Payment Deferral FAQs
Your Payment Deferral
What is a Payment Deferral?
A Payment Deferral is a concession that allows you to pause making your normal monthly repayments for up to three months. During that time, we will pause collection of the normal monthly payments due under your finance agreement.
In mortgages and other types of finance ‘Payment Deferrals’ are also referred to as ‘payment holidays’ and may operate slightly differently.
It is important you understand that a Payment Deferral only puts your monthly payments on hold and those payments are not cancelled, so they will still need to be made up before your finance agreement is completed.
If you make up your Deferred Payment(s) before your normal monthly payments resume, there is no cost for the Deferral. You do also have the option of making up your Deferred Payment(s) over a longer period of time but there is an interest charge for that.
Payment Deferrals can be helpful in an emergency but they should be not used unless absolutely necessary. The FCA have confirmed that people who can afford to continue their repayments should do so; a Payment Deferral can actually make such people’s financial situation and credit profile worse, not better.
As well as offering Payment Deferrals, there are other things we can do to help our customers deal with the impact of coronavirus so please see our Coronavirus Support FAQs for more information.
What happens when my Payment Deferral period ends?
Our Payment Deferral – Next Steps FAQs set out what will happen at the end of your Payment Deferral period and includes important information about how you can make up your Deferred Payments.
What can I do, if I can’t afford my repayments, after a Payment Deferral?
If you cannot afford to restart your normal monthly payments after a Payment Deferral, please contact us at MoneyManager or call us on 0333 200 0030 as soon as you can, so that we can discuss your options with you.
Also, if you are worried about your debts, you can get free, impartial debt advice and information about managing your money from the Money Advice Service Money Navigator tool and the FCA’s webpage ‘Dealing with financial difficulties during the coronavirus pandemic’.
Can I have a second Payment Deferral?
A second Payment Deferral may be granted as follows:
- Customers who currently have a Payment Deferral will be eligible to apply for a further Deferral, as long as the total length of the Payment Deferrals doesn’t exceed a maximum of 6 months.
- Customers who have not yet had any Payment Deferrals can apply for Deferrals of up to 3 months each, with a maximum of 6 months of Deferrals in total.
- Customers who previously had a Payment Deferral of less than 6 months can also apply for a further Payment Deferral, as long as the total length of Deferrals doesn’t exceed 6 months.
Please note that Payment Deferrals must end on 31 July 2021. This means that, depending on when you apply, you may not receive Payment Deferrals which last the maximum 6-month period. Therefore, please consider this when deciding when to apply.
Payment Deferrals mean that your monthly payments are delayed. They still have to be paid at some point during the life of your finance agreement and do not change the length of your finance agreement as they simply alter the time when the Deferred Payments have to be made. This means that, at the end of your Deferral period you will still owe the same amount of money as you did before you took out the Payment Deferral and may therefore have less time to pay it back.
As noted above, Payment Deferrals can be helpful in an emergency, but they should be not used unless absolutely necessary. We agree with the FCA that people who can afford to continue their repayments should do so; Payment Deferrals could actually make such people’s financial situation worse, not better.
Will my account be in arrears if I have a Payment Deferral?
The terms of your finance agreement haven’t changed so your account will technically be in arrears until your Deferred Payments are made up. However, you will not be reported to credit reference agencies as being in arrears due to a Payment Deferral and as long as you continue to make you normal monthly payments, the Payment Deferral will not appear on your credit profile as arrears.
Any arrears that occurred before your Payment Deferral will remain on your credit profile, even if you have a Payment Deferral, and any failure to make your normal monthly payments under your finance agreement or to keep to the terms agreed for making up your Deferred Payments will also be reported to the credit reference agencies.
You should also be aware that, although Payment Deferral will not be reported to credit reference agencies as negative impacts on your credit profile, lenders may, when making credit decisions in the future, consider a range of information. This may include information you provide, information the lender already has and information from our bank account, including information relating to Payment Deferrals.
Why did you send me a “Notice of Sums in Arrears” letter?
As stated in the letter sent with the Notice, we are required by the Consumer Credit Act to issue such Notices. As long as you are maintaining your normal monthly payments and keeping to your Payment Deferral exit option, you don’t need to worry and can disregard the Notice of Sums In Arrears letter.
If you do miss any payments under:
- your finance agreement;
- the option for making up your Deferred Payment; or
- any other arrangements we have agreed,
you will receive further correspondence from us which you will need to act on.
Will I be charged interest during my Payment Deferral?
We will not charge you for arranging a Payment Deferral, nor will we charge any interest during the Payment Deferral period.
However, please note that interest may be charged on your Deferred Payments if you do not make them up in full, straight after the end of your Payment Deferral(s).
How long do I have to apply for a Payment Deferral?
You have until 31 March 2021 to apply for an initial Payment Deferral or a further Payment Deferral. However, customers who currently have a Payment Deferral will be able to extend that Payment Deferral after 31 March 20201 to cover consecutive payments up to and including 31 July 2021, subject to the maximum 6-month limit.
What do I do if I cannot afford to immediately make up my Deferred Payment(s) in full?
We have made a range of options available up your Deferred Payment(s). These are set out in our Payment Deferral – Next Steps FAQs.
Please read through the full range of options to see which one might fit your circumstances best.
Will the terms of my finance agreement change?
No, all of the original terms of your finance agreement will remain the same.
Both Payment Deferral and the options for making up your payments are concessions, offered to help you cope with the impact of coronavirus and in line with guidance from the Financial Conduct Authority. They all involve temporarily suspending or varying some of our rights under your existing finance agreement but only on a temporary basis. This is in order to accommodate your Payment Deferral, and so the actual terms of your finance agreement have not changed.
If you do not keep to the terms of the option you have chosen, it will terminate automatically and any remaining amount of Deferred Payment, together with interest due, will be immediately repayable.
What can I do if I'm still worried about my finances?
Please see our Coronavirus Support FAQs which contain links to a number of websites you might find useful for helping you to manage your finances at this difficult time.