We understand that a customer’s financial situation can change suddenly and they may not be able to meet their repayments when they fall due. This may be due to another emergency expense, loss of income or being made redundant and therefore they may not be able to repay the amount as planned.
We are dedicated to treating our customers fairly and will avoid charging you late fees and default interest where possible. Instead, we aim to offer forbearance and leniency in order to help you repay your loan and get back on your feet. Our guide below explains what happens when you cannot repay your loan with Uncle Buck.
We will contact you first
As you aware, you will have a scheduled repayment date with us each month for the loan term – usually the last working day of the month or a date that you have selected in accordance with your pay frequency. If your collection does not go through, we will be notified and send you an email and text message letting you know that your payment has not gone through; we will also attempt to call you. In some cases, this may be because your debit card has expired or there are insufficient funds in your account.
We will not bombard you with emails, phone calls or text messages. Instead, our contact attempts will be within regulatory guidelines and allow time for you to get in touch with us so that we can discuss your situation and find the best arrangement for you.
In the event that you are having financial difficulty, it is important that you let us know as soon as possible. Rather than potential late fees and charges being added to your account, we can help you set up an alternative and more affordable repayment plan to suit your needs.
This may involve setting up an arrangement or pay plan which involves breaking down your repayments into smaller amounts over a longer period of time and freezing the interest. For instance, if you owe £50, this can be broken up into two monthly payments of £25 after discussing your circumstances with one of our advisors.
Late fees may apply
You may incur a one-off default fee of £15 on your first missed instalment if you do not respond to our correspondence and no payment has been made three days after the due date. This is the maximum amount that can be charged and covers any administration fees in order to follow up your repayment and contact you.
In addition, you may be charged the daily interest for every extra day that your loan is not repaid. We charge a daily interest rate of 0.8% on the principal outstanding and this will continue to accrue until you have made contact with us and your account has been resolved. This information is presented to you in the contract that is electronically signed, prior to funding your loan. The total cost (fees, interest and charges) is capped at 100% of the original amount borrowed which means you will never repay more than twice the amount borrowed.
Rollovers and extensions
If you are looking to top up your loan, rollover or extend your repayment for another month, this is not something that we offer. We recognised in the industry that several customers are using rollovers as a way to manage their long-term debt. However, this can lead to severe debt problems for customers which is why we do not offer this facility. Instead, we encourage you to speak to our friendly customer services team to discuss your repayment options.
Impact to your credit score
If you miss a repayment or fail to repay your loan in full, the information will be sent to the credit reference agencies that we work with and this may have a negative impact on your credit score. A record will be left on your credit file stating that you have missed a repayment(s) and this information will be available for future creditors that may be considering you for a loan or financial product.
Repaying your payday loan in full and on time will still involve the information being sent from the lender to a credit reference agency. Since this will be positive, it will allow you to maintain a good credit score or even improve it.
Applying for other credit
Failing to repay and having a mark left on your credit file may make it harder to be accepted for other financial products in the future. This is because you may now be deemed a higher risk to potential lenders. Although there are loan products available for those with poor credit, you may have to pay higher interest rates and provide extra security in order to be accepted.
Since repaying a loan in full and on time will have a positive impact on your credit rating, it will allow you to continue to access affordable credit in the future.
Working with a debt collection agency
In the event that we have tried to contact the customer on a number of occasions and no progress has been made, we may pass on your contact details and account information to an external collections agency after one year. You will be given notice about this in writing, including the name of the agency that your details have been transferred to.
This company will be authorised and regulated by the Financial Conduct Authority (FCA) and will be professional when it comes to collecting debts and helping the customer repay. We understand that no one likes to receive lots of phone calls and emails which is why working with a professional can sometimes be the best way forward.
With a debt management company, they can help you organise your finances and clear your debts whilst still paying for all your essentials such as rent, food and travel, however we always encourage our customers to speak to us directly
Do not apply for more loans
Customers that are struggling to make repayments should avoid applying for more high-cost loans. Payday loans are considered to be high-cost short term credit and by applying for more, it can lead to a spiral of debt.
For free and impartial advice, you can read more online or speak to the following organisations:
Citizens Advice – www.adviceguide.org.uk
StepChange – www.stepchange.org – 0800 138 1111
National Debtline – www.nationaldebtline.org – 0808 808 4000
Money Advice Service – www.moneyadviceservice.org.uk – 0800 138 7777