It is understandable that a borrower may find their financial situation has suddenly changed meaning that they suddenly cannot repay or meet the demands of their debts. This may be due to an unforeseen circumstance or emergency, loss of income or being redundant.
Treating our customers fairly is a priority of ours and will avoid charging you late fees and default interest where possible. Instead of doing this, we will aim to offer forbearance and leniency in order to help you make repayments your loans to get to back to a stable position. This guide explains what will happen if you cannot repay your loan due to no fault of your own.
May Incur Late Fees
After missing a payment, you will typically have around 3 days or so where you can make a payment without being charged any extra interest or default charges. However, the number of days depends on the lender and their criteria.
If you are charged a default fee, this is just a one-off fee and is a maximum of £15, as per recent regulations by the Financial Conduction Authority.
You may also continue to accumulate daily interest on your loan and with payday loans, the rates can be quite high. This is because your loan is technically open for longer so you are being charged more days that you have the loan open. This interest only accrues if you do not speak to the lender, avoid their calls and no contact has been made.
Impact on your Credit Score
If you do fail to make a repayment or you fail to pay off your loan in full, then the information will be sent to the credit reference agencies that we deal with.
Please note that this may have a negative impact on your credit score. A record will be left on your credit file which states that you have missed a repayment or multiple repayments. This information will be available for future creditors that may be considering you for a loan or any other type of financial product.
Future providers need to be aware if you missed a loan payment because you might be trying to apply for other finance to pay off your existing loan – which is important to avoid.
Even if you do repay your full in full and on time, information will still be transferred across. But because this will be positive, it will allow to maintain a good credit score or may even work to improve it.
Speak To The Lender
If you have taken out a loan, you will be aware that you will have a scheduled repayment date with us each month. Usually this will be on the last working day of the month or a specific date which has been agreed on by both parties.
If the collection of cash does not go through to our side from yours, we will be notified and upon notification, will send an email and a text message to the information you have provide us with. This will let you know that the payment has failed to process and if this is not resolved, we will attempt to call you. In some cases, this could be because your debit card has expired or in other cases, because you simply have insufficient funds in your account.
However, it must be said that we do not have a policy of bombarding you with emails, calls or text messages. Instead, the attempts made for contact will be within regulatory guidelines and will allow you the chance to get in touch with us so that we can discuss your situation to find the best arrangement for you.
If you express that you are having financial difficulties and this can be proved, please do let us know as quickly as possible. We would want to avoid adding late fees and charges to your account if you are already, genuinely struggling with money .Instead, we will help you set up an alternative and more affordable repayment plan to suit your new needs.
This will usually involve setting up an arrangement or pay plan which involves breaking down your repayments into smaller amounts over a longer period of time. In addition, this will also freeze the interest. For instance, if you owe £50, this can be broken up into two monthly payments of £25 after discussing your circumstances with one of our advisors.
Understanding Rollovers and Extensions
If you are wanting to top up your loan, rollover or even extent your repayment for another month or so, this is not actually something we offer. We have noticed that several customers in the industry rely on using rollovers as a way to stay on top of their long-term debt. We do not recognise this as a good method in the slightest as it can just lead to increasing levels of debt.
Working with a Debt Collection Agency
If it comes to the point where we have tried to contact the customer via email or via their phone number and no progress has been made, we may have to pass the contact details onto an external debt collection agency. If this happens for you, we will contact you beforehand in writing which will include all the details of the agency.
This company will, like us, be authorised and regulated by the Financial Conduct Authority (FCA). We are aware that no one enjoys receiving phone call after phone call, which is why we deem it best to get professionals involved to deal with debt collection on some occasions.
A debt management company can help you to organise your finances and clear you of debts whilst you continue to be able to pay for your essentials, such as rent, food, travel and so on. However, we do encourage our customers to speak to us directly. We also encourage you not to apply for any more loans to try and pay off your debts as this can get you in far more trouble then you were originally in.