Feeling overwhelmed by the thought of having to pay back your holiday loan? Or found yourself in an unexpected situation and don’t know what to do?
Despair no more…
Here are 5 best ways to manage your holiday finance, without making you want to rip your hair out!
1. Be aware of how your loan repayments are being processed
How are payments usually processed?
Depending on the company, you may be able to opt for one of the following choices:
• Continuous payment authority
• Direct debit
However, it is common that most lenders will use continuous payment authority. This method allows lenders to verify your account and collect recurring payments on a scheduled date.
However, it may also be useful to know that the lender is legally required to give you notice before collecting any of the repayments each month.
2. Keep all of your details updated
Having to update all your details may seem like such a futile task.
But apart from it being quick and easy, it can save you extra hassle as it avoids there being a miscommunication between yourself and the lender.
Contact your lender directly if any of the following has changed and needs updating:
If you change accommodation
If your contact information has changed
If there is a change in your employment status
If you change any personal details
3. Check to see if you can pay your loan back early
Are you tempted to pay off the whole sum of your loan early, to avoid incurring interest charges?
Well, this may not be such a bad idea…
Most lenders do accept early repayment requests. You could be permitted to make larger repayments each month or even pay large deposits against your sum loan amount!
What are the drawbacks of this?
Nothing is as it sounds...
Some providers charge extra fee’s if you want to pay early. This is because they are losing out on interest the earlier you pay. Consequently, they are well within their rights to charge you the equivalent of 1-2 months of interest to make up for their losses.
Weigh up your options
You should always work out the amount of money you would be saving if you choose to pay the early repayment fee. Although it may seem that you would be saving more the earlier you pay, you may actually end up losing more, especially with a hefty early repayment fee. Use an interest calculator to calculate how much you are racking up.
4. Make changes to your loan
We get it. Life happens…
You may find yourself in a predicament where you don’t have the funds available to pay back your loan.
If this is the case, your best bet would be to contact your lender directly to find out if they could possibly extend your loan term. This isn’t unheard of so hopefully they can sort something out for you.
This will make your monthly payments smaller and more manageable. But it may result in an extra fee to pay – making your loan more expensive in total.
5. Be prepared for things to go wrong
The best-case scenario is that you will have no issues when repaying your loan. But life is unpredictable, and we all have to be prepared for things to not go quite how we want them to.
So, if you are in need of a little guidance, try not to worry!
We are here to help answer your questions if you are struggling to find a solution when something does not go to plan.
Struggling to pay your loan back?
Not being able to pay off a loan is a tricky situation to be in.
So just be aware that charges do incur if you are late or miss the repayment loan deadline completely. It is common to be charged a late or missed payment fee of around £30.
Bear in mind that the lender will also file a report of the missed payment to credit reference agencies, so your credit report will be affected. This could damage your credit rating so do your best to repay your loan within the agreed repayment term to avoid a poor credit score.
Decided you want to cancel your loan?
Are you having second thoughts about applying for a loan and are worried you can’t take it back?
Well, you’re in luck!
You have 14 days from the date you sign the loan agreement to cancel your loan. This is known as the cooling off period.
However, before you go ahead and cancel your loan, be aware that you are still required to repay the money you have already borrowed and any interest on top of that, within 30 days.
Moving to another country?
Just because you are moving to another country doesn’t mean you are void of repaying back your loan. You are still required, by law, to repay back the remainder of your loan.
Therefore, if the lender does stop receiving payments from your account following your move abroad, they will file a report on your missed payments to UK credit reference agencies. It is also possible that they may choose to take the necessary steps to claim the debt by hiring a debt collection agency.
To avoid being in this position, be sure to let your lender know of your plans to move abroad so you are able to discuss your options. If you do not communicate this with your lender, they are in their rights to accuse you of fraud.
So now that you are an expert at managing your holiday finance, you can go on holiday resting peacefully knowing that you have got everything covered!