Have you been mis-sold a payday loan?
We guide you through what to do if you're struggling with your payday loan.

Last updated: 20/07/2022 | Estimated Reading Time: 3 minutes

What to do if you can’t pay back a payday loan

Payday loans may seem like a simple and straightforward solution, but if you get caught out and can’t pay the loan on time it can quickly become a disaster for you. If you’re struggling to pay back a payday loan, the best thing for you to do is to face the problem head-on. There are steps you can take to sort out the solution - you don’t need to panic. Below are some suggested steps to help you through your situation.

In This Guide:

Step one: Contact your payday lender as soon as possible

This is a vital first step as, by law, your payday lender must help you out if they are contacted. They are required to direct you to sources of free debt advice, suspend recovery of the debt if you are figuring out a debt repayment plan on your own and treat you fairly, which means giving you a reasonable amount of time to repay the loan.

If your payday lender is not being fair to you, you should file a complaint. By law, they must help you.

A lender is not allowed to harass you. This may include a bombardment of phone calls, emails or text messages. If you feel as though you are being harassed, file a complaint.

Step two: Consider cancelling the recurring payment

If your loan repayments are worrying you, or if continuing to pay monthly means you will no longer have enough to pay for living essentials, then you might want to consider cancelling the recurring payment.

This payment is what allows the lender to take the money out of your account and if you want to cancel it, you need to phone your bank at least one day before the payment is due and inform your lender of your plans.

It is advisable to write down the date and time of the cancellation made with the bank so that if any money goes missing following this, by law, the bank must give you a refund.

This doesn’t remove the debt so you will still have to continue to make payments. If you’re struggling, you may want to consider contacting some debt management companies who will help you sort out a plan for repayment. There are charities who will do this free of charge.

Step three: Refuse to roll your loan over

If your payday lender suggests you ‘roll over’ your loan for another month or so, do not agree. This will make life harder for you.

This results in you paying more charges and interest and will end up with you owing a lot more than you did originally.

Before the lender suggests to ‘roll over’ your loan, they should guide you to debt advice so you can sort out a repayment plan.

Step four: Get help from a free debt advisor

The best place you can get advice if you’re struggling to manage your debts is from a free debt advisor. National Debtline and StepChange are two charities that offer confidential free advice.

These charity advisors are there to be on your side and to negotiate with your lender on your behalf.

You must tell your lender you are working with a debt advisor and they then must give you a reasonable amount of time for you to make a repayment plan.

They cannot immediately go to debt collectors, and they must not continue to contact you whilst you are working with your debt advisor. If they do, ask them to stop.

Remember your rights!

A payday lender is not allowed to harass you or pressure you into making payments for your loan. If a payday lender:

  • Calls you at work without permission or at unreasonable hours
  • Discusses your debt with anyone but you without permission
  • Refuses to deal with the debt advisor service working with you

Then you should file a complaint.