PAYDAY and short- and medium-term loan borrowers struggling with repayments due to coronavirus should contact their lender as quickly as possible.
These lenders don't have a blanket approach to helping customers, for example offering three-month repayment holidays as we've seen banks do with mortgages.
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But they are able to offer assistance on a case by case situation.
Graham O'Malley, debt expert at Citizens Advice, told The Sun: "All firms, including payday lenders, are required to treat their customers fairly.
“This means they need to consider your circumstances, such as if you're not able to work due to Covid-19, and then try to help you.
“This could include proclaiming to offer you additional time to pay, a breathing space and you don't have to make payments, or stopping adding interest to the debt.
“If you've got a payday loan and therefore are struggling to make repayments, you should contact the firm and ask the things they can do to help.
“If you're still worried, contact Citizens Advice free of charge, impartial and confidential advice.”
What help can my payday lender offer?
According towards the Financial Conduct Authority (FCA), which regulates high cost credit firms, there are a variety of various options lenders can offer to struggling borrowers.
They can suspend, reduce, waive or cancel further interest or charges.
Alternatively, they might defer payments so long as this doesn't increase repayments to an unsustainable level or shorten the term of the loan to create repayments excessive.
Another option is for lenders to simply accept token payments for any "reasonable" time period if repayments in their current rate mean borrowers can't meet priority debts or pay their rent, bills or buy food.
The Sun has reached out to numerous short-term and medium-term high cost lenders to discover their policies.
Here's what we've learned so far:
- 118 118 Money: Customers who get in contact to advise of difficulties because of coronavirus may have their account put on hold for Thirty days. It will then come back to borrowers during this period frame to discuss an inexpensive repayment schedule. It doesn't charge any late payment fees.
- Amigo: It might only tell us that customers is deserving of in contact as help differs based on your situation.
- Loan Pig: Can provide repayment holidays and/ or reduced payment schedules without adding further interest or financial penalties. What is offered will be different with respect to the customer but in yesteryear it's offered as much as four month repayment holidays.
- Mr Lender: Can freeze future payments, spread repayments over a longer term to lessen monthly obligations, or offer breathing space from repayments. It added that it never applies fees or charges for late repayments.
- Sunny: Will decide assistance on a case-by-case basis but options include repayment holidays.
Sadly, most financiers don't have advice on their websites about the help on offer to borrowers during the coronavirus epidemic.
So you'll want to get in contact to inquire about.
Sara Williams of debt blog Debt Camel said: "Most lenders say get in touch if you have problems because of coronavirus – however they aren't being clear by what help they'll offer.
"During these difficult times, payday loan lenders ought to be more open and say that people might have payment holidays when they need them and that this won't affect people's credit records."
Industry trade bodies, the customer Finance Association (CFA) and also the Finance and Leasing Association (FLA), say members will look at the choices to help borrowers.
The CFA adds that lenders are moving more staff onto phone lines to assist using the rise in calls.
Will this affect my credit rating?
Where a repayment holiday is agreed because of coronavirus, the UK's three credit reference agencies – Equifax, Experian and TransUnion – say it won't impact your credit score as they'll implement an “emergency payment freeze”.
This means it won't be documented on your file.
It will also apply to other measures for example reduced payments and paused payments, but not to increased credit limits or new borrowing.
Have payday loan lenders stopped giving out new loans?
Yes, some payday and medium term lenders have stopped supplying loans to new borrowers due to the coronavirus.
These include Amigo, Drafty, and Everyday Loans.
Where can one use if I need help?
If you're struggling you should get free advice from charities for example Citizens Advice, National Debtline, and StepChange.
We've also rounded-up banks which are giving mortgage holidays and larger overdrafts if you're struggling because of coronavirus.
Plus, here's how to get help paying the bills.