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What to do when your coronavirus loan payment holiday has ended

What happens when your payment holiday is over?

Your lender will get in contact with you if you are coming to the end of a payment holiday (also called a payment freeze) to discuss your options.

It will be in your best interests to discuss next steps with your lender. If they don’t hear back from you they will restart your repayments automatically.

Under normal circumstances, the payments missed will be added to your outstanding balance, along with the interest.

This means your monthly repayments will be higher than before. How much higher largely depends on how long you have left on your loan term.

What options might your lender consider

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There are several options your lender might discuss with you. However, many of these might have an impact on your credit report, and affect your ability to borrow money in the future.

Increasing the term of your loan

Increasing the amount of time you have to repay the loan will keep your repayment at the same level as they were before, or at least minimise the increases to your repayments.

For example, if you took out a three month payment holiday, your lender might agree to add three months onto the end of your loan term.

However, you might end up paying back more than your originally would because of the extra interest payments.

It’s important to remember to budget for making these repayments for a longer period of time.

Waive fees for missed payments

If you’re still struggling to make repayments, your lender might agree to waive fees and charges you would normally pay for late or missed payments. You should discuss this option with your lender. Do not simply miss a payment as this will impact your credit score and affect your ability to borrow money in future.

Putting together a realistic payment plan

If your finances have been badly affected by the coronavirus outbreak, your lender might put together a different repayment plan.

This might include a combination of reducing your monthly repayments and extending the term of your loan to make it all more manageable.

Lenders are required to work with you to work out a repayment plan based on your circumstances.

I need help explaining my situation to my lender

If you need help with what to say you can use a template letter.

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The Consumer Credit Act gives you rights when dealing with creditors such as loan providers. If you fall into arrears, they must:

  • give you time to bring your account up to date before they take any more action
  • send you regular statements and arrears letters if you fall behind.
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If you received a payment deferral, or a different solution which was later deemed not to be suitable for you, any interest accrued during this relevant period should be waived.

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Impact of further support on your credit file

If your lender does offer you further support once your payment holiday ends, this will be recorded on your credit file. This could mean that you may find it more difficult to borrow money in the future.

Make sure you’ve claimed all government grants or benefits you’re entitled to

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Make an emergency budget

If you’re worried about cashflow, have a look at what you’re spending and what income you have coming in.

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Look at how to cut your household bills, such as switching providers for your gas, electricity or mobile phone contracts.

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Next steps if you’ve missed a payment

If you’ve missed a personal loan payment, contact your lender to explain your situation. Try to avoid taking out more credit unless you know you can afford to pay it back.

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When to get debt advice

Have you you’ve already missed payments and aren’t able to come to an agreement with your lender? Then it’s best to get advice as soon you can, especially if you’ve got other debts as well.

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Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

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