Skip to main content

An arrangement to pay is an agreement made between a lender and borrower to restructure the repayment agreement attached to a loan. 

These terms will differ from the regular terms attached to a loan. They will usually detail how long a borrower has to repay their debt and how frequently they take repayments from your bank account.


Key Points: 

  • An Arrangement To Pay is organized when a lender and borrower restructure the terms of a repayment contract. 
  • You should only seek an Arrangement To Pay if you truly can’t afford to pay back your debt. 
  • This arrangement will require you to contact your lender and communicate why you need to readjust your agreement. 
  • Arranging this way to pay will leave a scar on your credit history, which is why it is best to avoid them. 
  • Failing to contact your lender when you can’t repay your debt could leave you with expensive late fees, and potentially legal action. 


Why Would I Seek An Arrangement To Pay?

In short, an arrangement to pay helps you if you are struggling to repay your debt as originally set out. In other words, if you aren’t able to meet your original repayment schedule this helps you still repay your loan but in a slightly different way. 

You can seek an arrangement to pay if you’ve in a difficult financial position. Maybe you’ve been hit with unanticipated costs or had a salary cut. If this is the case, repaying a loan may be very challenging, and the best option may be an arrangement to pay. 

You should only do this if you truly need new repayment terms. For a lender, a request for an arrangement to pay may lead them to think that the borrower is unreliable, and may deter them from lending to you again or offering you higher interest. Can you stop companies from automatically-withdrawing cash from my account?


How Do I Secure This Type of Arrangement?

You need to speak to your lender to secure an arrangement to pay. You will need to explain why your circumstances have changed, such as if you have been hit with a home repair bill that means you don’t have the funds to repay your debt. 

Many lenders will then be obliging and help you arrange a new repayment plan. Remember, their money’s on the line here! It is in their interest to adjust a contract to make sure they get their money back, even if it’s slightly later than they thought. This prevents them from having to consider legal action, given that you are cooperating and proactively trying to find a way to pay them back.

Your lender may offer you a longer time frame to repay the loan in smaller chunks.


Will Arranging This Payment Schedule Impact My Credit Record?

Yes, an arrangement to pay shows clearly on your credit history for at least five years from the point you arrange it. This will be visible to lenders, possibly making them less willing to lend to you. An arrangement to pay may cause them to think you are unreliable and that their money is unsafe in your hands. That is why an arrangement to pay should only be made if you truly need it. 

Nevertheless, not all lenders will look down upon an arrangement to pay. Lenders are all too familiar with financial hardship – after all, it’s their business. Given this, many lenders will still be happy to be your borrowing partner, even if your credit record illustrates past financial troubles. 


What Could I Do Instead of An Arrangement to Pay?

First of all, stay calm! If you aren’t that excited about an arrangement to pay, there are plenty of other options. 

  • Speak to a financial advisor and ask them for advice on what to do if you can’t meet your debt repayments. 
  • Check whether you’re eligible for any government support. If you are out of work or eligible for a government pension scheme this could be a definite possibility for you.
  • Of course, you could seek an alternative loan, such as a guarantor loan, or you could ask friends or family for a helping hand. 
  • Finally, adjust your budget to prevent encountering these problems again in the future. You could create this manually, by creating a spreadsheet showing your incomings and outgoings. Alternatively, you could download a budgeting app such as Mint. This will categorize your spending for you, showing you where you splurge the most. Through either of these avenues, creating a new budget can help you curb overspending and help ensure you put money away for times when you are struggling to make ends meet. 


Remember, even though an arrangement to pay leaves a mark on your credit history, the alternatives of court or bankruptcy are much worse. This is an option that can help you get back on track and is there to help you if you need it. 

Leave a Reply