What happens if you cannot repay your loan

We appreciate that circumstances can change and it might be hard to make your repayment at the end of the month. Whether it’s an emergency, loss of income or unforeseen circumstance, we understand that sometimes people can’t repay on time.

As part of our commitment to treating customers fairly, we will always offer forbearance to those experiencing difficulty with repayment. We explain below what happens if you cannot repay your loan.

We will get in touch with you

If your monthly payment does not go through on your scheduled pay date, our payments team / customer service will get in touch by email, SMS and phone.

Our team is trained to offer flexibility, which is why we encourage you to get in touch with us if you cannot repay. We may be able to change your repayment date to when you might have sufficient funds to repay your loan.

In some cases, we may offer an arrangement or payment plan whereby we break down your outstanding debt into smaller and more affordable repayments. For instance, if you owe £100, this could be split up into four weekly repayments of £25.

We do not charge late or default fees

Unlike the majority of other short term lenders in the UK, we do not charge any default fees for missed repayment. The FCA regulation states that lenders can charge up to £15 per defaulted payment but at Mr Lender, we understand that you might be having a difficult month, so the last thing you need is to have more money to pay.

However, as soon as you default on your loan, you will be charged the daily interest agreed for any extra days that you have your loan open with us. This is clearly stated in your loan agreement that it is electronically signed during the application process.

If you speak to us and state that you cannot repay, we may be able freeze any extra interest being and help you set up a repayment plan.

The impact to your credit score

In the event that you miss repayment, the information will automatically be sent to a credit reference agency and a note will be left on your credit file. By defaulting on a payment, this may cause your credit score to fall and make it harder to access credit elsewhere as any lender that runs a credit check on your account will have access to this information.

Equally, if you pay your loan on time, the data will also be fed to a credit reference agency and this may cause your credit score to improve.

We will not offer a new loan, extension or rollover

When customers struggle to keep up with repayments, they sometimes request a new loan, top up or want to rollover their existing loan. This is not something that we offer at Mr Lender because we do not want to increase the financial burden for the customer or cause a spiral of debt.

You may be passed onto a third party collections agency

We will always try to contact the customer in the event that repayment has failed. We will only call you a certain number of times in order to be compliant with FCA regulation and to avoid bombarding the individual.

In the event that the customer does not respond to our correspondence and no outcome is achieved, we may pass on your details to an external collections agency and give you the name of the agency that you have been transferred to. This company will be licensed and regulated by the FCA in order to help you repay your loan, through an arrangement or debt management plan.

Do not apply for a payday loan if you cannot afford to repay

Financial products such as payday loans and instalment loans are high-cost short term credit products. With this in mind, it is important before applying to consider just how you are going to repay the loan and the financial consequences if you cannot repay. If you ever feel that you are not going to meet a repayment, please contact us as soon as possible as we may be able to freeze interest and reduce the impact to your credit score.

If you are having money problems, we recommend the following organisations: