Asking Your Lender For Help During Coronavirus Crisis
The COVID-19 pandemic has been devastating in terms of jobs, salary, loans, and repayment plans.
A disruption in your financial situation can have detrimental effects on your ability to pay back your loan.
If your salary was reduced or you were fired from your job, you will most likely not have the available funds to stick to your current repayment plan.
This has put many people in a difficult financial situation, risking their credit scores along with other penalties and fines.
The good news is that many institutions are open to working with borrowers who have suffered due to coronavirus’ impact on the economy.
Here is what you need to know about asking your lender for relief during the pandemic.
Can You Really Ask For Help?
Do not hesitate to reach out to your lender about your options for repayment during this difficult time.
Many people have been negatively affected by the pandemic, so you are certainly not alone in needing relief, assistance, or some flexibility.
Due to the volume of people struggling to repay their loans, it is in the lender’s best interest to work with you and explore a solution that makes both parties comfortable in the interim.
How Can You Qualify For Relief?
It is imperative to understand that not everybody qualifies for automatic relief.
It is a good idea to reach your loan provider to discuss specifics.
Due to the large volume of calls many lenders are experiencing, you may be directed to online chats or other forms of customer service.
Try to talk to someone in person and take detailed notes about your conversation, including:
- The time and date of your conversation
- Who you spoke with
- The details discussed
If you can, ask a representative to send you an email confirming the agreement you have reached so everything is clear and in writing..
Missed payments can have detrimental effects, ranging from calls from collection agencies to a negative impact on your credit report and late fees.
Avoid this by proactively speaking with your lender and knowing precisely what you need to qualify for relief.
How Does Relief Work?
How relief works will largely depend on your lender. Reports of a variety of options have come to light, and some companies are offering the following solutions:
- Waived late fees
- Skipped payments but applicable late fees
- Interest relief
- Charge a portion of the sum you owe
Call and ask about what relief options are available, and do not be afraid to negotiate.
These are uncertain times for everyone, which calls for flexibility on both your part and the part of the lender.
Before you call, have a good understanding of your current situation and what you can realistically handle.
You should also do your research and have a few options to propose to the lender.
One option is to ask that the missed payments be added to the end of the loan, or paid off over time with a repayment plan.
It is important to ask that your loan status be ‘paid as agreed’, as this helps to avoid negative shocks for your credit score.
How Long Does It Give You?
The applicable amount of time for loan relief largely depends on your lender. For example, government-held student loans were put in forbearance until September 2020. Additionally, federally- backed mortgages may qualify for up to a year of relief.
Some lenders are subject to the CARES Act, which requires them to allow affected borrowers up to 180 days of forbearance. After that, the borrower is entitled to request an additional 180 days. Of course, not every lender is going to make all these options clear, so you will need to do some research to understand your rights. This particular forbearance plan applies to mortgages that are backed by federal entities, including:
- The Veterans Administration (VA)
- The Federal Housing Administration (FHA)
- Fannie Mae
- Freddie Mac
- The US Department of Agriculture (USDA)
Most likely, you will receive a few months of relief, but be sure to understand if you can reapply along with collecting any details like late fees or penalties that may be associated with your specific relief plan.
Coronavirus has had devastating effects on people’s ability to pay back their loans.
People with student loans, mortgages, and other kinds of financial assistance are not only concerned about current financial conditions, but also the future.
The positive news is that many lenders are dealing with similar situations, and as a result, they are more open to finding repayment options that will work for you.
Be sure to do your research and understand your finances before you call your lender about relief options.
Do not be afraid to negotiate and be sure all details of your relief plan are crystal clear.
Hopefully, with a little effort, you will find a repayment plan that will deliver some needed flexibility during these difficult times.
Moreover, this is the perfect time to take a deeper look at your finances and learn how to prepare for any financial crisis that could unfold in the future.