Every lender in Britain has borrowers who have been badly hit financially by Coronavirus.
I often criticise lenders and/or regulators. So it’s great to be able to point to two lenders that ares providing the help its borrowers are most likely to need and is communicating this well.
Zopa offers payments freeze on its loans
Zopa, the peer-to-peer lender, has this page of information for its borrowers: Coronavirus and your finances.
Zopa has a form borrowers can fill in where they can say if they want a payment freeze for three months, to be reviewed at the end, or to make lower payments for six months.
If someone isn’t sure how much they should offer to pay, there is a link to StepChange’s pages on making a budget.
Zopa’s page is clear that:
- no extra interest will be added if customers need this help;
- missed payments will need to be repaid;
- neither option will impact people’s credit score.
This gives people the information they need to decide what to do.
Nationwide also has simple, easy to access help
Nationwide originally set up an easy form to get the 3 month mortgage payment holiday.
A few days later it has now extended this approach, with other forms to complete to let you reduce the amount you pay to an unsecured loan or to a credit card to £1 a month for 3 month. This won’t affect your credit record.
All lenders should be offering this same help
I think this is what all lenders should be doing – giving people a choice between no payments or lower payments.
That includes secured lenders. Mortgage lenders have already offered three-month payment breaks. Secured loans and HP – including car finance – should follow suit. And guarantor lenders should offer help to borrowers with the assurance that guarantors will not be pursued for the duration. The lenders will still have their security/guarantees to call on after this temporary problem ends.
This problem is not of the borrowers’ making so it would be unfair that their credit records should be impacted by this. Mortgage lenders have already said they will make sure payment holidays do not impact borrowers’ credit score. I think the industry should take a collective decision that the same should apply across the board.
Unless this clear, some people will decide to borrow more in order to be able to pay existing debt and protect their credit score. That is not something the FCA or lenders should want to encourage, see Don’t let credit rating worries make your debts worse. Britain already has uncomfortably high levels of personal debt.
Simple and effective communications
Zopa and Nationwide have both explained what they are offering clearly. And they both let people complete a simple form, rather than making them phone up, which many people who are feeling anxious or depressed may prefer.
This is how lenders ought to talk to their customers. It is a complete contrast to some of the persistent credit card debt letters people may have received, which sometimes managed to sound vague, complicated and threatening at the same time.
How are other lenders doing?
Have you have seen another lender who is doing a good job of supporting their customers? Or one who is avoiding the subject, or not being helpful? Leave a comment below!