If you can’t pay, just say…

Why keeping the lines of communication with your lender is important

Before we say anything else, we need to say this. You must make your repayments. This is important because making your repayments on time and in full is at the very heart of the contractual agreement you entered into once you accepted the T&Cs and “signed on the dotted line” so to speak. It’s your classic quid pro quo (if you, then I) situation where, by accepting the terms and conditions, as well as the cash you needed, you have made a commitment to make all scheduled payments until the terms are satisfied and the loan has been serviced in full.

All that said, yes, we know that life happens. No one gets through life without having to deal with some form of adversity and oftentimes, money has something to do with it – either as a root cause or the very necessary remedy to an unforeseen circumstance. In short, you may run into a situation where you can’t make a payment. If that happens despite your best efforts, the worst thing you can do is ignore the issue and clam up.

In the absence of a reasonable (or any kind of) explanation, the lender that you have entered into an agreement with will have no choice but to add a dishonour fee to your loan. Now, generally speaking, these dishonour fees are not massive comparatively speaking however, if ignored and or left unexplained, it’s fair to say that an unfavourable impression from a credit perspective will be made.

What you can do if you can’t make a repayment

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If circumstances have overwhelmed you, perhaps your employment situation changed suddenly and without warning, it is best to contact your lender directly. Once a suitable lender was matched to your circumstances and needs, you would have been put in direct contact with them and the relationship in terms of borrower and lender would have progressed from there. No matter what your circumstances were (in need of an emergency loan or simply a fast cash loan enabling you to take advantage of an opportunity), your lender made provision for that within the fabric of the offer and contract. If there was a certain amount of risk to be taken on in offering you a solution, the lender certainly went in with their eyes open and were willing to work with you. It is for that reason that we encourage you to:

• Inform your lender straight away if you cannot make a payment or changes in your situation have occurred such that you cannot make payment(s). It’s in everyone’s best interests to work out a solution.

In some cases, you may find it necessary to apply for Financial Hardship with your lender. If that proves to be a reasonable option for your set of circumstances, you should ensure that it is a deeply considered decision. If, at first glance, you simply feel that you’re going to be inconvenienced by making a payment or you can definitely make the payment, but it may be slightly late – again, the clear message is to contact your lender as soon as possible and work with them towards a short-term solution. It may be that the dishonour fee added to your next repayment is as far as things need to go.

The benefits of making your repayments

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Being able to demonstrate a history of making repayments on time and in full paints a flattering picture of you as a borrower in the eyes of prospective lenders. But flattery is far from the only benefit of a clean credit history. A history such as the one just described affects:

• Risk profile – confidence in your ability to service loans can be built on your recent, past and current repayments. If you have had a number of loans and your repayment history has been solid, that’s one less question to be considered by prospective lenders – you are seen as less of a risk.
• Interest – the repayments history, if favourable in the eyes of the lender, can often be reflected in the interest rates attached to the contract you are offered. If you have had difficulty with on-time repayments in the past, the rates, terms and conditions you are offered may not be as favourable as those offered to someone who has never missed a repayment.
• Credit limits – typically, as perceived risk is reduced because of a history of satisfactorily serviced loans, lenders may be more inclined to offer larger loans because of the confidence they may have in your ability to make repayments.

It would be very rare (and ill-advised) for an applicant to try and secure a loan if they knew that could not make the repayments. So, setting that scenario to one side, if you do suddenly find yourself in difficulty and at serious risk of missing a repayment, please do speak to your lender who, more often than not, will be happy to work with you to ensure a mutually satisfactory outcome.

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