When you take out any kind of credit – such as a personal loan or credit card – the lender must be happy that you’re able to manage the agreed repayment schedule. It’s doubly important that you are also confident in your ability to pay back what you have borrowed. Of course, even when both parties are confident that all repayments will be made, the unexpected can happen.
Missing credit payments can cause a lot of problems, most notably with your credit history. A missed payment is likely to have a negative effect on your credit score, which may make it harder to borrow next time. Missed payments can also snowball into much larger amounts due to late fees, for example if not sorted out quickly.
There are many reasons why someone may not be able to make a payment – perhaps they have been a victim of bank fraud, had an unexpected and unavoidable expense, or experienced a job loss. No matter the reason, there are things you can do to protect yourself against trying times and which will also help to solve payment issues faster should it ever happen to you.
Automate your payments
One of the easiest ways to make sure that you’re making each repayment in full and on time is to have the money automatically pay out on a set day each month. These days, this is usually set up at the time of application as a Direct Debit so you may already be paying in this way. Automating other regular payments (such as rent or mortgage rates and bills) can take a lot of stress out of budgeting.
Many people opt to have more than one bank account – one for important payments like these, and one for spending. By keeping the right amount in your bill account each month, you know that your main expenses are covered and that you don’t need to do anything else as the payments will go automatically. A free, basic account from any high street bank should do the trick, and make sure that your spending account is linked to it so it’s easy to transfer between them.
Keep an eye on your account
Keeping yourself up to date on what’s happening with your money is easier than ever with online banking, so if you haven’t done so already then downloading your bank’s app to your smartphone is a good idea. Most banks will allow you to set up an alert so that you’ll be notified of what’s going in and out of your account, and also when you hit a certain balance level, to let you know where you’re at, financially speaking. This is a great way to avoid nasty surprises and to have plenty of warning if you are unable to make a payment.
If you have multiple accounts at different banks, or if you’d prefer to use a different platform to manage your money, there are a number of money management apps out there which work very well. You can see your main spending in easy format and many of the available apps can help you to spend smarter and save little and often.
Keeping a close eye on your finances is something many of us fall down on, and it’s easy to get into the habit of completely ignoring your account through fear of what you may find! Biting the bullet and checking your balance regularly means that nasty surprises will be a thing of the past, and any issues can be sorted in good time.
Make a working budget
If you don’t already have a rough household budget, now is the time to create one. It shouldn’t take too long, and will give you a much clearer idea of how much you need to keep going as you are, and where savings can potentially be made. Making a budget can be a bit daunting at first, particularly if you’re not comfortable with numbers, as many of us are. Thankfully, there are a range of online tools and support available for free whenever you are ready to take the first step.
A budget simply lets you know how much you spend each month in different categories. It can help you visualise your spending easily, and it’s very useful for quickly working out what you have left for luxuries and other non-essential spending. Free online resources like the Budget Brain from Money Saving Expert or the Budget Planner from the Money Advice Service make it very easy to get started indeed.
Boost your available funds
If you’ve made a budget, then it’s likely to show where you may be spending a bit more than you realised. Each section of the budget can be worked on over time to reduce your expenses – for instance, you may find a TV & internet package which is much cheaper than your current one. When you apply small savings to every aspect of your budget able to be changed, then this can add up into more than you may imagine over time. This will naturally leave you with a little more spare cash than previously, allowing you to do more of the things you want to, and acting as a buffer during financially stressful times.
You can also boost your available funds by boosting your earnings. Whilst this is not as simple as making savings on what you already spend, it’s worth looking into. Do you have any unwanted items that you’d like to sell? Do you have skills which can be translated to a little extra money here and there (tutoring, babysitting, teaching an instrument etc.)? Boosting your income does not always mean having to get a second (or third!) job.
Be on friendly terms with your lenders
Last but not least, being on friendly terms with your lenders can go a long way if you’re having trouble making a payment. As soon as you find out that there may be a problem making payment, it’s best to call them up directly and let them know. Lenders understand that sometimes unavoidable problems arise, and if you’re open and honest from the beginning they are more likely to give you some leeway and propose a temporary easier payment plan. If you do not get in contact with your lender or answer their attempts to contact you, you could incur penalties which would have otherwise been waivered under the circumstances. Having issues with money is stressful and never fun – but it can be made much easier by being open and by demonstrating that you’re willing to work with your lenders.
For more information about H&T Pawnbrokers and the various credit options we offer, visit our lending page or contact us for more information.