“I took out a payday loan a few months back. I’ve now had my hours cut because of lockdown and can’t afford the repayments. Can I get any help?”
On the 27th April the FCA (Financial Conduct Authority) ruled that all payday loan companies must offer a ‘payment holiday’ to customers struggling due to coronavirus. A payment holiday is a short amount of time where our loan repayments go on hold. During a payment holiday, interest is sometimes frozen.
The minimum length of payment holidays for payday loans is one month, but lenders can offer a longer amount of time. (Let’s see about that! Payday loan companies aren’t known for being generous.) Anyone who wants to make use of a payment holiday should get in touch with their lender as soon as possible. You can apply for a payment holiday up until the cut off, which is 27th July 2020.
Once the payment holiday is over, the lender can’t just demand the money owed. Part of the FCA ruling said that lenders must allow their customers to make the deferred payment in an ‘affordable way’. This could either be in small instalments added to future payments, or by adding another month at the end of the loan period.
The new rule only came in on 27th April. Anyone who had been in touch with their lender before then and denied a payment holiday should contact them again. It’s now the law so they can’t say ‘no’.
As well as payment holidays for payday loan customers, the FCA has done the same thing with pawn brokers, rent to own and buy-now-pay-later companies. This applies to in-store credit and catalogue credit, as well as places like Brighthouse. With this type of loan we can request a three month payment holiday, but interest will still build up during this time. These new rules were also brought in on the 27th April and last until 27th July.
For loads more info on rules around payment holidays during coronavirus, scoot on over to the MoneySavingExpert page here.
For more info about wellbeing during the coronavirus crisis, have a look at the list of questions and answers on Corona-Finance section of the Quids in! magazine website here.
If you have a question that you can’t find the answer to on our site, you can ask us yourself by using the Corona-Finance Enquiry Form on the site.