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An arrangement to pay is when a lender allows a borrower to restructure their repayment plan because they are struggling. Usually, repayments will become smaller over a longer repayment term. This makes repayment easier for borrowers.


Key Points:


  • An Arrangement to Pay occurs when a borrower and lender agree to restructure the terms of a repayment contract.
  • Only 14% of those who take out payday loans can afford to pay them back as outlined in their contract.
  • You should only seek an Arrangement to Pay if you truly need to. Doing this can harm your credit score.
  • To create an Arrangement to Pay, contact your lender and explain the situation.


contact your lender

If you cannot afford to pay off your loan, you should contact your lender as soon as possible.


Should I Ask For An Arrangement To Pay?


If you have the money to pay off you loan, but just don’t want to spend your money on paying off debt, no, you should not seek an arrangement to pay.

You should only seek one if absolutely necessary. For instance, if you have lost a job, been hit with unforeseen medical bills, and cannot afford to pay your debt, then an arrangement to pay may be the best option.

You should only take out an arrangement to pay if you need one. Adjusting a payment plan may cause lenders to consider you unreliable, and could make them unwilling to loan to you in the future, or to charge you higher interest.



Will An Arrangement To Pay Impact My Credit History?


Yes, an arrangement to pay will be clearly marked on your credit history for a minimum of five years and will, in most cases, lower your score. With a credit score, the higher the better. The fact that you were unable to pay off your debt will be visible to future lenders and may deter them from issuing a loan to you. This is because they may think that their money is not safe in your hands.

On the other hand, plenty of lenders are understanding of financial hardships – after all, that’s their industry. Because of that, low credit scores and financial hiccups don’t always prevent you from securing a loan. You can still secure a bad credit loan from a number of lenders across the US.

Arrangements to Pay will be clearly marked on your credit history.


How Do I Secure An Arrangement To Pay?


You need to get in contact with your lender and explain why you will be unable to repay the loan in the way that you agreed. They will want to hear a legitimate reason.

Lenders will often be willing to arrange an alternative payment plan.

Remember, their priority is to ensure they receive their money without having to chase it or threaten legal action. Your lender may offer you a longer time frame to repay the loan in smaller chunks. Only in extreme cases can payday loan companies take you to court over unpaid loans.


cannot meet costs

An arrangement to pay makes repaying your loan more flexible.


What Could I Do Instead?


Firstly, stay calm! You are not alone in facing financial troubles and there are plenty of avenues when it comes to repaying debt.

You should check if you are entitled to any government support, which could be the case if you are out of work and therefore entitled to government benefits.

You could approach a trusted loved one for advice or even for funds if this is feasible for you and for them. Remember, mixing relationships with money can have undesirable results. When borrowing from friends and family, be confident that you will be able to pay back these loans.

Finally, you could adjust your budget to free up some cash. If you are slightly tech savvy, you can download a budgeting app like Mint or Honeydue to your smartphone or tablet. These help you plan ahead and get on top of your repayments.

If apps aren’t your thing, you could create a manual budget by tracking your income and outgoings. You could make lifestyle adjustments, such as walking instead of taking the subway. These little savings here and there will enable you to save more.

If none of these are available to you or sufficient, you could contact your lender and seek an arrangement to pay.