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If you've been financially impacted by COVID-19—as millions have—you may be worried about how you're going to pay all your bills. In response to the crisis, many companies have enacted new assistance policies and are working with customers to find manageable solutions.
Your personal loan lender may also offer assistance, possibly in the form of payment deferrals or reduced payments. Read on to learn how these programs work and how to qualify.
What Types of Assistance Do Personal Loan Lenders Offer?
Assistance programs won't forgive your debt, but they can make it easier to manage your bills without paying extra fees or hurting your credit. Personal loan lenders' assistance programs may offer:
Deferred Payments
The most common option from lenders appears to be loan deferment, which allows you to temporarily pause your payments. Lenders are generally offering an initial deferment for one to three months, although you may be able to apply for an additional deferment if you still can't afford payments when that ends. Interest will still accrue on your loan while it's in deferment.
Lenders will then add your missed payments to the end of your loan's term, extending your total repayment time. If you'd prefer, you may be able to repay the missed amounts early.
Reduced Payments
Rather than completely deferring your monthly payment, you may be able to temporarily make a lower monthly payment or interest-only payments. The unpaid portion will be added to your loan amount and extend your repayment period.
Waived Fees
Lenders may additionally waive certain fees associated with your account, such as the late payment fees that would otherwise be charged when you miss a full payment. If you've already been charged a fee, you could ask for a refund (although lenders aren't required to offer one).
Also ask about additional fee waivers if you have a personal loan from a bank or credit union where you have a checking or savings account. For example, you might be eligible for waived monthly or maintenance fees on those accounts.
Applying for Assistance
Some lenders have online apps you can use to request assistance after logging into your account. Others ask that you call their customer service department to discuss your circumstances and options.
Creditors may also require proof that you're dealing with a financial hardship. This proof may be a copy of a termination letter or correspondence notifying you of cut hours or reduced wages.
Bank and Personal Loan Lender Assistance Pages
Many lenders have created a page or blog post about their COVID-19 response and how you can contact them to request assistance. They may also provide examples of the types of assistance they offer, but you generally have to submit a form or call customer service to inquire about your specific eligibility and options.
How Can Assistance Programs Impact Your Credit?
The Coronavirus Aid, Relief and Economic Security (CARES) Act requires creditors to continue reporting your account as current as long as it was in good standing when the assistance (called an "accommodation" in the act) was put in place. The rule will continue to apply until 120 days after the national emergency declaration ends.
If your account delinquency predates these assistance programs, or your account becomes late and your lender hasn't granted you assistance, creditors can continue to report your payments as delinquent, which can hurt your credit. However, if you pay the past-due amount and you bring it current—which may be easier if you don't have to make monthly payments—then the creditor will need to start reporting your account as current.
Staying in Control of Your Finances During a Crisis
You can learn more about financial assistance programs and managing your credit in these posts:
- New Unemployment Benefits Under the CARES Act Stimulus
- How the CARES Act Stimulus Can Help Your Small Business
- COVID-19 (Coronavirus) Credit Card and Debt Relief
- Protecting Your Credit During the COVID-19 (Coronavirus) Crisis
- How Does a Natural or Declared Disaster Impact My Credit?
The CARES Act offers automatic payment suspension on certain federal student loans and expands forbearance policy on federally backed mortgages.
Additionally, Experian, TransUnion and Equifax are giving U.S. consumers free weekly credit reports through AnnualCreditReport.com. If you want to monitor your credit score and report, you can also get free credit monitoring and FICO® Score☉ tracking from Experian.