Personal and Payday Loans in the UK: How to Manage Unaffordable Repayments
Understanding Your Rights Under FCA Regulations
How Personal Loans Work in the UK
Personal loans are sums lent to individuals to be repaid over an agreed-upon term. They are typically unsecured, meaning no asset is tied to the debt.
How Payday Loans Work in the UK
Payday loans are short-term, high-interest loans intended to be repaid on the borrower’s next payday. Like personal loans, these are typically unsecured.
Secured vs. Unsecured Loans: What You Need to Know
Both personal loans and payday loans are unsecured debts.
Some loans are not unsecured (secured loans). These should be handled differently; see this section.
Key steps to identify your loan type:
- Review your loan agreement for collateral clauses.
- Contact your lender directly for clarification.
- If you don’t own property or a vehicle tied to the loan, it’s likely unsecured.
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What to Do If You Can’t Repay Your Loan
If you are struggling with loan payments, relax. You will feel ten times better once you visit our unsecured debt section.
The good news is that the Financial Conduct Authority (FCA) mandates lenders to treat borrowers fairly. Token payments are one option to reduce repayments. Other solutions include:
- Debt management plans
- Negotiating revised payment terms
- Exploring debt relief solutions (detailed in our unsecured debt section).
Next Steps: Tackling Loan Debt Confidently
Anyway, enough chit-chat, head over to our Unsecured Debt Solutions guide for step-by-step strategies tailored to UK borrowers.
