a long period. Therefore, you should consider both the pros and cons of this strategy before you make a decision.
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Seek Financial Advice
If you are finding it difficult to manage your finances after losing your job due to any circumstance, you can seek assistance from an experienced financial advisor. You can consider talking to a financial consultant such that the person is able to design a way through which your expenses can be delayed or controlled. The expert in the field can also help you plan out how to repay the personal loan amount easily, even when you do not have an ongoing job.
A debt counselor can help you design a proper budget to repay your ongoing debts. You can discuss this with the lender to obtain better conditions for repayment of your personal loan amount. A financial advisor can help you in more ways in addition to budgeting and debt counseling. Experts can also help you design a well-formatted financial plan that reflects your reduced income while allowing you to repay the loan and manage other day-to-day expenses.
When you have access to a well-formulated strategy, you can successfully manage your finances, even without a proper job.
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Look for Alternative Sources of Income
As you keep looking for a new job, it is practical to look for additional sources of income that would help cover your loan installments. If you are forced to take up a low-paying job or a part-time job, you will at least have something to depend on to ease the pressure. You can look for part-time jobs to repay the loan amount after your job loss.
For instance, freelancing is a great opportunity if you have marketable skills. Whether the job is about writing, designing, consulting, or programming, freelancing enables you to work as a freelancer based on your schedule.
Self-employment also offers immense opportunities when it comes to making a living. Some of these jobs can include driving people for Uber or even delivering food for online food ordering platforms. These options offer money instantly without any fixed working hours.
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Do Not Take Additional Debt
Most of the time, during such pressing moments of financial volatility, you might consider borrowing more money to repay your debts after a job loss. However, this mechanism drags individuals into a cycle of loans or debts that become difficult to repay. You are advised to control your ongoing debts. Even if you have to take more, be extremely careful about it.
When you ensure discipline in taking on additional debts, it makes sure your additional stress is reduced on financial grounds. If you have to use credit to meet day-to-day needs, be extremely careful about it. Take debts only that you can easily repay. Always avoid taking up high-interest loan amounts or uniquely priced credit cards.
Be cautious about specific conditions that are stated while issuing a loan. Give preference to loans that offer a lower interest rate along with the ease of repayments.
Conclusion
Losing a job can be a significant financial setback, but it’s important to stay proactive and take steps to manage your personal loan repayments. You can surpass this challenging period by communicating openly with your lender, exploring options like loan restructuring or moratorium, and seeking additional income sources.
Remember, seeking professional financial advice can also provide valuable guidance and support. With careful planning and determination, you can overcome this hurdle and regain financial stability.