05 May Company Statement: Payday & Personal Loans During The Covid 19-Coronavirus
Further to our brief statement we put online a couple of days ago we felt it best to give you a fuller rundown of how the coronavirus has impacted the lending and short- term lending industry. We will also use this space to inform you as to what help is available and where with specific regard to lending and personal finances.
Are Payday Lenders Still Lending During Coronavirus?
We normally operate with a lending panel of up to 40 different direct lenders of whom around 25-30 will be lending at any one time. That figure has dropped to around 6 still lending with up to 3 lending at any one time. So the bad news is the lenders have contracted severely, the good news is there are a few still lending and you can access them right here.
These are obviously highly uncertain times which are hopefully drawing to a close as the pandemic subsides. The problem is nobody knows what the lasting effects will be. This means caution will reign in the minds of lenders for some time to come.
It’s a very similar story in the personal loan market as most retail lending has been curbed apart from the government funded initiatives which will be your best bet if you qualify for one of their loans. Good luck with that. We have a couple of lenders still funding loans under our ‘apply now’ button so it’s worth a try but worth bearing in mind our normal 25 lender panel is now just a couple.
What Help Is Available If You Are Looking For Payday Loans During Coronavirus?
Payday / High Cost Loans
Let’s start with the important stuff and all payday loan customers in the UK will have to be offered a one month payment freeze by their loan provider if they say they are experiencing financial difficulties due to the coronavirus.
It doesn’t matter whether you went down the Payday Loan direct lender route or used a broker like us, the company who lent you the money on a short term high interest rate MUST offer you a one month freeze.
The relevant part of the Financial Conduct Authority directive is here Help for high cost credit customers. No additional interest will be charged during this time and the lender is expected to look favourably on any further freeze requests over the coming months due to the pandemic.
If you’re wondering whether or not your loan qualifies as a payday loan ask yourself a couple of questions. Is the loan term less than one year? If so it’s a payday loan but it may have been called an instalment Loan or a short-term loan.
Also, if it’s for less than £2,000 or 3,000 it may well still be a payday loan but if it’s for less than £1,000 and under a year in length, this will likely be classified under this category.
The good news is that if your loan doesn’t qualify as a high cost loan, it’s still a loan and it means you can have a 3 month payment holiday instead of the single month. The one month is supposed to reflect the fact that Payday products have significantly shorter terms than normal loans.
You have until July 27th to formally ask your lender for a payment holiday so if you’re ok now but find things tough going over the next month or two you can still get the help a little further down the road. If you asked your lender before April 27th and they didn’t help, it’s worth asking again as now they have to help. Any deferred payments can be added to the end of the loan but they must be repaid in an ‘affordable way’ which could mean either one lump payment at the end of the loan term or a series of smaller payments.
Personal Loans are also referred to as unsecured loans and like Payday Loans it doesn’t matter how you got your loan either as a personal loan from a direct lender or via a broker the guidance is the same.
If your finances have been impacted by the virus you will get help by way of a 3 month payment holiday. A personal loan is either a secured or unsecured regulated credit agreement that is not a high cost short term credit agreement, buy now pay later, rent to own, hire purchase agreement (including car finance – find out more here), credit card or overdraft. You have until July 9th to request a payment holiday from your lender.
The lender can still add interest to the loan while the holiday is in force but there will be no detrimental effect on the customer’s credit file and no fees should be charged at any stage of the process. The 3 month payment holiday, the no fee at any stage and the lack of impact on anyone’s credit file also applies to Home Collected Credit, Guarantor Loans and Logbook Loans.
For any of these products and associated payment holidays you should not have to prove you are struggling. The lender should take you at your word. Most requests can be done online but some may want you to use their app or the phone.
We hope this helps and we wish you all the very best in getting through this pandemic and it is our sincere wish you come out the other side in the best of shape.
For any further questions, please contact us here.