Personal Loans
63% of Americans Say Their Finances Have Been Impacted by Coronavirus
Note: this resource page is being updated regularly. It was last updated on Aug. 30, 2021.
By Erika Giovanetti and Rebecca Safier | Edited by Michael Galvis
The coronavirus pandemic has created financial challenges for many Americans. If you’re having trouble making payments on your personal loans or student loans, relief might be available. Below is a growing list of lenders offering help during the COVID-19 pandemic. If you need assistance, contact your lender to learn about your options.
In this resource, we’ll take a look at:
FORBEARANCE
In certain circumstances, your lender may allow you to forgo making payments for a few months. Your loan will continue to accrue interest and you’ll still have to make the payments at the end of the term, either in one lump-sum payment or as an installment loan.
REFINANCING
Borrowers who can’t afford their entire loan payment but can still pay some amount could consider refinancing for a lower APR or longer terms. This can help bring your monthly payment down without the need to go into forbearance or default. Keep in mind that you might be on the hook for a loan origination fee with your new loan, or prepayment penalties if your old lender decides not to waive them.
PAYMENT PLANS
If you’ve missed multiple payments on your personal loan, your lender may allow you to break up the missed payments across a number of months going forward.
If these options don’t offer the help you need, you may consider entering a debt management plan through a nonprofit credit counseling agency. This type of program can help you become current on past due accounts and reduce costs on your debt. Although they can come with fees, the credit counseling agency may be willing to offer reduced or no fees on your plan.
But generally, you should first see what options your lender has that are available to you. While there may not be specific programs listed on their website, many banks and lenders suggest contacting them if you need loan assistance due to the coronavirus.
In response to the coronavirus pandemic, the Department of Education paused payments and interest accrual on federally-held student loans in March 2020. Since then, this period of zero-interest forbearance has been extended several times.
If you owe federally-held student loans, such as direct subsidized loans, direct unsubsidized loans or direct PLUS loans, you won’t have to make payments until this forbearance ends on Jan. 31, 2022. After this date, your payments and interest accrual will resume.
While private student loans are not eligible for this federal forbearance, many private lenders offered relief in response to the pandemic. If you’re struggling to pay back your private student loans, contact your lender to see if it can provide any assistance.
On March 11, 2021, President Joe Biden signed the American Rescue Plan, a $1.9 trillion relief package that includes a one-time $1,400 stimulus payment (also known as an economic impact payment) for Americans. Individuals earning $75,000 or less and couples earning $150,000 or less qualified for the full payment amount. Households that qualify also received $1,400 per dependent.
The bill also extended federal unemployment insurance payments at $300 per week until Sept. 6, 2021. The first $10,200 in unemployment payments were nontaxable for households earning no more than $150,000.
Starting in July 2021, millions of families started receiving checks as part of the enhanced child tax credit. Qualifying families receive up to $300 per month for each child under the age of 6 and up to $250 per month for each child between the ages of 6 and 17.
The amount that each family gets starts to phase out at higher incomes, specifically for single filers earning more than $75,000 per year and married filers earning more than $150,000 per year.
The average American pays more than $1,200 toward debt each month, and many have long fallen behind on other bills due to reduced income, unemployment and other financial emergencies.
When you can’t pay all your bills, prioritize them. Generally, it’s most important that you pay secured debts and court-ordered debts before all else. If you fail to pay your auto loan or mortgage for multiple months, your assets could be seized by the bank. Plus, failing to pay court-ordered debt may result in wage garnishment or even jail time.
It’s also important to pay your utilities like water and energy bills every month to avoid them being cut off. While many utility providers and state legislators have stopped shut-offs during the coronavirus pandemic, there’s been no official moratorium to stop utility shut-offs in any federal coronavirus relief bills so far.
Unsecured loans and credit cards are lower-priority debts. Since they’re unsecured, you don’t risk losing an asset. However, you will risk your financial institution reporting you to the credit bureaus, which will lower your credit score. If you can, try to make the minimum payments on your credit cards to avoid late fees and a ding on your credit report.
The coronavirus pandemic has resulted in the temporary closures of many restaurants, schools, travel destinations and other gathering places. Because of this, many people may struggle to make ends meet. In times of high unemployment, predatory lenders take advantage of the helpless situations that people find themselves in.
Predatory lending refers to a lender that imposes unfair practices on borrowers, which are often accompanied by high interest rates and short repayment terms. In late March 2020, the Federal Reserve and Consumer Financial Protection Bureau (CFPB), among other financial entities, encouraged banks to issue small loans to Americans who are struggling. The announcement was met with criticism, since the Fed didn’t put any protective measures in place when urging banks to issue these small loans.
One type of predatory lending, payday lending, has already faced scrutiny amid the coronavirus pandemic. Payday lending refers to a type of short-term loan that requires no credit check and can help tide people over with small amounts of money, typically $500 or less. However, these loans have sky-high interest rates — typically around 400%, according to the CFPB.
Since the coronavirus pandemic began, payday lenders were able to sidestep regulations banning them from advertising on Google and Facebook by partnering with out-of-state banks, a report from the Wall Street Journal found. To make sure you don’t fall victim to predatory lending, look out for these red flags:
Before you turn to a payday loan or another type of predatory lending, consider the alternatives, such as small personal loans, credit cards with favorable terms or even borrowing from friends and family. Plus, the LendingTree coronavirus hubpage has plenty of resources for people who can’t pay their debts.