Difficulties with payments

Despite the best of intentions there may be times that difficulties will arise with repayments. In case this may occur you should have a plan to resolve the problem.

Communicate.

The best approach is not to avoid the issue but to communicate. By talking it through, quite often it is possible to come up with an agreeable solution. One of the advantages of a private loan is that it is up to two individuals to decide and the original loan agreement can be changed if agreed.

Negotiate.

The problem may be due to a short term difficulty or it may be more permanent. Here are some suggestions on how you could renegotiate your loan agreement.

Miss or defer a payment.

The lender may agree to miss a payment and accept an alternative. For example, the borrower could pay double at the next scheduled payment or the payment could be added to the final loan payment or the loan period could be extended by an additional payment period.

Restructure the Loan.

If the circumstances have changed so much that there is little chance of keeping to the original schedule or catching up, a completely new affordable loan agreement could be negotiated. For example, the total loan period could be extended to lower the regular monthly payments. Or the payments could be reduced in the short term and increased in later terms.