Managing Your Loan

If you’ve recently been approved for a loan, you might be wondering what’s next.

When will I receive my money?
How much do I need to pay off my loan each month?
What’s the best way to manage my loan repayments?
Can I repay my loan early?

The Little Loans guide to managing your loan provides the answer to these frequently asked questions.

When will my money be sent?

This will depend on your lender. Every lender will have their own timescale when it comes to paying out funds, and this information can usually be found on their website or in your terms and conditions.

Some lenders could send your money on the same day your application is approved.

The most important thing to remember is that the time it takes for the money to physically become available in your account will depend on your bank’s policies and procedures.

Using a loan: how does it work?

Received your loan? Great! Here’s what happens next.

1. Use the loan to cover the cost of the urgent expense, for example, car repairs or a replacement boiler.
2. Repay the money you’ve borrowed, plus interest, in monthly instalments, until your loan term comes to an end.

How much money will I need to pay off my loan each month?

Your monthly repayment amount will depend on:

• The amount of money you’ve been approved to borrow;
• Your chosen loan term; and
• The Annual Percentage Rate (APR).

Good to know: the APR combines the interest rate and any standard fees, and is shown as a percentage.

Let’s say you’ve borrowed £500 for 12 months, with an APR of 79.5%. In this scenario, you’ll repay approximately £56 a month, including interest. Please note that this calculation excludes any possible additional fees.*

How to make your loan repayments

Worried about forgetting to make a repayment? You might prefer to set up a Direct Debit instead. This allows the lender to automatically take the money from your bank account on a certain date each month.

Alternatively, a good old-fashioned calendar reminder or monthly notification alarm could do the trick!

Some lenders have a dedicated app, which could make it easier to manage your loan. Your lender may also send you reminders when your repayment is due.

Some borrowers choose to make their monthly repayments by bank transfer. If your lender has a physical branch, it might also be possible for you to make an in-person payment.

You should include loan repayments in your monthly budget alongside any other essential outgoings, such as housing, bills, and groceries.

Will I be charged any additional fees?

Every lender is different; while some could charge additional fees – such as late or early repayment fees - others may not. The best way to find out is to either contact your lender directly, check their website for further information, or read through your terms and conditions.

Can I repay my loan early?

Some lenders could allow you to repay your loan early, although you should check whether they charge a fee for this. If your lender does charge a fee, will repaying the loan early work out cheaper than continuing with your repayment term as usual?

Top tips for managing your loan

• Take the time to read through your loan’s terms and conditions, paying particular attention to any standard or additional fees.
• Make sure your repayments are made in full and on time each month. A late or missed repayment will harm your credit score and could result in additional fees.
• If you’re able to, you might think about overpaying your loan, which could reduce the term and interest. This, in turn, could lower the overall cost of borrowing.
• Consider setting up an automatic payment, such as a Direct Debit, for your monthly repayments. This could eliminate the risk of a late or forgotten repayment.
• Remember to include your loan repayments as an essential monthly outgoing when working out your monthly budget.
• If you think you might struggle to make an upcoming repayment, you should contact your lender as soon as possible.

Who should I contact if I have a question?

If you’ve used Little Loans’ credit broking service to search for a loan and your query relates to the eligibility check, you can contact our lovely team here. Our team will be available to assist you from Monday to Friday, between 9am and 5pm.

Got a question about the creditworthiness assessment carried out by the lender or the loan you’ve been matched with? You’ll need to speak to your lender directly. You should be able to find contact details on their website or our lenders page.

I can’t afford to repay my loan; what should I do?

If you’re finding it difficult to repay your loan, you should get in touch with your lender as soon as you’re able to. Don’t wait until you’ve missed a repayment – this could result in additional fees and a decline in your credit score. Take action as soon as you feel like you’re struggling – that way, your lender can try to help you as soon as possible. They will let you know if there are any options that could reduce the financial pressure you’re facing, such as a temporary reduction to your repayment amount or a repayment holiday.

I need to talk to someone about debt and money worries; who can I turn to?

We’re sorry that you’re currently experiencing money concerns and would like to remind you that this first step – the step you’re taking now in order to seek help – is the bravest and most important one of all. Talking about money can be uncomfortable, but it shouldn’t be. So many of us will struggle with money at some point. The good news is that free, confidential, and impartial advice is readily available. For support and guidance on anything money or debt-related, please contact StepChange, MoneyHelper, Citizens Advice, or National Debtline.

*We used this loan calculator to determine our workings.