What to Do If You Have to Pay a Loan Instalment but are Broke and Desperate

instalment payment broke singapore

If you thought you hated getting calls from telemarketers trying to convince you to sign up for bank loans, trust me, it’s 58 times worse than the bank is calling you up to remind you that you owe them money. I’d trade one of those loans collections guys for 100 telemarketers.

The worst thing is that people are all to ready to jump in with well-meaning advice about how you shouldn’t spend beyond your means, but once you mention there are loansharks banging down your door, everybody falls silent and starts to inch away as if you’ve just been diagnosed with leprosy.

Other than changing your name and moving house, there are some things that can stop your entire life from falling to pieces. Here’s how to deal if you can’t pay back your loans.


Call up the bank and ask for a reduced interest rate

Most people make the mistake of trying to run away from loan providers when they can’t pay back their loans, which is a silly thing to do because short of escaping overseas forever and never getting extradited there is no way you can evade the long arm of the law.

However, what most people don’t know is that loan providers can try to make your life easier if you tell them you’ve fallen on hard times. Not because they’re angels sent from above but because it costs more money to get lawyers to harrass you, and even more to try to make you bankrupt.

Now, loan providers have the power to do a few things for you when you tell them your sob story. They might be able to give you an extension, reduce the interest you have to pay for a period of time or even help you to come up with a loan repayment scheme. If nothing else, this should stop them from harrassing you for some time.


Do a short term stint for more money

Upward mobility in Singapore isn’t all that attainable if you’ve been dealt the wrong hand of cards. If it were so easy to find a higher paying job on short notice, you wouldn’t have to be reading this, now would you?

When you’re struggling to make loan repayments and the banks are going all pig’s head on you, your priority should be to raise some quick cash as soon as possible to appease them. Short of begging your boss for a cash advance, the most helpful thing you can do is to get a short-term stint as soon as you can, something you can do after work or on weekends, just to raise some emergency cash.

Here are some part-time jobs that are constantly on the market:

  • Roadshow salesperson – just search “roadshow” on Gumtree and similar sites and you’ll see lots of part-time roadshow jobs that are hiring immediately, no experience needed
  • Private tutor – call up a bunch of tuition agents in the classifieds section of the newspapers and in a week or two you can start teaching during your free time


Put your spending in emergency mode

Living like a pauper isn’t easy in the long term and cause you to fall into an existential crisis or get depressed. I’m not talking about being frugal here but actually living in monk-like conditions in the name of saving money—zero spending on entertainment, eating modest meals at home without meat, public transport only.

When you’re desperately trying to pay off a loan, though, you need to realise that you’re in an emergency akin to accidentally sending a gossip-filled email to the entire office or discovering your dog has mysteriously lost a leg.

That means it’s time to rack up some extreme savings—at least until you can pay off one full installment and get the banks off your back.


Borrow money

If you’re in a really desperate situation, have tried all the above and still can’t bail yourself out on your own, it might be time to seek help elsewhere before the moneylenders bare their fangs. If you’re lucky enough to have friends and family who can lend you money, promise them you’ll clean their house for a year or something, anything that will get you through the next loan installment.

Even if your family slams the door in your face when they hear you coming, you might still be able to turn to other moneylenders if your credit isn’t totally wrecked. Debt consolidation happens when you take one loan to pay off your other loans at a lower overall interest rate. Say you owe Bank 1 $10,000 and Bank 2 $15,000. You take a $25,000 from Bank 3 to pay off the first 2 banks.

While financial institutions would like you to think that debt consolidation solves all your problems, in many cases you actually end up paying more in interest overall.

Let’s say you have high interest credit card loans and take out a 5-year personal loan at a lower interest rate to pay them off. While you might pay less interest per month than you were paying on your credit card bills previously, over a 5 year period you end up paying more overall, since you might have paid your credit card bills off in less time.

If you’re on the brink of getting your door rammed down, this might be the only thing that can stop you from going under.

Have you ever had trouble paying off your loans? Let us know what you did in the comments.