Knowing how to repay a loan back on time is an important skill that many people need to learn. It is easy to think that is something that we are all born with but learning how to manage money is one of the most important skills that you will need to be able to learn. Sometimes, you can find yourself in a situation where you have borrowed money and you cannot repay the loan back on time. This is the perfect advice guide for you on how to fix this problem once and for all.
Borrowing from friends & family – How can you tell them you are in difficulty?
If you have borrowed from your family, you should automatically approach them and let them know that you do not think you are going to make your loan repayment back on time. You should also have a plan of how you can repay the money such as making small payments every week. This also depends on your money personality: people who are not good with managing money should try their best to send loan repayment money every week. Depositing money online is a good place to start but it also can sometimes feel like you have not really made a loan repayment. A good idea instead is to pick one day out of the week where you take money you have saved for the loan repayment and go to the bank physically yourself to deposit the money. You will get a receipt and this will give you a sense of achievement that you have repaid money back to the people who lent you the money.
If you have borrowed money from family members, don’t stay silent. Approach them early and communicate properly to highlight that you are in financial difficulty. They are your family, they are emotionally connected to you so they will want to help you figure out how to make your repayments.
Borrowing money from friends requires a different approach. In most cases, you should avoid it entirely and just approach a consumer credit company instead because they are able to give you the credit you need. You will keep your relationships with your friends in tact this way and you won’t jeopardise how they see you.
The most important thing in dealing with family or friends when borrowing money is being honest with your current financial situation. Don’t hide it from them and let them know that you do not think that you will be able to repay them on time. You should still look for financial solutions to this such as selling items or finding an extra part-time job so that you can earn money to pay them back.
Keeping your relationships safe from the emotional stress from borrowing money should be one of the things that you do if you decide to borrow money from friends and family. A better way to avoid this emotional stress is to simply avoid friends and family as a source of cash and to use direct lenders instead.
Borrowing from a direct lender
If you have borrowed money from a direct lender, and you are not able to repay your loan on time, you should contact your direct lender immediately. The benefits of doing this is they can help you come up with a concrete plan on how to make your repayments on time.
Some borrowers get into problems with their loans when they forget about them or when they bury their head in the sand. If you do this, then you will start to get financial problems, and it will be even harder for you to make your repayments on time.
Communication is key and you must do everything you can to tell your direct lender everything that is going on with your personal finances.
How to solve failing to repay a loan back on time
Follow our top tips so that you can repay your loans back on time without running out of money
- Create a written plan on how to repay your loan: You should get your hands on a notebook and write down a plan on how to repay your loan if you have missed payments. The problem with missed payments is that they can cause late fees to be levied on your loan. If you are struggling to repay a loan, you will have an even harder time to pay off additional charges. Your plan should be followed with an absolute focus and do not stray from the plan. Once you have repaid your loan, you can go back to how you were living your life.
- Don’t borrow to repay another loan: Do not borrow more cash to repay a loan that you have. You should approach your lender to create a repayment plan that you can work with. This is a better way to pay down your debts because it will help you avoid paying for another loan.
- Make changes to your budget: It’s important to make changes to your budget if you are behind on making your loan repayments. You can cut down on your spending and one of the best ways you can do this is by going to eat out less.
- Don’t have many loans: Don’t have a revolving door of loans in your personal finances. If you fall behind on one loan, and then you are struggling to pay repayments on other loans, this can make you feel like you are drowning in loan repayments. Only have one loan to repay at a time so that you can avoid falling into financial problems.
Ultimately, failing to repay a loan back on time can create serious hardship for you especially if you do not face this problem head on. Always stay in touch with your direct lender if you fall into financial problems so that they can help you make your repayments. Repaying a loan back on time is critical to ensuring that your credit report is stable.