How to Avoid Defaulting on a Personal Loan?

Thinking about a personal loan? Before you do, make sure you read this entire article know all the facts. There could be a ton of reasons why you might need a personal loan. It could be for something new and exciting like a car or vacation. It could also be for some unplanned emergency expense that you do not have the money to pay.

Not all reasons for needed a loan are happy ones, but no matter the need, the same considerations need to be made by you. You should enter into a loan agreement thinking that you will do anything to avoid defaulting on a personal loan. No one wants to be in default. That is a scary position in which to find yourself. Keep reading to find out how to avoid falling into default on a personal loan.

What Is A Personal Loan?

In order to help you to avoid defaulting on a personal loan, it is important to understand what is a personal loan. In the simplest definition, a personal loan is money that a lender allows you to borrow. The lender charges you interest to allow you to borrow the money. The interest rate a lender offers you is directly related to your credit score.

You promise to the lender that you will make regular monthly payments per the terms of your agreement. Typically, a personal loan is paid back in three to five years. I mentioned some key words that you want to remember. They are important and I talk about them again later in this posting. Those words are interest rate, credit score, and regular monthly payments.

You can do just about anything with your personal loan once approved. A lender typically asks your intention for the money. Typically, the lender does not base your approval on your reason for needing the money. People have used personal loans to pay for weddings, houses, home repair cost, or a new wardrobe. You can use a loan for anything you can imagine.

Keep in mind that just because you can, does not mean that you should. A lender may agree to approve you for a loan, but that does not mean you can afford the loan. Your budget should play a key role in making the decision to get a consumer loan, which is another name for personal loan.

Are There Different Types of Loans?

There are many different types of loans available to you. There are also many different loan places in which you can obtain a loan. Make sure you read and understand all of the fine print when agreeing to the terms of your loan. A lender must disclose all of the fees and charges in their agreement with you. It is up to you to read the agreement. There are traditional loans that you find at a bank. These types of loans may have slightly lower interest rates, but you must go into the bank to apply. A loan office must fill out the paperwork with you.

These loans tend to take a little longer process. Not as long as they used to as the process has become much more streamlined. For those who have no interest in going into a bank, online loans are available. As the name states, these loans are available completely online. You fill out the application and upload any documents all on the same website. You do not have to interact with a person. These loans typically have higher interest rates. Not that long ago, they were only for those with bad credit. That really is not the case anymore.

Another type of loan is a payday loan. This loan is different because is it intended to be short term. You borrow small amounts of money with the expectation you pay it back in a short amount of time, like two weeks. Your credit is not a factor for payday loans. The only thing they care about is your income. No matter what way you obtain it, you want to avoid defaulting on a personal loan.

Online Lenders

When it comes to online personal loan lenders, you must be cautious. Some online lenders are looking to scam borrowers. They are looking for people in vulnerable places to get more money out of them. You can avoid falling into this trap by arming yourself with knowledge. Research any potential lender and find out all you can about them. Your lender should have credentials to lend money in your state. Make sure that any lender you use has the appropriate credentials.

You can also use Loanry! We connect you to reputable lenders quickly and efficiently. By filling out this form below, you allow us to research the database and find unique offers suitable for your situation.

What Does It Mean To Default On A Loan?

Defaulting on a personal loan essentially means that you are not paying on that loan. However, lenders seem to have different ideas of what defaulting truly is. In some cases, you miss one payment, and the lender says you are in default. Other lenders wait until you miss a series of payments, two or three, before they claim you have defaulted on your loan.

What Does it Mean to Default on a Personal Loan?

It is important to understand how your particular lender views default so that you can avoid defaulting on a personal loan. Once a lender considers you to be in default, they hold nothing back in getting their money. Trust me, a lender always gets their money. Once you have fallen into default, the lender has a few ways to handle it. Typically, the first thing that happens is the collections letters and calls. At first, it is directly from the lender.

Eventually, the lender may decide to sue you or turn you over to a collection company. When your lender turns you over to a collection company, the lender has basically sold your debt to the collection company. They got much less money than what you owe them, but they got some money and they write off the rest. The collection company, however, is relentless. Believe me when I say they do not care about you. Their only focus is getting their money back. Remember, they just paid the lender for your loan, so they basically paid to harass the money out of you. It is not fun being on the other end of that.

If you can, I suggest you settle with this company. Depending on the company, they may be willing to work with you on a settlement amount. If this does not happen, you may end up in court anyway.

Can I Be Sued If I Default On A Loan?

As I mentioned above, yes you can be sued. You should avoid defaulting on a personal loan at all costs. Depending on the amount of your loan, if it is small enough, the lender may write it off. If it is a large amount, like a mortgage, someone is going to sue you. It may either be the actual lender or the collection company that sues you. In addition to being sued, the property, in the case of a mortgage, is seized, so you lose your house.

If you choose not to go to court, the court will issue a judgement. That judgement could include garnishing your wages, taking money out of your bank account, and sending a sheriff to your home to seize your personal property to pay the money that you owe. A sheriff knocking at your door is not that likely, unless you owe a lot of money and you have a sizable amount of assets in your home. The court may require you to disclose that assets that you have. Bottom line, show up in court.

If you show up in court, you have the opportunity to work with the collectors and come to some agreement on payment. Together you may be able to come up with a payment plan. Often times, when in court a collector is more agreeable to payment plans. When dealing with you directly, they may not be as willing to negotiate. In court, however, it is different. If the court see that you are attempting to make payments and the collector is not allowing you to do so, that reflects badly on the collector.

Can I Go To Jail For Defaulting On My Loan?

If you are the average run of the mill person who defaulted on a personal loan, you are not going to jail. You should still avoid defaulting on a personal loan, no matter what. However, you do not have to fear going to jail. Although you may be put throw the ringer by the lender or a debt collector. Someone in your position is not going to end up in the slammer. Now, if you have committed some type of crime and there was some type of debt as a result. A real life example of that is a financial advisor taking some money off the top of all his clients investments. He now owes money to all of those people, but he has also committed a crime because he stole all their money.

The real reason he is going to jail is because he was stealing money. There probably was a time hundreds of years ago where people would go to jail for not paying their debts. Those same people would also have their hands cut off for stealing. We have come a long way since then!

I Do Not Think I Can Pay My Loan; Now What?

Here is the thing, if you know you are getting into a place where you cannot pay your bills, reach out to the lenders. Believe it or not, many lenders are willing to work with you to get you in a place where you can pay them. They want you to avoid defaulting on a personal loan, too. Their bottom line is at stake here. If you are honest and contact them, they may work with you. They might be willing to let you skip paying them for a month. They may be willing to take half of the payment you owe them for a few months.

By entering into this agreement, you are promising to pay the amount you agree upon. You are also promising to begin paying the regular payment amount on a specific date. Keep in mind, they are not writing off the amount you are not paying them. They are adding it on to the back end of your loan.

Lenders know that working with you is a better option. They know if they accept a little less money now, you may be able to get back on track and pay them what you owe them. They understand that things happen and sometimes you might find yourself in a jam. Truthfully, the best way to handle this is to be upfront. I know it may seem embarrassing. I know it may seem like you are begging them. You may have to get over that feeling to do what it is your best interest.

Is There Any Way To Protect Myself From Defaulting On A Loan?

As I stated above, if you know that you are getting into a position where you are not going to be able to pay your loan, you should ask your lender for help. However, there are ways to avoid defaulting on a personal loan all together. I understand that things happen and we all find ourselves in an emergency situation. Once you find yourself in the situation, it may be hard to get out of it, especially if you have a lot of bills.

Smart Money Tip!

The best way to avoid this is to not get into this situation. Before you apply for a loan, determine if you really need the loan. Are there other ways to get extra money? Is it possible for you to get a part time job to cover those expenses. Can you borrow money from family or friends, so that you do not have to go to a lender.

There may be other options. You should consider all of your options and applying for a loan should be one of the last options.

Understand Your Budget

Earlier I mentioned that there are many things you should consider before applying for a personal loan. One of the things you need to take into consideration is your budget. You should not take out a personal loan that you cannot afford to repay, thus avoid defaulting on a personal loan. It is important to understand your budget before jumping into a loan.

You should consider using a budget application to get a handle on your finances. With the help of an application, you can list out all of your budget expenses, line by line. This allows you to take a look at all the ways you are spending money. It also helps you see all the ways you are wasting money.

It gives you an indication of where you may be able to reduce your expenses. Do you have a gym membership or magazine memberships that you are not using? Now is the time to cancel them. Do you have a habit that you can cut out of your budget? Maybe you buy coffee every day. You can make coffee at home and save yourself a lot of money. This may also be the time to cut out a bad and expensive habit, such asCLICK IMAGE: Learn about Budgeting for A Personal Loansmoking. You can save a significant amount of money by breaking that habit.

Take a look at your income

Once you see all of your expenses and cut the expenses where you can, you have a good idea of the money you are spending. Once you have done that, you can take a look at your income. Then you can see the difference between how much you bring in and how much you spend. That also lets you know how much is left over after all your existing bills are paid. Once you know that amount, you should not apply for a loan that is more than the amount you have left. If you do, you are putting yourself in a terrible position, one where you are taking on a loan that you cannot afford.

Why Does Interest Matter?

Interest plays a large role in the amount of your personal loan. It can increase the amount of your personal loan to a place you cannot afford. Learn as much as you can about interest rates to avoid defaulting on a personal loan. You should think of interest as a charge from the lender for allowing to borrow money. The amount of the loan you borrow is considered the principal amount. The lender adds interest to that. The interest associated with your loan is a reflection of your credit score. The better your credit score than the lower your interest rate will be and the less money you end up paying.

There are a few things, other than your credit, that impact the interest rate you receive. Interest rates change, but only some rates are set by the Federal Reserve. Personal loan interest rates are usually set by the lender. They issue a benchmark rate, which is what the banks use when lending money to each other. This is also the rate off which they base their own interest rates. They know they have to be competitive and smart about the rates they set. They want their customers that have money collecting interest in their banks to receive the most value. This is how they keep them as customers.

They also know they have a lot of competition and have to keep their loan rates at a reasonable amount. It is important to have basic knowledge about loans and understand how they impact you. Remember, interest is what is added to your principal loan amount. A lender determines what interest rate to charge you based on your credit score.

What Does My Credit Have To Do With It?

I keep mentioning your credit score, so let me tell you why it is important. As I have mentioned a few times, your credit score directly impacts the interest rate you receive. Your credit score may seem like an insignificant three digit number, but it is a huge deal. Your credit score is prominently displayed on your credit report. Your credit report is a detailed listing of all of your activities involving credit. It shows your payment history, how much debt you have and how you use it.

It shows the age of your credit. It shows all of your late or missed payments. It even shows loans on which you have defaulted. All of these items listed on your credit report impact your credit score. It is built, or destroyed over time and gives lenders an indication of your credit worthiness. It takes hard work to build your credit score. However, it only takes one or two missed payments to send it downward.

Typical credit scores range from 350 to 850. A perfect score of 850 is difficult to achieve. Most people have a credit score somewhere between 600 to 750. Good credit falls somewhere between 670 to 800. Anything below 570 falls into the danger zone of bad credit. When you have bad credit, it is much harder to get a good interest rate. You may find it is difficult to be approved for a loan. Lenders feel those with bad credit scores are not able to avoid defaulting on a personal loan.

Should I Consolidate My Debt?

Consolidating your debt may help you avoid defaulting on a personal loan. When you consolidate your debt, you are taking all of your individual debts and creating one large debt. This requires taking out a personal loan large enough to cover all of your combined debts, or using a debt consolidation firm. There are some obvious advantages to this. You are able to focus on one payment, instead of many different payments.

You may be able negotiate a lower interest rate on the new loan than what you are paying on your other debts. Right now, you may only be able to pay the minimum payment, which does not help you pay off the actual debt. Consolidating your debts allows you to chip away at bigger pieces of your debt. If you feel like you cannot make any of your payments, debt consolidation may help you avoid defaulting on a personal loan.

Is There A Negative Side To Consolidating My Debt?

As with anything, there is no guarantee that you can avoid defaulting on a personal loan by consolidating debts. Debt consolidation is not for you if you are trying to avoid defaulting on a personal loan. It only helps if you have multiple bills or loans that you are trying to combine together. It will not be much help if you only have one loan. Often interest rates are higher for debt consolidation loans. You may wind up paying a high amount for your monthly payment. You should keep in mind that debt consolidation is not quick. It will still take you a long time to pay off your debts.

Not all debt management and consolidation programs work in your best interest. Forbes magazine lists many debt consolidation programs that you should avoid. Some of them will make no payments on loans and credit cards while trying to negotiate with them. This can negatively impact your credit because it is seen as you missing payments. It does not matter that you have a company trying to negotiate a better deal for you.

One of the major cons to debt consolidation is it gives you the feeling that you have paid off your debt. Your credit card balances are zero and your other loans are paid. However, you still have a major debt to pay. You can run the risk of beginning to use your credit cards and racking up large debt again. If you choose to consolidate your debt, you must be careful not to fall into the trap of using your credit cards again.


The best way for you to avoid defaulting on a personal loan is to carefully consider every loan and credit card you use. If you have a clear understanding of your budget and your finances, you can spend wisely. If you know what you can afford and you do not live about that, you should safely stay out of the danger or defaulting on loans and impacting your credit. Emergencies come up and we cannot avoid them. However, you can be smart and do your best to prepare for them. You can take a look at your budget today and make cuts to help improve your finances. It is never too late to take control.


What is a Secured Loan and Are You Secure?

In the last couple of months, my family has run into what seems like every financial roadblock possible. Though we work hard to keep our heads above water, there are times that there is nothing more that we can do to prevent some financial problems. More times than I care to count, we have found ourselves considering loans and how they might help us improve our lives, even if it is just to ease the burden for a moment.

As much as I wish it were not true, we are not alone. Financial stress and difficult times seem to affect a lot of people, and they always have. Why else do you suppose there are so many available loan options and lenders? It would not be such a large industry if only a few people needed it.

While there is no shame in needing help, loans tend to be a bad move for many people. From my experience, I believe that is because many borrowers do not necessarily understand the loan that they are receiving, do not understand the different loan options, and sometimes because they simply cannot repay it.

At times, borrowers are not even sure what they need to apply for, and this is often due to a lack of clarity on the numerous terms and what all of these loan options really are. I have quite a few friends that have complained that the loan industry is an overwhelming and confusing place. If you have ever tried to navigate it blindly, you can most likely relate.

We want to make sure you have all the clarity you need to make good financial choices, so we put together this little guide on one type of loan that many have heard of but few fully understand secured loans.

Everything You Should Know About a Secured Loan

A secured loan is a loan for which you temporarily trade ownership of something, i.e. collateral, in exchange for the borrowed money. The lender requires collateral for secured loans so that if you do not pay as you should, they have the right to sell your collateral. This prevents them from risking much more than the time it will take to repossess and sell the item.

A secured loan is not always as handy as an unsecured loan, as you will see as you read through this article. They require extra paperwork, extra consideration, and often extra time. In addition, the borrower is not always receiving the full amount of said loan. Secured loans do have their purpose and place though, and they have helped many a borrower improve their financial state. They provide an avenue of borrowing for people whose credit history and score block all other ways.

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What Type of Credit Score Do I Need to Be Approved?

In short, pretty much any score. The beauty of a secured loan is that, generally speaking, your credit will not prevent you from getting approved. While lenders differ in their requirements, your credit score is often one of the lowest factors in a secured loan credit decision. The collateral you can provide and your ability to repay are much bigger factors. If you have some type of collateral that is valuable, which we discuss shortly, you will likely have no trouble locating a lender.

Though it is usually not a big factor in the approval decision, a secured loan with bad credit might affect your interest rate, loan repayment terms, and the collateral required. The lower your credit score, usually the higher your deposit or required collateral. Sometimes, you have to put an equal amount of collateral as what you borrow. For instance, if you get a secured loan through a bank for $500 and your credit is bad, the bank may require you to put $500 in an account that cannot be touched until you pay off the loan.

Secured Loans for Bad Credit: Personal Loans 411

This means that if you are looking to get a loan to actually use for your bills, a secured loan may not be the best option. I mean, if you have to put the entire amount you will borrow up to for collateral, you are basically just swapping the money over. If you can afford to put up that amount of collateral, however, secured loans are a great way to build your credit. Although you have put up collateral, the financial institution will report your payments to the credit bureaus. Additionally, over time, your collateral may be released, or you may be able to take out the same loan without collateral after you pay the first one off.

What Can a Secured Loan Be Used For?

A secured loan is much like any other type of loan when it comes to using it. What you use the loan for is pretty much up to you. However, due to the fact that it is secured, it is best to consider this type of loan solely for the purpose of building credit. While you can use the funds for anything, keeping credit as your main goal is a wise move.

For instance, when I started trying to rebuild my credit a few years back, I was only able to qualify for a secured credit card at the time. Secured credit cards are built on the same principle as secured loans, meaning that they require collateral. I was approved for a $200 limit but had to put a $49 deposit down as my collateral.

In truth, the additional $150 that was left on the card would not go far, especially since they also took out a $39 annual fee. Instead of relying on it for needs, I simply used it as a way to build credit. I would pay the balance in full every month, and then, after the billing cycle closed, I would use the full amount to pay what I could. I would then pay it off before the end of the billing cycle so that I was not paying monthly interest.

Since I only used the card when I had the cash to back my payment, I did not get behind. Instead, this small credit limit helped build my credit up to the point that I could then get a small unsecured loan. Viewing a secured loan as nothing more than a way to build credit should help you use it responsibly instead of getting in any further debt.

What’s the Difference in a Secured Loan and an Unsecured Loan?

Difference Between Secured and Unsecured Personal Loans

The word “secured” has been used in many different ways, so the definition can easily be skewed. The difference in a secured loan and an unsecured loan is very simple: a secured loan requires collateral while an unsecured loan does not. We are going to break this explanation down a bit farther for good measure:

Let’s say your cousin asks to borrow $100 for gas and food until payday. You know his reputation and that he does not normally repay loans. He has done such a poor job with his finances in the past that no one in the family is willing to open their wallets. He has even borrowed money from you before and not paid you back. Logically, you know it probably is not a wise move but you still want to help him out. What do you do?

You could just give him the money, either as a gift or as a loan that you hope he repays. This is an unsecured loan. The other option is that you could say, “Sure, I can help you out. I will loan you $100 but I need to hold onto your laptop until you get paid. When you repay me, you can have your laptop back.” Though you may not want to, if he fails to repay you, you can use the laptop to recoup your losses. This is a secured loan since you are holding ownership for one of his belongings until the loan is paid off.

Special warning

If you were truly offering this secured loan, it would be very smart to get the terms in writing and notarized so you cannot be accused of stealing property. If you are anything like me, you love your family but have learned not to blindly trust them. Always be diligent when it comes to your finances, regardless if you are borrowing or lending.

What Type of Collateral do You Need?

This really depends on the financial institution you are getting the loan from. Both payday loans and title loans are secured loans. With a payday loan, the collateral is the check you fill out and give them. If you do not pay, they can simply deposit the check into their account and get their money back. With a title loan, the title to your vehicle is the collateral. If you do not repay the loan, they have the right to take your vehicle. The are other types of collateral as well such as cars, a home, and more. It is possible to find a loan for pretty much any asset you might own.

Be very careful when taking out this kind of Loan. If you can’t pay it back you risk losing you asset. You need that car to get to work! This is the case with Title Loans.

When A Secured Loan Makes Sense

  • Mortgages are secured given the house is the collateral if you can’t pay back the loan you foreclose and lose the house.
  • Auto loans are secured because like a home loan, if you don’t pay it back, you lose the asset.

There are cases where you can use your asset to get another loan such as a line of credit. You might have property that you do not even realize is very valuable. About five years ago, my husband and I decided to purchase a piece of land and the mobile home that came with it. Looking at this property, we knew it was not worth much, but it was a start in the home ownership path we wanted to take. The plan was to eventually build a house and tear down the mobile home.

Over time, we began to see what a money pit it was and began weighing out our options. We feared that since the piece of land was small and needed a lot done to it that we would never be able to resell it. We honestly assumed that it was worth no more than a few thousand dollars. Then, just last year, I had to gather some paperwork related to my property from the courthouse. To my utter amazement, the stated value on this paperwork was almost six times as much as we believed.

The Moral of This Story is to Never Assume You Have Nothing of Value

I have known people who have discovered many unknown assets. One friend discovered out of the blue that a book he owned for years was actually a very valuable first addition. A friend’s cousin inherited her grandmother’s jewelry. No one else wants the jewelry as they all assumed it was only costume jewelry. They were all surprised that tucked away with that costume jewelry was actually two very valuable rings.

When my grandfather was alive, he ran a truck stop. The items he kept there are now considered “antique”. Though I cannot see anyone wanting an antique icebox, there is a market for those items. For that matter, some very old plates I found at my grandmother’s home turned out to fit into that antique category, as well. Imagine my surprise when I discovered the plates we were eating from were selling on eBay for almost $100 each. Lesson learned: if you own something and are unsure of the value, do your research. You just might be surprised at the amount of valuable assets you own, and most of those can be used as collateral. Speak with your lender to determine acceptable forms of collateral for them.

Benefits of a Secured Loan

We have previously discussed that secured loans can be great for building and improving your credit, but there are a few additional benefits as well. One is that since you are putting up collateral, the lending institution is assuming less risk. This is beneficial because it generally means that the interest rates will be much lower.

Notice I said “generally”. That is because while many loan places do charge lower interest rates for secured loans, that is not always the case. Some actually charge much higher interest, such as title loans and payday loans . If you have never had the misfortune of needing one of these, consider yourself blessed. These are high interest downward spirals that you should avoid as much as possible. There is more detail on these secured loans below.

Other lenders will likely charge lower interest rates, but they will vary from lender to lender. To avoid really high interest rates, simply do research before signing any paperwork. Some other benefits of secured loans are that they are usually easier to get than unsecured loans because it is less of a risk and you can usually get approved for larger amounts.

Risks of a Secured Loan

VIDEO: Title Loan is a Type of Secured Loan

Like all good things, a secured loan has negative sides. First, as there is extra paperwork and assessments needed for the collateral, it may take longer to get approved and receive the funds. Second, as mentioned before, if you are putting cash up for collateral, as in a bank account, a secured loan probably will not be so beneficial for you in regard to bills. Lastly, there is the risk of losing property if you do not pay as you are supposed to. It is best to aim for unsecured loans if those are a possibility for you. If they are not a possibility, be sure that you make timely payments so that you never lose your property.

Terms and Interest Rates

When it comes to the terms and interest rates of secured loans, they can vary as well. Payday loans only give you until your next paycheck to repay the loan. Many payday loans, especially for first time borrowers, do not get approved for much more than $150, though it can go up higher. The highest I have personally seen is $500, but that was after the customer had borrowed money from that lending institution quite a few times. For the $150 payday loan, the interest came to almost $30. For the $500 loan, the interest hit $88. That is about 1/5 of the amount you borrow, which I consider to be a bit high.

Title loans also have high interest raising up into the $100s. However, they have longer repayment terms. In fact, you can literally pay on a payday loan for the rest of your life. The payment the lender requires each month is nothing but the interest, so if you feel like throwing your money away, you can just pay the interest every month. However, that will never touch the principle. If you go in for either a payday loan or title loan, be prepared to make some rather large payments.

On the other hand, there are many other secured loans out there with lower interest rates. In fact, some lenders, such as banks, will also hold your car title as collateral. The difference is the interest rates and the term. With a bank or credit union, the title is literally collateral and the interest on the loan will be about the same as it is for any other loan.

Let’s take an example

For instance, my mother borrowed $2000 from the bank at one point. She used her title as collateral but her payments on that amount came to only $141 per month, and she was to pay for somewhere around two years. This loan was basically a secured personal installment loan for which the interest was added from the beginning. The monthly payments she made were much lower than an actual title loan company charges, and the payment was working on the interest and the principle.

The key to finding a good secured loan comes from doing the necessary research. It is very possible to find a secured loan that offers reasonable interest rates and good payment terms. Often, though, the best ones are not the first ones that jump out at you.

Repaying a Secured Loan

Repaying a secured loan is as important as paying back any other type of loan. Though title loan and payday loan companies do not typically report to credit bureaus, it is not safe to assume that all secured loans are the same. In fact, with most lenders, a secured loan gets reported just as an unsecured loan does. Therefore, you must treat it like any other loan you borrow.

First and foremost, never borrow more than you can repay. Borrowing $1,000 to pay bills will not help if you are adding another bill you cannot afford. My family and I have been in some tight spots over the years. More than once, my immediate inclination was to apply for a loan. The more desperate we were, the more a loan seemed like a good idea. Fortunately, my brain would kick in and say, “If you are already this desperate, how much more desperate do you think you will be when a loan is due next month?” Finding your way out of one problematic situation just to put yourself straight into another one is never a good idea.

So You Absolutely Need a Loan?

If you absolutely need to take out a loan, calculate how much you can afford to repay each month and how long you think you will need to repay it. Be smart about it. Do not take out a short term loan if you cannot afford to pay the full amount back within a month or so, as that is about the length of repayment terms for short term loans. Search for a lender that can provide the monthly payment amounts and repayment terms that you need.

After you have taken the loan out, you should immediately adjust your budget to suit the payments. If you find that you miscalculated and cannot afford the payments, consider picking up some extra shifts at your job, picking up a side job, selling some of your possessions, or anything else you can do to help make the payments.

Also, be sure you as to when you are getting the loan whether there is a penalty for paying it off early. If there is not, consider paying the loan off with your tax refund, a Christmas bonus, or another piece of additional income. The sooner you pay it off the better. Remember that how you treat this loan can and will most likely affect your credit. Do not dig yourself into a deeper hole if you can help it. Be as committed to repaying your loan as you are to make a house payment or car payment.

What Do I Do If I Cannot Repay a Secured Loan?

You took out a loan with every belief that you could pay it back, and you had every intention of doing so. Then, you get blindsided- perhaps you lose your job, an emergency occurs, you get really sick and cannot work for a few weeks, or something else occurs that knocks you down. How will you pay your loan payment? You are already scrambling to pay your rent and buy some groceries. How on earth will you pay that loan payment?

I do not know about you but that scenario sounds awfully familiar to me. Even with the greatest intentions, life can surprise you and take the wind right out of your sails. If this happens to you, start by not panicking. I know that is easier said than done but you cannot think or act rationally if you allow your emotions to control your actions. You can always take a moment to let the emotions roll, of course. You just cannot stay in that place.

Personally, if I am blindsided with something negative, I allow myself to freak out for a day. I usually do not need that long but, in my experience, it is best to let your emotions go crazy for a moment before you try to solve a problem. In my case, within 24 hours or less of my issue, my logical brain kicks back in and suddenly: a.) things do not seem so bad, and b.) a solution seems to pop up out of nowhere.

So if you are facing a crisis, there are a few things I want you to do:

1. Give yourself permission

Especially to freak out- just do not stay in freak out mode for too long.

2. Take a look at your financial situation and assess

Look at how bad it really is. It is usually not as bad as it initially seems.

3. Determine when you can make a payment

Try to find time within a week or two, if at all possible.

4. Call your lender

Burying your head in the sand is not going to solve your problem. Believe me. I have a friend who got a little behind on his loan payment due to a job loss. The lender called continually to see when he could make a payment but he chose not to answer the phone. It was not really that he was ignoring them. He actually had a job interview coming up and wanted to see if he would get hired so he could tell the lender something concrete. Instead, they ended up knocking on his door. From that point forward, he almost could not speak to them anymore about his situation because he had blown their trust in him.

So, again, do not hide. Face it head-on. Call your lender and explain the situation. Also, share your solution with them. If you are having a yard sale over the weekend to make your loan payment, tell them. The more straightforward you are and the more they see you trying, the more likely they are to work with you.

5. After you have given them a date and all the information, do everything in your power to keep your word


Now that you have some 411 on secured loans, you may be asking where to get a loan. As I stated before, there are a lot of secured loan options out there with various requirements, terms, and so on. The best thing you can do is research any personal cash loans available to you to find the pertinent information. If you need the money quickly, refine your research to the term fast loans or quick cash loans. Your research can provide you with the necessary information. However, full disclosure: that research can take a lot of time that you may or may not have.

That is the beauty of Loanry- we have done the research for you. We are connected to a large network of lenders and are dedicated to helping you find a lender that suits your needs. Instead of digging around the internet for hours trying to find a lender, we have provided a platform that makes it easier to get the money you need.