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Article
5 Effective Ways to Avoid Loan Delinquency
Falling behind on loan payments can be stressful. Even one missed payment can be unsettling since it can result in interest charges, late fees, and a lower credit score. But it’s possible to get back on track and avoid loan delinquency by earning extra money or redirecting existing income at the first sign of trouble. Use these tips to help regain control of your finances.
Did you know?
Late payments are those made after the due date but within 30 days. Accounts are often marked as delinquent if a payment is more than 30 days late. Review the terms of each loan for details.
Speak with your lender
Some lenders offer hardship assistance for borrowers facing financial challenges, but these options are most effective when discussed before payments are missed. Contacting your lender about payment concerns shows responsibility and often leads to workable solutions that can help you avoid delinquency. You might be able to skip a payment without penalty or temporarily lower your payments to give your finances time to recover.
Trade time for money
Leverage your professional talents to take on freelance work, such as graphic design, during your off-hours. The additional income can help bring your account up to date and prevent future missed payments. Even without specialized skills, there are opportunities to earn extra money by driving for rideshare services like Lyft, or delivering food with apps like Uber Eats and DoorDash. Or, if you love animals, you might earn an extra $200 to $300 a month offering dog walking services - enough to cover a typical credit card or personal loan payment.
Rent personal property
If your day job and family obligations do not allow for a side gig, you still have options. Your vehicle, parking space, recreational equipment, or professional tools could be valuable rental items for others who need temporary access without the commitment of buying. Research leasing platforms like Turo for your car, Neighbor for your storage space, or ShareGrid for professional equipment. Renting your car, garage storage space, and other items could provide steady income to help prevent loan delinquency.
Resell retail items
Can you tell the difference between a sweet clearance deal and a discount dud? Then you might profit from retail arbitrage, which involves buying products at low prices and reselling them at higher ones. Use your savvy shopping skills to find these items and list them at online marketplaces like Facebook Marketplace or Amazon. Your profit depends on the difference between your purchase and selling prices after subtracting shipping and processing fees. Apply the earnings to your loan balance.
Increase financial literacy
Understanding concepts like interest rates, payment terms, and budgeting strategies empowers you to take control of payment challenges before they become serious issues. Access free financial education resources through your credit union. They might offer articles, videos, and financing calculators along with digital resources that let you set automatic alerts for bill payments and account balances.
Using one or more of these resources might encourage you to reduce a daily coffee habit from $5 to $2, which frees up $90 monthly, potentially enough to prevent delinquency.
Credit Union of Colorado members experiencing financial difficulty are encouraged to speak with our Member Solutions Department at 800-444-4816. Our trained representatives can discuss your options and offer solutions based on your specific situation.
