AR - Arrangement

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Dave2015
Dave2015 Posts: 7 Forumite
in Credit file & ratings
Hi,

A personal loan has recently reached the end of its 5 year term. They have advised that as I changed the payment date a few times during the term, effectively pushing on the due date and adding some interest, I now owe £650 which is now to be paid. I have contacted them to set up a direct debit to clear this over 3 months, but they have advised that they need to add a marker to my credit report to show an arrangement is in place.

I am concerned of the negative impact of this on my credit report and I am wondering it is really necessary for them to do this? I called them straight away and set up to pay the additional interest so why are they so insistent on adding an AR marker to my file? I have told them that I am happy to pay the extra amount due and the 3 month time frame is reasonable, as the amounts I will be paying are similar to what I was paying for the actual loan.

How negative an impact will an AR be on my file for 3 months? Can I dispute this AR on the basis they never advised me that when changing the payment dates, I would accrue extra interest which would needed to be paid in one go or an AR indicator would be added.

Thanks

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  • BoGoF
    BoGoF Posts: 7,099 Forumite
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    It will be very negative. I'm pretty sure when you change payment date it does tell you additional interest will be payable (depends who you borrowed from I suppose). When did you think any additional interest would be payable. You agreed to pay within 5 years and failed to do so.
  • Willing2Learn
    Willing2Learn Posts: 6,294 Forumite
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    An AR essentially means you have broken the terms of your original credit agreement. It will definitely have a negative impact on the way you are viewed by lenders.

    Is there any way you can borrow the money to pay the balance off?
    Or could you apply for a Money Transfer credit card and pay off the balance that way?
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    :smiley:
  • Dave2015
    Dave2015 Posts: 7 Forumite
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    Yeah they advised additional interest would be payable. However, they implied it was a just a case of setting up something to clear it off. They never mentioned any possible impact on credit rating back then.
  • Dave2015
    Dave2015 Posts: 7 Forumite
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    Willing2Learn wrote: »
    An AR essentially means you have broken the terms of your original credit agreement. It will definitely have a negative impact on the way you are viewed by lenders.

    Is there any way you can borrow the money to pay the balance off?
    Or could you apply for a Money Transfer credit card and pay off the balance that way?

    Unlikely. The CCs on by eligibility check are not offering that.
  • Willing2Learn
    Willing2Learn Posts: 6,294 Forumite
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    Dave2015 wrote: »
    … they implied it was a just a case of setting up something to clear it off. They never mentioned any possible impact on credit rating back then.
    You could be extremely polite and ask, as a goodwill gesture, that they do not mark your file, to offset the fact that they never originally advised you that it could impact your credit file. It's a very long shot though...
    Dave2015 wrote: »
    Unlikely. The CCs on by eligibility check are not offering that.
    There is no harm in making an application though...a single credit search does not have a negative impact on your file...
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    :smiley:
  • Dave2015
    Dave2015 Posts: 7 Forumite
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    Willing2Learn wrote: »
    You could be extremely polite and ask, as a goodwill gesture, that they do not mark your file, to offset the fact that they never originally advised you that it could impact your credit file. It's a very long shot though...

    There is no harm in making an application though...a single credit search does not have a negative impact on your file...

    I might ask them but not holding much hope.
  • BoGoF
    BoGoF Posts: 7,099 Forumite
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    Why do you think you should have been informed they expected the increased interest in a lump sum. The terms you agreed to were that you clear the loan and any interest at the end of the 5 years,, you don't get another few months.
  • Dave2015
    Dave2015 Posts: 7 Forumite
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    BoGoF wrote: »
    Why do you think you should have been informed they expected the increased interest in a lump sum. The terms you agreed to were that you clear the loan and any interest at the end of the 5 years,, you don't get another few months.

    The letter they sent said they didn’t expect the additional interest to be cleared in one go. 6 months ago, in a separate query, they just advised it would go to their accounts / aftercare team where I would then set up something to clear the additional interest.
  • Dave2015
    Dave2015 Posts: 7 Forumite
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    Also, I recall changing the payment date around 2 years ago and the advisor said “by changing the payment due date you are effectively changing the term of the loan and as such you will have additional interest to pay”. If they had said at that point that the additional interest would be due at the end of the term in one go and they would list an arrangement on my report, then I wouldn't have changed it.
  • Kentish_Dave
    Kentish_Dave Posts: 842 Forumite
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    Dave2015 wrote: »
    Yeah they advised additional interest would be payable. However, they implied it was a just a case of setting up something to clear it off. They never mentioned any possible impact on credit rating back then.
    But you didn’t set anything to pay it off, unfortunately, and now here you are at the end of the agreement unable to do so.

    Best bet is to find a way to pay it back straight away. Have you anything at all that you can sell to raise the money? Bike, car, PlayStation etc?
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