Unforeseen financial emergencies can occur at any time and without backup funds available you may find yourself struggling. You may consider reaching out to friends and family to borrow money but this can be difficult, especially if you are worried about sharing your financial circumstances with them. In such situations, a small personal loan may be the answer. Small loans can provide a financial boost in an unexpected time of need, and help you manage the situation quickly. They can usually be accessed online, and with a quick application and speedy decision, you could have your loan within the hour or even sooner if you are approved!

What happens if I can’t repay my loan?

Before taking out a loan, it’s important to ensure that the loan repayments are affordable and that the planned use is responsible. Do you need to take out credit, or could you dip into your savings, or even wait until your next payday to cover the unforeseen expense? Remember to take into account your current financial circumstances as well as any upcoming commitments that you’ll need to budget for when considering if the loan is affordable. These considerations should help to reduce the chances of the loan becoming unaffordable at a later date.

Failing to repay your loan on time (or at all) may lead to bigger problems down the line, especially if you don’t face the situation head-on and as soon as possible. If you miss a payment, your lender will usually get in touch with you to let you know and provide you with instructions on how to make the payment. Most providers usually charge late fees and interest if you miss a payment, so the debt can end up growing if it is left unpaid.

If you continue to miss consecutive payments over a long period of time, or if you simply stop making all payments, your account may go into default. This may also be marked on your credit file which could negatively affect your ability to access credit in the future, as it tells lenders that you have had a history of not paying on time. Continued failure to pay or to engage with your lender may then lead to your account being transferred to a third-party debt collector or the lender may choose to take legal action to recover the money that is owed.

Whilst this is the worst-case scenario, it’s important to understand the consequences of missing your loan repayments. You will usually have a number of opportunities to get back on track with payments as lenders want to help you to repay in a way that you can afford, and they typically prefer to avoid taking legal action.

someone with bills and a calculator

What to do if you're struggling to repay

Lenders understand that your financial circumstances can change unexpectedly which is why there are a number of systems in place to assist you should you find yourself struggling to repay your loan.

Here’s what you need to do if you’re in a tight spot:

Don’t stay silent

Speak to your lender as soon as you realise you’re going to struggle to make your repayment. They’ll most likely ask for some information about the circumstances that are preventing you from making your repayment. They’re not being nosy – they just need to understand what is going on to ensure that they arrange a suitable repayment option for you. Remember it is never too late – or too early – to let the lender know that you’re unable to make a payment.

Work out your income and expenditure

The easiest way to figure out what’s going on with your finances is to take a look at your income and how your money is being distributed each month. It could take something as small as reducing takeaways and shopping trips to transform your immediate financial situation and make repayments towards your loan more affordable.

Set up a repayment plan

It can be daunting going back to your lender and telling them you are struggling. Don’t worry – most lenders are understanding and willing to get you back up to scratch with your repayments. If you’ve already worked out what you can afford to pay each month, then you’re already ahead of the game. Share this with your lender, as this will help them assist you in setting up a repayment plan that works for you.

What does this mean for my credit score?

There are three main credit reference agencies in the UK – TransUnion, Equifax and Experian – and each of them has a different way of calculating your credit score. However, they all use personal information, such as your address, as well your financial records, such as your previous repayment history. Things that may seem pretty minor, like how often you apply for credit, can affect your credit score. Lenders use the information they see on your credit file, along with the information you provide when you apply for credit, to work out whether or not they think a loan is affordable. It also helps them to calculate how likely it is that you will return the loan along with the interest. If you have a history of failed or late repayments, lenders may not be as confident to lend to you. This may also be reflected as a lower credit score.

If you are concerned that your repayment history may be having a negative impact on your credit score, there are always ways to improve it, such as making arrangements with your lenders to repay your debt or speaking to a debt charity to get the ball rolling. Though a large chunk of the information that goes into calculating your credit score is dependent on your repayment history, there are various factors that contribute to your score so don’t panic too much if you’ve had a difficult few months with repayments.

Will I be able to borrow again?

Not everyone has a perfect borrowing history and lenders know this. Just because you might have struggled with repayments in the past does not mean that you’ll no longer have access to any credit in the future. Whilst your options may be limited if you’ve struggled to keep up with repayments in the past, there are different options for different types of borrowers. For example, there are long term loans online which allow you to spread out your repayments over a set period, which can make managing your finances much easier in comparison to other credit options. You may also want to make an extra effort to improve your credit score.


Financial difficulties can arise when you are least expecting it and it’s okay to admit that you are having a hard time with your finances. Keeping quiet will only exacerbate an already difficult situation and reduce the options that are available to you once you are ready to face it. If you’re struggling with repayments, it’s not the end of the world. Lenders want to help you, but they can only do so if you let them know about your situation and work with them to find a solution that works for you.