Loans interfering with rent payments
(Request from Angelo in Las Vegas, Nevada) I owe some money in loans and it is interfering with me paying rent. PLEASE HELP.
Dear Angelo,
It sounds like you might have gotten in a little over your head with your debt. Loans can be potential tools for getting through temporary hardship, but they are no long-term solution for paying living costs.
Since you did not provide any information about the nature of the loans, I can only assume that these were largely personal loans that you may have taken out to cover certain expenses. Such loans can often carry very high interest rates depending on the lender.
Consider these examples:
- Payday loans carry an average 391% APR.
- Consumer finance loans often cost 30% APR or more.
Hopefully the loans you obtained were through your bank or credit union, which would generally average between 7-20% APR. If you are having trouble making payments on those loans your debt is now interfering with your ability to pay living costs (rent), then you may need to speak with a debt counselor.
Debt counselors work by helping you to develop a budget and draw up a summary of your debt and income. They can often spot opportunities for reducing deficits or reaching a monthly surplus. It is possible that you may be able to consolidate multiple unsecured personal loans along with any credit cards into a single consolidated payment that is usually less than you are currently paying. Personal loans companies often consent to a payment of only 75% of the regular payment, but only through a specially designed debt management program (DMP).
A DMP can be created through a credit counseling organization. I strongly recommend that you contact an agency that can assist you with developing a budget, increasing income, reducing expenses and managing your debt. This could leave you with more money to put towards your monthly rent payment.
In the meantime, it might be wise to speak with a case manager who also may be able to assist you with rent on a temporary basis. HELP of Southern Nevada is one such agency operating in your service area that may be able to assist with your rent.