What to do if you miss a loan repayment

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There are lots of reasons why you might miss a loan payment, especially if coronavirus has been affecting your finances.

If you have a loan, the most important thing is to reach out to your lender and explain your situation. 

If you have a loan with Monzo, please reach out to us in the app. Here’s a bit about what we could do to help.

How will I know if I’ve missed a loan repayment?

If you don’t have enough money in your account to cover the repayment the day before it’s due, we'll send you a reminder in your Monzo app. 

If you don’t have enough money in your account on the day the payment’s due, we’ll tell you it’s failed by sending you a notification and showing you a message in the app. 

When you open the message, we'll explain what you can do. 

  • If you have enough money to make the repayment but it wasn't in your Monzo account, we'll walk you through how to re-try the payment.

  • If you can't pay this month or you have any questions, we'll link you to our in-app chat so you can talk to someone.

At the end of every month, we’ll report your information to Transunion, a credit reference agency, and they’ll add it to your credit file. The information in your credit file can affect whether banks will lend you money, how much they’ll lend you, and how much they’ll charge you.

What if I’m struggling to pay?

Please get in touch with us in the Monzo app if you’re struggling to pay back your loan. If you can't make a repayment on the date it’s due, but you know you’ll have the money soon, please let us know.

When you get in touch, we’ll connect you to a financial difficulties specialist, who can advise you on how we can help you manage your debts. 

The options available to you will depend on your circumstances, so it’s helpful to share anything with us you feel is affecting your ability to pay.

We might be able to: 

Offer you a payment break

A payment break is an arrangement that allows you to take a break from repaying your loan for up to three months.

A payment break makes your loan last longer by pushing back your monthly payments. If we offer you a payment break, we’d keep charging you interest for the months you're not making repayments. So if you take a payment break, you'd pay back more money overall.

Give you some breathing space

You may need some time to consider your options and decide on a long term solution to manage your debts. 

To give you some space to think, we can temporarily stop sending you messages about your loan and repayments. We can also stop loan taking loan repayments automatically from your account during this time.

If you are on breathing space payments are still due and you will continue to be charged interest as normal. Being on breathing space will not impact your credit score unless you miss a payment. Missing a payment will be recorded on your credit file and may impact your ability to get credit in the future.

Set up a repayment plan 

We might be able to set up a repayment plan which’ll freeze your interest and let you reduce your monthly repayments to a more affordable amount. You could also choose a different date to make your payments each month. 

The repayment plan will appear on your credit file and could affect your credit score. But it might be a useful option if you can't afford the repayments we agreed because your circumstances have changed.

What happens if I miss multiple payments?

If you miss two payments, we're legally required to send you a notice of sums in arrears (NOSIA) until you're up to date with your loan payment schedule.

If you miss six repayments on your loan, we’ll send you a Notice of Default in the post.  A default means you’ve broken your loan agreement. This is something we need to tell credit referencing agencies about, and it’ll show on your credit file for six years. That will almost certainly make borrowing money harder and more expensive for you.

The Notice of Default tells you when you’re due to default, which will be 31 days from the date we post the letter.

If you get back on track with your payments or get in touch with us by the date we’ve given you, we won’t default your loan or tell the credit referencing agencies. But if you don't reach out or get back on track with your payments by the date we give you, we'll default the loan.

If you default on your loan, it will stay on your credit file for six years. 

You’re also still liable to pay off the debt. If you pay off your debt after you default, it might improve your credit score. And it is still possible to improve the damage to your score once you pay off your debt.

You can get in touch with us to discuss your debt whenever you want to – even after we’ve given you a Notice of Default.

If you’re struggling to manage debt you could contact Stepchange who offer free confidential debt advice. They can recommend the best debt solutions for your individual circumstances.