Debts in the UK – how to deal with loan repayment?
An installment loan or loan is a type of financial service with a repayment period of several months or summer. When you decide to take out a loan, you undertake to regularly pay back the debt on the terms set out by the lender. Life, however, writes different scenarios, so it may turn out that due to circumstances beyond your control, you can no longer cope with the timely repayment of installments. So how do you handle debt repayment when we can’t afford it? We will tell you how to effectively face financial obligations when we are in a difficult financial situation.
1. Don’t underestimate your situation
The main thing is to analyze your financial situation and discover the extent of your financial problems. Start by reviewing your bank statements for the last few months, analyze outstanding documents and familiarize yourself with previously ignored accounts. Then make a list of overdue payments, including the amounts you owe each company or lender, along with interest. After creating such a list, you’ll be able to prioritize your payments and decide which of your debts is the most urgent and which one you should focus on first.
2. Look for help from friends and family
If your financial problems are temporary and you need one-time financial support to get back on your feet and take control of your expenses, check to see if you can get help from someone you trust. Borrowing money from family and friends can be risky in the event of a prolonged debt (after all, we don’t want our debt to affect relationships with our loved ones). Nevertheless, in the case of temporary financial problems, such support may prove to be beneficial for us. When borrowing money from our loved ones, we don’t have to worry about repayment dates or high interest rates.
4. Consider taking a consolidation loan
If you are struggling to pay off many loans at once, one of the possible solutions may be to take a consolidation loan. Repayment of several debts at once can be very stressful – each loan has a different repayment date and installment amount, so you have to control several things at once. A consolidation loan can help you pay off several debts at once. It is a type of loan that combines all debts into one, while reducing the monthly installment and extending the repayment time. Thanks to it, you can get better control over your finances. The downside of this solution, however, will be the need to extend the debt repayment period, so before you decide on it, talk to a financial advisor.
3. Tell the lender
It may seem that informing the lender of your financial condition is a last resort, but in reality, the sooner you do it, the better. UK lenders are required to help their clients if they have problems paying back their debts. The lender is obliged to refer you to an independent and free financial advisor who will help you deal with your financial situation. The adviser will also help you create a realistic repayment schedule and recovery plan. You can also contact a financial advisor yourself. Go to the National Debt line for free financial advice.
4. Prepare your debt repayment plan
Having a debt repayment plan is a good starting point for renegotiating the terms of your current loan agreement. The loan repayment plan should present your real debt repayment options, including the amounts of installments you proposed and the repayment date. You can create a new schedule yourself or with the help of a financial advisor, whose help you have the right to use. After analyzing your repayment plan, the lender will offer you to suspend the interest rate or reduce the installment amount.
5. You can apply for a ‘credit vacation’
Credit holidays are a temporary suspension of loan repayment giving you the opportunity to temporarily “rest” from repayment of installments. By using credit holidays you don’t bear the risk of the consequences of late payments. Most loan agreements give you the option to suspend your loan once or even several times during its repayment period. It is worth mentioning, however, that during such a break you are released from the obligation to pay the installment itself, and not the loan interest. This means that credit holidays can translate into an increase in other installments. Suspending a loan is therefore an option that will only work in the event of temporary and minor financial difficulties.
6. Check your contract
Many borrowers are just a cursory read loan agreement before signing it, thus agreeing to additional fees. Hidden fees typically include ancillary services that the borrower himself does not realize. Therefore, often borrowers spend years paying off credit and additional services, which they will not probably use. However, there is a way. Omni Claim is a company fighting for the rights of bank customers who have hidden insurance fees in their contracts. Omni Claim will review your contract and see if you have any reason to recover your lost money. If so, they will contact your bank and recover your money. It is worth mentioning that Omni Claim operates on a “no win-no fee” basis, so if it turns out that your contract does not include additional fees, you will not gain anything, but you will not lose.
What is worth remembering
If you are in a difficult financial situation and you have a loan repayment on your mind, do not panic and approach the matter methodically. Contact a free financial advisor who will help you create a recovery plan and inform your lender about everything. Remember, in financial matters, the best solution is transparency, and delaying loan repayment can have serious consequences. So it’s not worth the risk.