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Loans

3 tips to avoid falling behind on your personal loan payments

There are a few considerations that can help you avoid missing a payment that's due.

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Taking on debt strategically and thoughtfully can help us reach certain goals and even build our credit scores. This is especially true of personal loans, which typically get used to fund large expenses, like a home renovation project, wedding, funeral or even a relocation to a new city.

But there's always a risk that our circumstances could change and we can no longer afford to pay back our loan, or we just begin to fall behind on our monthly payments.

Before taking on any form of additional debt, it's important to have a plan in place for how you're going to pay back what you owe. So if you're considering applying for a personal loan in the near future (or if you recently took out a loan), think about these steps to protect yourself from potentially falling behind on payments.

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Sign up for autopay

One of the simplest ways to avoid falling behind on loan payments is to put your bills on autopay. Autopay allows payments to be automatically deducted from your linked bank account and applied to your bill. This way, you don't have to remember to manually transfer money to pay your bill each month.

Autopay can be especially useful when life gets busy and you may accidentally forget about paying your bill one month. Plus, many personal loan lenders actually give you an APR discount for using autopay to make your payments. SoFi, LightStream and Marcus by Goldman Sachs all offer a 0.25% APR rate reduction for using autopay. Even if 0.25% doesn't sound like a lot, the money you save can really add up over the life of your loan.

SoFi Personal Loans

  • Annual Percentage Rate (APR)

    5.74% to 21.28% when you sign up for autopay

  • Loan purpose

    Debt consolidation/refinancing, home improvement, relocation assistance or medical expenses

  • Loan amounts

    $5,000 to $100,000

  • Terms

    24 to 84 months

  • Credit needed

    Good to excellent

  • Origination fee

    None

  • Early payoff penalty

    None

  • Late fee

    None

Terms apply.

LightStream Personal Loans

  • Annual Percentage Rate (APR)

    3.49% to 19.99%* when you sign up for autopay

  • Loan purpose

    Debt consolidation, home improvement, auto financing, medical expenses, wedding and others

  • Loan amounts

    $5,000 to $100,000

  • Terms

    24 to 144 months*

  • Credit needed

    Good

  • Origination fee

    None

  • Early payoff penalty

    None

  • Late fee

    None

Terms apply.

Apply to a lender that allows you to choose your payment due date

Before you settle on a lender, you might consider whether payment due date flexibility is something that's important to you. This would allow you to pick a day of the month that more precisely coincides with when you expect to get paid so you won't have to risk not having enough money to cover your loan payment.

Though, it's important to note that not many personal loan lenders have this much flexibility. The Marcus by Goldman Sachs Personal Loan does provide this option, however. You'll need to choose your desired due date when you accept the loan and if you decide down the line that you need to change your due date for increased flexibility, you can do so again up to two more times.

FYI, a loan from this lender also rewards you for consistently making your payments on time; you can earn one month where you don't have to make a payment (and won't accrue interest) after making 12 on-time consecutive payments. This can be a useful reprieve if your circumstances change and you need some time to regroup.

Marcus by Goldman Sachs Personal Loans

  • Annual Percentage Rate (APR)

    6.99% to 19.99% APR when you sign up for autopay

  • Loan purpose

    Debt consolidation, home improvement, wedding, moving and relocation or vacation

  • Loan amounts

    $3,500 to $40,000

  • Terms

    36 to 72 months

  • Credit needed

    Good

  • Origination fee

    None

  • Early payoff penalty

    None

  • Late fee

    None

Terms apply.

Avoid applying for more money than you actually need

Before you submit your loan application, you should carefully consider exactly how much money you'll need to borrow. For example, if you're taking on a loan to pay for a home renovation, gather all your material and labor estimates before you apply for a loan, otherwise you're just taking shots in the dark as to how much money you need to borrow.

The more money you need to borrow, the higher your monthly payments will likely be and the more you'll be charged in interest. A high monthly payment can give you less wiggle room in your budget. And while you can sometimes opt for a longer repayment term, a longer term means paying more in interest charges over the life of the loan.

If you need help figuring out the appropriate amount of money to borrow, you could speak with a financial advisor who can help you find a way to finance at least some of your expense through other means so that you can borrow as little money as possible.

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