What Happens If You Can’t Repay Your Personal Loan in the UK?

Personal loans are often used to cover large expenses such as home improvements, weddings, cars, or to combine other debts into one monthly payment. Most personal loans have fixed monthly repayments and a set end date. This can make them easier to manage than some other types of credit. However, your situation can change, and what once felt affordable may become harder to repay.

Why Personal Loan Repayments Can Become Difficult

Many people take out loans when their income feels stable. But unexpected events such as job loss, illness, reduced working hours, or rising household bills can quickly put pressure on your finances. When this happens, keeping up with loan repayments can feel overwhelming. If you are in this position, you are not alone, and support is available.

What Happens If You Miss a Payment?

If you miss a payment, your lender may charge a late fee and add extra interest to your loan balance. This means the total amount you owe can increase. Even one missed payment can have consequences, so it is important to act quickly if you think you cannot pay on time.

Impact on Your Credit Score

Lenders share payment information with UK credit reference agencies. If you miss a payment, it may be recorded on your credit file. This can lower your credit score and make it harder to get credit in the future. Missed payments can remain on your credit file for up to six years, which may affect applications for loans, credit cards, mortgages, or rental agreements.

Contact from Your Lender

If you fall behind, your lender will usually contact you by letter, email, or phone. This is a normal part of the process. They will try to arrange repayment and discuss your situation. If the debt is not resolved, it may be passed to a debt collection agency. Debt collectors must follow strict rules and are not allowed to harass or threaten you.

Steps You Should Take

If you are struggling, contact your lender as soon as possible. Many regulated lenders must treat customers fairly and may offer support, such as temporary payment breaks, reduced payments, or a new repayment plan. You should also review your budget to see where you can cut costs. Free and confidential debt advice is available from organisations such as National Debtline. Acting early can reduce stress and help you find a solution before the problem grows.