If you took out an insurance payment holiday because of the coronavirus outbreak and its now come to an end, it’s important to understand what happens once the payment holiday is over and what options are available to you if you’re still struggling to make payments.
What happens when your payment holiday is over
Once your holiday is over, your payments will start again automatically. This means it’s important you know what date these payments will start again.
Any missed payments will be added to your outstanding balance, which means your monthly payments will be higher. So, it’s important you budget for this.
If you’re still going to struggle to make your insurance payments after the holiday, it’s important you get in touch with your insurance provider as soon as possible.
What options might your provider consider
Moving you to a cheaper policy
If your insurance needs have changed, your insurer might be able to move you to a cheaper policy.
Your insurer might choose to waive fees for switching policy. However, the total cost of your new policy, including interest and fees, cannot be more than your existing policy.
Spreading payments out over a longer period
My extending the length of time you have to pay for your insurance policy, your monthly repayments will be reduced.
For example, if you took out a three month payment holiday, your insurer might offer to extend your payment term by three month. This would keep your monthly repayments the same as they were before, but you would be paying it off over a longer period.
Rescheduling the payment date
If it will benefit you, your lender can change your payment due date. For example, to just after you get paid.
Waiving fees for missed payments
If you’ve missed a payment after your payment holiday ended, your insurer might waive and fees for missed payments.
If you’re financial situation gets worse
Contact your insurance provider as soon as possible to discuss your options.
Make an emergency budget
If you’re worried about cashflow, have a look at what you’re spending and what income you have coming in.
Look at how to cut your household bills, such as switching providers for your gas, electricity or mobile phone contracts.
Next steps if you have missed a payment
If you have missed a payment contact your lender to explain your situation. You should avoid taking out more credit unless you know you can afford to pay it back.
When to get debt advice
If you’ve already missed payments and are not able to come to an agreement with your lender, it’s best to get advice as soon you can, especially if you’ve got other debts as well.
Find out more on the StepChange website
about how debts are collected when you are in arrears.
Find free confidential debt advice online, over the phone or near to where you live using our debt advice locator toolopens in new window
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