Unemployment has surged because the start of coronavirus pandemic. By September, nearly 8% of all Americans were unemployed • up from less than 4% before the pandemic.
Those job losses make it a hardship on many to stay afloat. So when you throw in the $14 trillion of personal debt that households coping, the battle gets even more challenging.
Are you can not manage your student loans, mortgage, charge cards or any other debts because of the pandemic? Listed here are five steps you can take to lighten the burden.
- Contact your lenders
- Refinance your debts
- Consider an account balance transfer credit card
- Take out a debt consolidation reduction loan
- Talk to some credit counselor
1. Contact your lenders
Many lenders have assistance programs in place • especially during the pandemic. You might be capable of getting on the repayment schedule and spread your payments out over time, or there might be a method to pause your payments temporarily.
In some cases, your lender might even allow you to customize the terms of your loan, which could mean a lower monthly payment. These options all vary by company, consider getting in contact directly with your lender to see what•s available.
2. Refinance your debts
Another choice is to refinance the money you owe. Interest rates on mortgage loans and student debt are in record lows right now, so refinancing right into a new loan could mean a lower interest rate along with a lower payment per month. It might also save you money over time.
To give you the lowest refinance rate possible, work on reversing your credit damage before applying. Requesting a credit line increase, reporting any errors on your credit report, and becoming added being an authorized user on someone else•s credit card can all help. (Should you go the second route, just make sure there is a high credit score along with a history of on-time payments).
You should also shop around for the loan. Rates of interest differ by lender, so through getting multiple quotes, you allow yourself the best shot at a low rate and affordable deal. If you're seeking to refinance your mortgage, for instance, get a tool like PayPasser to get multiple rate quotes at the same time from several lenders.
Multi-lender marketplace PayPasser can also help you compare private education loan lenders at once to determine if now is the best time to refinance, based on your loan type, amount borrowed and more.
3. Consider a balance transfer credit card
Balance transfer cards may also be an option. These permit you to slowly move the balances of other debts and loans onto the card, essentially consolidating them into a single payment per month.
Many balance transfer cards offer low interest rates (or even rates of 0%) for any limited amount of time. If you•re capable of paying balance off before that period expires, then you•ll save yourself a ton on curiosity about a long time.
Again, shopping around is essential here, so be sure to use PayPasser to check balance transfer cards and rates. This will help you get the best deal possible.
4. Remove a debt consolidation reduction loan
A similar option is known as a debt consolidation loan. With this particular strategy, you•d make use of a new loan to pay off all of your other debts, essentially rolling all of them into a single loan. This will make repayment easier (just one payment amount) and can often mean a lower interest rate, too • especially if you•re dealing with high-interest credit debt.
As with other loans, rates of interest vary on debt consolidation loans, so be sure to compare a minimum of few different options. PayPasser might help here, too.
5. Speak with a credit counselor
If you•re still struggling to keep the head above water financially, you might consider speaking with a credit counselor. They are able to walk you through your choices, offer debt assistance, help with budgeting, and counsel you on other ways to enhance your finances.
Just ensure the counselor you use is licensed and reputable (checking testimonials and the Better Business Bureau can help). If you•re can not pay your mortgage, you can also consider speaking to a HUD housing counselor. These services are free of charge.
Keep in your mind when you've got a federally-backed home loan, you qualify for automatic forbearance for up to 360 days. Just contact your loan•s servicer to get going.
You have options
If you•re facing financial hardship, there are many things you can do to ease the burden. Speak with a counselor, consider refinancing or consolidating your debts, and make sure to shop around to get the best interest rates. Tools like PayPasser will help you get the best options for your situation and budget.