Struggling to Keep Up With Loan Repayments? Your Options

Rising costs, a slow quarter, a lost contract or a change in personal circumstances can make loan repayments hard to meet. If that’s where you are, the most important thing is to act early. Lenders have far more options available before repayments are missed than after a default has been recorded.

Signs it’s time to act

• You’re using credit cards or overdrafts to make loan repayments
• Tax, super or supplier payments are falling behind
• A fixed rate is about to expire and the new repayment won’t fit your budget
• You’ve already missed a repayment, or expect to

Your options

1. Talk to your lender about hardship

Most lenders can temporarily reduce or pause repayments, extend the loan term, or switch to interest-only for a period. For home loans and other regulated consumer credit, lenders are required to consider hardship requests. Business lenders usually have their own hardship process too.

2. Restructure the loan

Extending the term, moving to interest-only or splitting the loan can lower repayments without a full refinance. It may cost more interest over the life of the loan, so treat it as a bridge rather than a permanent fix.

3. Refinance to a lower repayment

If your rate or loan structure no longer suits you, another lender may offer lower repayments. Refinancing works best before arrears appear on your credit file, which is another reason to act early.

4. Consolidate your debts

Several loans, leases, cards and tax debts can often be combined into one facility with a single, lower repayment. This is especially effective when property can be used as security. See our guide to business loans with ATO debt.

5. Sell or restructure assets

Sometimes the best answer is selling an under-used asset or property, or refinancing equipment to release cash.

Free help is available

If you’re in serious financial difficulty, the National Debt Helpline (1800 007 007) offers free, independent financial counselling, and small business owners can contact the Small Business Debt Helpline. Your accountant should also be part of the conversation.

How a broker helps

We review your current loans, work out which option will genuinely reduce your repayments, and approach the lenders on our panel of 100+ that suit your situation, including specialist and private lenders when the banks can’t help. Learn more about our debt advisory and private lending services.

Frequently asked questions

What is a financial hardship request?

It’s a request to your lender to change your repayments for a period because you’re temporarily unable to meet them. For regulated consumer credit, such as a home loan, lenders must consider a hardship request. Business lenders aren’t always bound by the same rules, but most have a hardship process.

Will asking for hardship affect my credit file?

An agreed hardship arrangement can be recorded on your credit report, but it’s generally treated differently from a missed payment or default. Missing repayments without an arrangement usually does more damage.

Can I refinance if I’m behind on repayments?

Sometimes. Specialist and private lenders may refinance borrowers with recent arrears if there is equity in property and a clear plan, though usually at a higher cost.

This article is general information only and doesn’t take into account your objectives, financial situation or needs. Speak to us or your accountant before making a decision.