What to Do If You Can’t Make Your Loan Payments

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Last Updated:August 30, 2024

What to Do If You Can’t Make Your Loan Payments

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Despite all the stimulus checks and child tax credits doled out, debt is still a big deal. The total U.S. household debt is $17.3 trillion in 2024, a new high for the country. Debt is a huge part of our personal finance and something one should never take lightly.

Unemployment rates are falling back to semi-normal levels—4.1% in June 2024 compared to 14.8% in April 2020—and the Feds keep upping interest rates in an attempt to control spiraling inflation. This can make it tough to pay the bills. If you’re having difficulty paying all your bills or facing delinquency, you should look into a loan payment relief program.

Loan payment relief programs

Many lenders offer loan payment relief, and for good reason. Beyond simple debt forgiveness, loan payment relief programs are often a way for lenders to help borrowers AND themselves. The borrower can make their monthly payments, and the lender benefits from at least some of the repayment, even if it’s smaller than normal.

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Types of loan payment assistance programs

Assistance programs exist for all types of loan borrowers. Help can range from refinancing student loans to mortgage relief for homeowners, debt consolidation for credit cards, and more.

Refinance

Refinancing is usually helpful in making monthly payments more manageable or saving money on interest paid. Homeowners with an FHA (Federal Housing Administration) or VA mortgage loan might be able to refinance to lower interest rate loan. Those with outstanding student loan payments and personal loans can also request a refinance.

Deferment

Some lenders will allow you to pause your payments for a short time, usually one to three months. Interest will continue to accrue while your loan is in deferment.

Forbearance

Forbearance allows eligible homeowners to put a hold on paying mortgages and interest rates for a certain time, say six months. This, however, means past due loan amounts will still be due. However, a flex loan modification program changes the original mortgage terms to keep homes out of foreclosure. Typically, this loan will reduce monthly mortgage payments by 20% for eligible borrowers.

Debt consolidation

If you owe a lot of credit card debt, it might be best to consolidate it into one personal loan. You may save money because interest is generally calculated and applied only once (vs. credit cards, which compound interest daily). If you have a good credit score, you could also consolidate debt with a low-interest home equity loan or home equity line of credit.

Interest and fee waiver

Some lenders waive interest or fees associated with an account that meets eligibility requirements. For example, if you’ve been making your loan payments on time, you are more likely to get a maintenance fee waived if you ask for it.

Loan modification

If you meet eligibility criteria, your lender might be willing to change the terms of your loan. This could mean lowering your interest rate, giving you more time to repay, offering a different type of loan, etc.

Loan repayment options

Sometimes a simple due date change could mean the difference between “I need help” and “I’m doing good.” Call your lender to ask if your loan program offers due date changes or the option to pay in cash at a retailer near you so you can still make payments on time.

Small business relief

The U.S. Small Business Administration (SBA) assists with small business loans. The SBA automatically makes monthly payments for the equivalent of six months of payments. Additional economic assistance may be available if you contact your lender.

Read on to learn about the different companies offering loan payment relief options.

Get a Personal Loan Even If You Have Bad Credit with Bankrate

Use Bankrate to Get a Personal Loan

Get as much as $100,000 with rates starting at 5.95% APR*
Use a personal loan to pay off debt, renovate your home, family needs, and more
Takes minutes to see how much you can get
Doesn't hurt your credit score to check

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Companies that offer loan payment relief programs

If you call them, most financial companies will consider a request for loan payment assistance if you’re experiencing financial hardship. The lenders below specifically listed the assistance they might offer eligible customers. Usually, eligibility requires a solid payment and credit history.

Upstart

Upstart provides alternative payment plans for customers experiencing hardship. This could include fee or penalty waivers, student loan deferrals or reductions, or additional repayment plan assistance.

Read a full review on Upstart.

PNC

PNC details various ways to get help. Personal credit card, auto loan, personal loan, home equity loan, or line of credit customers can apply for their Consumer Loan Hardship Assistance online.

Read a full review on PNC Bank.

PenFed

PenFed’s Financial Hardship Center describes multiple ways they help customers. Help includes payment deferrals, forbearance, or repayment modification.

Wells Fargo

Wells Fargo is offering payment assistance to student loan and personal loan customers. This includes deferred payments for eligible customers. Call 1-800-241-0028 for more details and to see if you’re eligible.

Read a full review on Wells Fargo.

Truist

Truist’s personal loan payment relief guide describes how approved customers may be able to suspend monthly payments temporarily if they’ve lost income or experienced a natural disaster. However, the interest keeps accruing on loans, so that customers will pay more interest in the long run.

Costs

You shouldn’t pay any fees to get loan payment relief. If someone asks for a fee or “tax,” chances are that’s a scam. But as most lenders will probably tell you, loan payment relief doesn’t necessarily save you interest. Interest keeps accruing while your loan payments are deferred, which could add to the life of your loan or your monthly payments once you start paying again.

For example, imagine your loan balance is $10,000 with an interest rate of 10% and a repayment term of 5 years. If you defer payment for only one month, you will add $82 to your loan balance.

Pros and cons

Pros

Save money. Many loan payment relief programs lower your interest rate, lower your monthly payment, or pause your payments altogether.
Reduce stress. If you’re able to reduce debt and save money, you may be at less risk for stress and anxiety.
More time. If you’re able to find debt relief, you can refocus your energies on family, work, or health.
Keep credit intact. If your loan payment relief lowers payments to the point that you can actually pay them on time, vs. being delinquent or defaulting, your credit won’t be harmed.

Cons

Possibility of scams. Con artists may promise you a debt consolidation loan if you pay them a fee in advance. Or a fake credit repair clinic may promise to clean up your credit report for a fee.
Doesn’t always lower debt. Just because a program changes your due date, lowers your interest rate, or delays your payment doesn’t mean your debt disappears.
Complicated. With many federal relief programs, the rules seem to keep changing and it can be hard to keep up with.

Get a Personal Loan Even If You Have Bad Credit with Bankrate

Use Bankrate to Get a Personal Loan

Get as much as $100,000 with rates starting at 5.95% APR*
Use a personal loan to pay off debt, renovate your home, family needs, and more
Takes minutes to see how much you can get
Doesn't hurt your credit score to check

See how much you can get through Bankrate

FAQs

Will missing a loan payment affect my credit score?

Yes, missing a loan payment can have a negative impact on your credit score. If you miss a payment by 30 days or more, it is typically reported to credit bureaus, which can lower your score.

Can I negotiate a new repayment plan with my lender?

Many lenders are willing to work with borrowers to create a modified repayment plan. This can involve extending the loan term, lowering the interest rate, or reducing the monthly payment amount. You can also seek legal advice before you speak with your lender.

Is it a good idea to use a credit card to make a loan payment?

Using a credit card to make a loan payment might not be advisable, as it could lead to high-interest debt if not paid off promptly. Consider other options like negotiating with your lender or seeking financial assistance before using a credit card.

What are the consequences of defaulting on a loan?

Defaulting on a loan can have serious consequences, including damage to your credit score, legal action, wage garnishment, and difficulty obtaining future credit. It's crucial to address payment issues before they lead to default.

The bottom line

If you’re in debt and can’t make monthly payments, you should consider a loan payment relief program. Assistance exists for every type of loan, from student loans to mortgages and personal loans. Just be sure to read the fine print, compare programs, and rule out any possibility of scams. Good luck getting some relief!

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A veteran wordsmith and research nerd, Brittany Wren spent a decade working in higher education where she helped people overcome challenges to chart a path forward. These days, she writes about personal finance, careers, parenting and education. Her content has been published by a wide variety of brands including T-Mobile, Intuit, LifeLock, Reliant Fund Administration and CURO Financial Technologies Corp.

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