Can you extend a loan?

It may be possible to extend your existing loan, but it’ll be at the lender’s discretion and may cost you in interest and charges. Alternatively, you could consider transferring the debt to a different source of finance with lower interest rates, and spread the repayments over a longer timeframe.

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How to extend my loan?

If you want to extend your existing loan, you’ll need to speak to your lender. They’ll want to know your reasons for doing so, as well as how long you plan to extend it by.

There’s no guarantee that they’ll extend the loan term. But if you are struggling to make the payments, they need to make sure they’re treating you fairly. So they should help you to reach an affordable solution. They may explore things like:

  • Freezing or reducing future interest and/or charges
  • Suspending or postponing certain charges
  • Reducing your monthly repayments for a set time period

Some lenders may also offer you the option to take a payment holiday. This allows you to miss one or more monthly payments, to give you some breathing space. Depending on the provider, this can usually be arranged over the phone, in person or online.

Be aware, an agreed payment holiday will increase the length of your loan. Plus, interest will continue to apply in the background. So it’s likely that you’ll end up paying more interest overall.

Pros of extending your loan

  • You’ll have more time to pay it off
  • You don’t have to change loan provider

Cons of extending your loan

  • You’ll be paying it off for longer, which means you are tied to a regular payment for longer
  • It will cost more overall, as you’ll pay more interest in total 
  • You may be charged a fee for extending it

Will I be approved?

Whether you’ll be approved depends on your credit history, affordability and the lender’s criteria. There’s no guarantee your lender will agree to it, but the better your credit history, the higher your chances of acceptance.

Will an extension be recorded on my credit report?

Depending on the terms and conditions of your loan, a loan extension or payment holiday will not usually show on your credit report. However, a gap in your payment history may give the game away. 

It’s important to ask your lender to see how it could affect your credit score and ability to get credit in the future. This could vary from lender to lender, depending on the terms and conditions they’ve set out in your loan agreement.

It may have an indirect impact, by making your payments less affordable in future, when you have to catch you with arrears, for example. Then if you miss a payment it will impact your credit score.

Are there alternatives?

You could use a cash transfer credit card to pay off your loan. These often come with introductory offers with 0% interest rates, which can last up to about 26 months. Though you may be charged a small transaction fee (usually around 3-4%). The best rates are often reserved for those with the highest credit scores. Remember though, if you still have a balance after the introductory period ends, this will have interest applied, which could be quite high.

Or, another loan may be a better option, where you borrow enough to clear the existing balance. You may be able to spread the repayments over a longer period, making them more affordable. This could be worth considering if you find lower interest rates with a different provider or you don’t see your current situation changing any time soon.

I have multiple loans – how can I extend them?

It’s possible to ask your lenders to extend multiple loans. Or, you could consolidate your debts into one loan and increase the loan term.

You can use eligibility checkers with different providers to explore your options. This will mean you can see how likely you are to be accepted for finance before applying. Plus, it won’t impact your credit score.

If you’re experiencing payment difficulties and need further information on your options, you can visit the Money Advice Service.

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