What to do if you cannot afford your loan repayments

Step one: work out what you can afford

Before you speak to anyone, list what comes in and what has to go out each week or month. Put your priority bills first: rent or mortgage, council tax, gas and electricity, and food. These are the bills where falling behind can cost you the most, and the FCA’s own rules describe them as priority debts and essential living expenses.

What is left is what you can realistically offer your other creditors. If nothing is left, that is useful information too, and a free debt adviser can help you put it to your lenders.

Step two: contact your lender

Tell your lender that you are struggling, what has changed and what you can afford. You do not need to have every answer. The FCA’s rules say a lender must treat customers who are in or approaching arrears with forbearance and due consideration, and must take into account the individual circumstances it knows about, or should know about.

What a lender might offer

FCA guidance gives examples of what forbearance can look like. Depending on your situation, a lender might:

• suspend, reduce, waive or cancel further interest or charges, for example when you can show you are in financial difficulty and can only make token repayments
• accept no payments, reduced payments or token payments for a reasonable period, if paying in full would mean you could not pay your priority debts or essential living costs
• agree a repayment arrangement with you that you can keep up

If you agree an arrangement and stick to it, the lender must reduce, waive or cancel interest and charges as far as needed so that the debt does not rise during that arrangement. It must also take all reasonable steps to make sure the arrangement is sustainable.

What a lender must not do

A regulated lender must not pressure you to pay a debt in one or very few payments, within an unreasonably short time, or by selling your property, borrowing money or increasing existing borrowing. If you are being pushed to take out new credit to clear old credit, say no and get free advice.

A lender should also tell you that free and impartial debt advice is available from not-for-profit advice services.

Get free debt advice

A free adviser can help you work out a realistic budget, talk to your lenders, and explain options such as a debt management plan. In England and Wales, an adviser can also apply for Breathing Space for you, which gives up to 60 days during which creditors cannot add interest, fees or charges to the debts it covers or take enforcement action. You do not need to pay a company for any of this.

If your lender will not help

Make a complaint to the lender first, in writing if you can. It must send you a final response, or explain why it needs more time, by the end of eight weeks.

If you are unhappy with its final response, or eight weeks pass without one, you can take your complaint to the Financial Ombudsman Service. It is free, and you do not need to pay a lawyer or claims management company to represent you. You normally need to go to the Ombudsman within six months of the date on the lender’s final response. Call it on 0800 023 4567, 8am to 5pm, Monday to Friday.

Common questions

Will my lender freeze interest if I cannot pay?

It might. FCA guidance lists suspending, reducing, waiving or cancelling further interest or charges as forms of forbearance. If you agree a repayment arrangement and keep to it, the lender must make sure interest and charges do not make the debt rise during that arrangement.

Should I take out another loan to pay this one?

Be very careful. Borrowing to repay borrowing usually makes the problem bigger. A regulated lender must not pressure you to borrow more to repay a debt. Talk to a free debt adviser first.

How long does a lender have to answer a complaint?

Eight weeks. By then it must send a final response, or explain the delay and tell you that you can go to the Financial Ombudsman.

Is the Financial Ombudsman free?

Yes. The Financial Ombudsman Service is free for consumers, and you do not need to pay anyone to represent you.

Sources

Every fact in this page was checked against these official sources on 28 October 2026.

1. CONC 7.3: Treatment of customers in default or arrears Financial Conduct Authority Handbook
2. PS24/2: Strengthening protections for borrowers in financial difficulty Financial Conduct Authority
3. DISP 1.6: Complaints time limit rules Financial Conduct Authority Handbook
4. How to complain Financial Ombudsman Service
5. Contact us Financial Ombudsman Service
6. Breathing Space GOV.UK

Written and fact-checked by the PiggyBank editorial team. Last reviewed 28 October 2026. This guide is general information, not financial advice. How we write and check our guides.