Payday loans can seem like a quick fix for urgent expenses, but the pressure to repay them can become overwhelming. If you find yourself unable to repay your payday loan in the UK, you are not alone—many borrowers struggle to meet short-term repayment deadlines. The good news is that UK law provides certain protections, and there are clear steps you can take to regain control of your finances.
This guide explains exactly what happens if you miss a repayment, what your rights are, and how to handle best payday loans uk debt responsibly.
Immediate Consequences of Missing a Repayment
When you fail to repay your payday loan on time, the lender will usually attempt to collect payment automatically. Most UK payday lenders use a Continuous Payment Authority (CPA) to withdraw funds directly from your bank account on the agreed date.
If the payment fails, here’s what typically happens:
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The lender contacts you – You’ll receive emails, text messages, or phone calls reminding you that payment is overdue.
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Additional charges may apply – Lenders can add a default fee, but this is capped at £15 under Financial Conduct Authority (FCA) rules.
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Interest may continue to accrue – Interest will continue to build on the outstanding amount, though the total cost cannot exceed 100% of the amount borrowed.
For example, if you borrowed £200, you’ll never have to pay back more than £400 in total, regardless of fees or interest.
How Payday Lenders Handle Missed Payments
Once a payment is missed, lenders are legally required to act fairly and responsibly. They cannot harass you, take unauthorised money from your account, or make multiple withdrawal attempts in a single day.
Here’s what they can and cannot do:
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They can:
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Contact you to discuss repayment options.
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Report missed payments to credit reference agencies.
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Offer a repayment plan or loan extension (sometimes called a “deferral”).
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They cannot:
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Threaten you with legal action immediately.
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Take more money than agreed under the CPA.
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Add excessive fees or interest beyond FCA caps.
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If the lender behaves aggressively or violates these rules, you can file a complaint with the Financial Ombudsman Service (FOS).
The Impact on Your Credit Score
Failing to repay a payday loan will almost certainly harm your credit score. When lenders report late or missed payments to credit reference agencies, these marks stay on your file for six years.
This can affect your ability to:
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Get approved for credit cards or personal loans.
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Secure a mortgage or car finance deal.
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Rent a property (some landlords check credit reports).
While one missed payment won’t destroy your credit completely, a pattern of missed or defaulted loans signals financial instability to future lenders.
Options If You Can’t Afford to Repay
If repayment feels impossible, the worst thing you can do is ignore the problem. Instead, take these proactive steps to manage the situation:
1. Contact Your Lender Immediately
Most reputable lenders are willing to discuss your financial difficulties. They may offer a repayment plan that spreads the balance over several smaller instalments without adding extra interest.
2. Request a Payment Freeze or Extension
Some lenders can temporarily pause interest or allow you to delay payment if you can show genuine financial hardship. Always confirm the new terms in writing.
3. Seek Free Debt Advice
There are trusted UK organisations that can help you negotiate with lenders and create a realistic repayment plan. These include:
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StepChange Debt Charity
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National Debtline
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Citizens Advice
They can even contact the lender on your behalf and help stop aggressive collection tactics.
4. Set Up a Debt Management Plan (DMP)
A DMP allows you to make affordable monthly payments to a debt charity, which then distributes the funds among your creditors. Interest and fees are often frozen once the plan is agreed.
5. Consider Consolidation or Alternatives
If you have multiple payday loans, consolidating them into one lower-interest loan may help reduce stress and make repayments more manageable. However, this option depends on your credit profile and income stability.
