Data shows that tariffs, inflation and a possible recession are on the minds of American consumers — and for good reason. All you have to do is catch the headlines to know why.
With all the financial strain, some of us will look to a personal loan to get through it, particularly if it’s a route to consolidating high-interest debt.
After we borrow, it’s not unreasonable to want some leeway — just in case something in our life or the broader economy goes awry.
But if you shop around for a personal loan, you’ll quickly find out that, while most lenders make mention of “relief” programs, they only offer flexibility on a case-by-case basis. And others may be reticent to promote remediation options for fear that it would attract the wrong applicants.
So which financial institutions actually walk the talk? To find out, Bankrate canvassed more than 20 banks, credit unions and online lenders.
4 lenders with strong flexibility options for distressed borrowers
These four lenders stand out when it comes to financial relief for borrowers.
1. Alliant Credit Union
- Modify your loan for short- or long-term affordability.
- Change your payment due date.
- Postpone your dues via a hardship forbearance if you experience a job layoff, illness or other unforeseen situation.
Alliant offers the potential for relief, as product director Sean Briscoe says, because it’s part of the credit union ethos to do so. It also explains why Briscoe refers to the company’s customers as “our members.”
“We want to make sure anything that we’re offering to them is in their best financial interest,” he says.
Related: Why credit union personal loans might be your most cost-effective (and best overall) option
2. Best Egg
- Modify the loan temporarily or permanently.
- Change your payment due date or amount.
- Take a payment off by extending your repayment term.
As mentioned, many financial institutions we survey avoid talking about repayment flexibility options. Best Egg president Bobby Ritterbeck says he feels the opposite: You should know what’s available to you, and not just after you borrow.
“Flexibility is really important for consumers to understand that they have that,” Ritterbeck says. “They’re not stuck in these original terms they just signed up for.”
When COVID hit and there was a lot of fear out there of what was going to happen, we built a ton of programs. As it turned out, things settled in in a much shorter time period than everybody thought it would. But having that flexibility when people were at their highest point of nervousness, it built a lot of loyalty with our consumer base. And it really helped us understand how important that flexibility is to customers.
— Bobby Ritterbeck, Best Egg president
3. Discover
- Recover from delinquency with three consecutive, on-time payments.
- Temporarily submit lower monthly dues that gradually increase until you return to your original payment amount.
- Extend your loan term and lower your monthly payments at the cost of accruing interest.
If you’re a personal loan applicant, you might be used to combing through lender websites, noting how thin some are. Some don’t divulge basic information, such as repayment term options, or they make it hard to find. For its part, Discover dedicates an easy-to-find page on its site describing its remediation options. It even recommends and relays the phone number for the National Foundation for Credit Counseling, a tried-and-true counseling service.
4. Happy Money
- Modify your payment to lower your minimum amount due.
- Adjust your due date.
- Skip a payment and tack it on to the end of your term.
Happy Money has long specialized in offering personal loans for the strict purpose of credit card debt consolidation. So, it’s used to applicants and customers who may be fed up with falling behind on high-interest debt without a realistic way to catch up.
“Whether they’ve been affected by a recent natural disaster or hit a rough patch financially, we approach [borrowers] with empathy and help them find the right way forward to make progress toward their financial goals and stay on track with their loan payments,” a company spokesperson tells Bankrate. “Loan modifications are designed to provide meaningful relief for qualified borrowers by adjusting loan terms… Our goal is to offer flexible solutions that help borrowers stay on track with their payments and move forward with confidence.”
Other lenders at a glance
Not all personal loan lenders are created equal when it comes to repayment flexibility
Fortunately, when borrowers are in distress, many lenders help in small and large ways. SoFi, for example, stopped charging late payment fees in 2018. Some lenders also allow you to update your autopay amount if you were paying extra but, because of changed circumstances, want to revise it to your minimum amount due.
Larger measures are typically not advertised. For instance, reputable lenders could award a personal loan deferment (or payment pause) on a case-by-case basis, but only if you alert them that you’re in trouble. Others merely advertise that you’ll have a human loan specialist assisting you from start to finish — something that was table stakes until chatbots and AI entered the picture.
More often than not, lenders leave something to be desired. For instance, some decide to outsource servicing to contract companies. Imagine getting someone on the phone who isn’t affiliated with the bank or financial institution from which you originally borrowed.
“What we found, most importantly, is getting someone into a loan they can afford in the first place,” says Chantal Rapport, Upstart chief marketing officer. “Of course, sometimes life happens. We want to be there if something happens that really changes the trajectory and they need a little bit of help.”
If you’re already in trouble, seek out help
If there’s anything we’ve learned from talking to lenders and combing through their platforms, it’s this: If you’re worried about making your payment, reach out.
Ritterbeck suggests getting in touch with a lender first and foremost. “Often, you can just go right into the [lender’s] website or a mobile app and express that ‘I need some flexibility around loan payments.’”
It’s as simple as that. Your lender doesn’t want you to become delinquent either, so it should be motivated to help.
What’s your next step?
When you next search for a personal loan, you’ll be rightly focused on which lenders offer the best interest rates. But secondary features — such as repayment flexibility options — can help you select the bank, credit union or online lender that best fits your unique scenario. When you shop around for a personal loan, you have the opportunity to test-drive lenders’ customer service. Take advantage of it.
Why we ask for feedback
Your feedback helps us improve our content and services. It takes less than a minute to
complete.
Your responses are anonymous and will only be used for improving our website.
Help us improve our content
Read the full article here
