Is A Temporary Repayment Plan For A Loan A Good Idea?

When you’re in debt, sometimes it can be difficult to pay it off. In some instances, you’ll want to set up what is known as a temporary repayment plan. However, not everyone is aware of what one of those actually is, and if it is even a good idea. To try and help you with this, we’re looking at the pros and cons. By reading this, hopefully you’ll know if a temporary repayment idea is the best plan for you.

What is a temporary repayment plan?

If you find yourself in a situation where you can’t pay, it’s never good. For whatever reason, you’re not going to be able to make payments for the next few months. In that case, you may want to consider making a temporary repayment plan. This is where you’re basically telling the loan company you can’t pay right now. You can’t make payments now, but you’ll be able to make payments in the future. This is always a better plan than not paying at all, because that can get you in trouble. However, you should know that there will still be interest on the loan. It could even be extra interest, so be sure that this is the right thing to do.

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What are the pros of a temporary repayment plan for a loan?

There are definite benefits to the temporary repayment plan. It allows you to pay less money for a short period of time. This time will hopefully allow you to earn some more money and get back on your feet. Once the time period has run out, you should be ready to pay in full again. You can also talk directly to the loan company about this as well. This means you don’t have to talk to the bank at all.

As well as this, it provides you with enough money to live. The agreement you make will make sure you have enough money for bills and food. This can be very helpful if times are tough in terms of money. The agreement can also help to protect your account from further charges. This means that you’re less likely to get charged more money by the company.

Are there risks with a temporary repayment plan?

There are certain things you should be aware of when you get a temporary repayment plan. First of all, your loan company doesn’t have to agree to your repayment plan at all. This is something you’ll want to avoid where possible. Furthermore, your credit file will be altered to show you had to take out the repayment plan. As well as this, you need to make sure you make the revised payments. If you don’t, there can be even worse alterations made to your credit file. And you still need to pay back everything at one point or another, so bear that in mind.

Real life stories:

Its total ripoff. Asked Moorcroft agent to change my payment plan date to the end of the month as i wont be able to make any payment towards the beginning of the month. They have attempted it twice this month to take money out of my account and my account is in minus now. Seriously !!!!

Sachin Sugathan – Consumer Action Group

Sachin Sugathan – Consumer Action Group

So how do I actually set up a temporary repayment plan?

Setting up the plan involves you to follow a set of steps. First of all, you’ll want to find out how much you can pay the loan company. This gives you a figure you can offer them in a written proposal. This will involve you working how out much you money you’re bringing into your household. This will include things like any tax credits and child benefits you may get. Then you should figure out exactly how much you need to survive in terms of bills and food. Don’t include any allowances for things like credit cards though. In order to find out how much you can pay, you need to do a quick sum. You need to take away the cost of running the house from your income. This will give you the amount you can pay the loan company.

Make sure you write down how much you earn and how much it costs to live. These are figures that you’ll need to have inside your repayment plan. The rules are slightly different if you want to set up multiple payment plans. You’ll need to ensure that you can pay each creditor the same amount. This may mean paying everyone less, but it keeps things fair. Make sure that you clearly explain to everyone why you can not pay the full amount. If you’re setting up multiple plans, then each creditor needs to be aware of this. This will help them decide if they’re going to approve the payment plan or not.

So what happens if I can’t make my loan payments still?

There may be yet more problems which prevent you from paying. If that happens, then talk to your loan companies as soon as you can. Tell them what’s going on, and that you can’t pay the new payments. Be aware though, this does have negative effects. You may have to default on your payments. This will impact your credit score, so be careful.

So is a temporary repayment plan the best choice for a loan?

If you really can’t pay your debts, then the plan is an option for you. However, it should not be done without careful research. You’ll want to make sure that you can pay the new payments without fail. The time you have paying less should help you get back on your feet. This will mean that you can go onto pay everything properly. However, you should think about the negative effects. You need to be absolutely certain you can pay the new payments. Otherwise you could cause a lot of problems for yourself, and lower your credit score.

Overall, the temporary repayment plan can be a good idea for some. If you need time to get back on your feet, then it’s worth looking into. However, it is important to make sure that you consider everything carefully. Make sure you know how much you have available to pay. As well as this, make sure you can definitely pay it. Ensuring that you can pay the debts on time with the smaller payments will provide you will definitely help.

If you can’t pay back your loan, check out check out my article on this here.

Good luck

John (aka Money Nerd)

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Definitions

Examples

FOIA2000 / DPA1998 status

1. Confidential

Normally accessible only to specified and/or relevant members of our staff

DPA-defined Sensitive personal data:

·                     racial/ethnic origin

·                     political opinion

·                     religious beliefs

·                     trade union membership

·                     physical/mental health condition

·                     sexual life

·                     criminal record

·                     salary information

·                     individuals’ bank details

·                     passwords

·                     large aggregates of DPA-defined Personal Data (>1000 records) including elements such as name, address, telephone number.

·                     HR system data

Subject to significant scrutiny in relation to appropriate exemptions/ public interest and legal considerations.

2. Restricted

Normally accessible only to specified and/or relevant members of our staff

DPA-defined Personal Data (information that identifies living individuals including:

·                     home / work address

·                     age

·                     telephone number

·                     schools attended

·                     photographs

Subject to significant scrutiny in relation to appropriate exemptions/ public interest and legal considerations.

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Normally accessible only to our staff

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·                     internal group papers and minutes,

·                     information held under license company policy and procedures

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Accessible to all members of the public

·                     Company filed documents

·                     Company websites

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Other users may have rights of access to data according to the terms of engagement under which the data was gained or created.

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The sets of information being classified should, in general, be large rather than small. Smaller units require more administrative effort, involve more decisions and add to complexity, thus decreasing the overall security.

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A violation of this policy and misuse of the systems and applications within our firm may also be a breach of the Computer Misuse Act 1990; consequentially the company may at its discretion take legal action against an individual or organisation that is found to be in breach of its policies.

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By “third parties” we mean any lender, broker or affiliate who interacts with us in enabling a consumer to make a loan application.

We will use the information to manage their account(s), give them statements and provide our services, for research, assessment and analysis (including credit and/or behaviour scoring, market and product analysis) and to develop and improve our services to the consumer and other consumers and protect our interests.

We, and other carefully selected third parties, will use their information to inform them by post, fax, telephone or other electronic means, about other products and services (including those of others) which we believe may be of interest to them.

If they contact us, we may keep a record of that correspondence.

We will keep details of transactions they carry out through our site and of the fulfilment of their applications and their loan history.

We will keep details of their visits to our site including, but not limited to, traffic data, location data, weblogs and other communication data and the resources that you access.

In order for us to be able to collect and use personal data and / or to pass If they do not want us to use their data in this way, or to pass their details on to third parties for marketing purposes, customers must manually opt in to this agreement (See CONC section of this Compliance Manual).

IP Addresses

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Cookies

 For the same reason, we may obtain information about a consumer’s general internet usage by using a cookie file which is stored on their browser or the hard drive of their computer. Cookies contain information that is transferred to their computer's hard drive. They help us to improve our site and to deliver a better and more personalised service. Some of the cookies we use are essential for the site to operate.

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Where we store data

The data that we collect from a consumer is stored within the European Economic Area ("EEA"). Such staff may be engaged in, among other things, the assessment and fulfilment of a consumer’s application, the processing of a consumer’s bank details and the provision of support services. By submitting their personal data, they agree to this transfer, storing or processing.  We will take all steps reasonably necessary to ensure that a consumer’s data is treated securely and in accordance with this privacy policy.

All information a consumer provides to us is stored on our secure servers. Any transactions will be encrypted. Where we have given (or where they have chosen) a password which enables you to access certain parts of our site, they are responsible for keeping this password confidential. We ask a consumer not to share a password with anyone.

The transmission of information via the internet is never completely secure. Although our systems exceed industry standards for security, and we will always do our best to protect a consumer’s personal data, we cannot guarantee the security of a consumer’s data transmitted to our site; any transmission is at their own risk. Once we have received their information, we will use strict procedures and security features to try to prevent unauthorised access.

Disclosure of information

We may disclose a consumer’s personal information to any member of our group, which means our subsidiaries, our ultimate holding company and its subsidiaries, as defined in section 1159 of the UK Companies Act 2006.

We may disclose a consumer’s personal information to third parties:

Credit Reference Agencies (CRAs)

When a customer makes an application for a credit, we will check whether they are likely to be able to meet the monthly payments and repay the loan.  However, we are limited in what we can actually do as we do not work directly with CRA’s as we are not eligible to do so.  We will work with what the applicant divulges on their fact find/application but we can only judge as accurately as the information given allows.

When we submit an application to a lender, it is normal practice for a lender to carry out a credit search with a CRA.  In the past, this would have left a search ‘footprint’ on the applicants’ credit file that may be seen by other lenders. Large numbers of applications made within a short period of time would adversely affect a customer’s ability to obtain credit, and they should always consider this before making an application for a loan.

However, the lenders that we have chosen to deal with offer a facility known as a ‘quotation’ search, which does not leave a footprint. This is in line with CONC 2.5.7 which suggests that during the ‘shopping around’ process of the customer, the lenders that we promote should only use a ‘quotation search’, which does not leave a footprint.

Access to information

The Act gives a consumer the right to access information held about them. Your right of access can be exercised in accordance with the Act. Any subject access request may be subject to a fee of £10 to meet our costs in providing them with details of the information we hold about them.

Changes to our Privacy Policy

 Any changes we may make to our privacy policy in the future will be posted on our web page, and, if appropriate, notified to consumers by e-mail.

Questions, comments and requests regarding this privacy policy are welcomed and should be addressed to moneynerduk (at) gmail.com.

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