Taking out a loan can be a smart financial decision when handled responsibly. But before signing on the dotted line, it’s essential to understand how loan repayment works. Knowing the terms, timelines, and responsibilities can help you avoid debt traps and stay financially healthy.

Terms you should know:

• Interest Rate – The percentage the lender charges you for borrowing.
• Term – The length of time you have to repay a loan.
• Monthly Payment – a fixed amount of money that must be paid every month.
• APR (Annual Percentage Rate) – The yearly interest rate of a loan plus fees.

What to expect when repaying a loan?

There are generally two types of loan repayments: fixed and income-based plans. 

Fixed Repayments mean you pay the same amount each period. This method is commonly used for mortgages, personal loans, and car loans.

Income-based repayments adjust according to your income, typically used for student loans. While these can offer flexibility, they may also extend the repayment period.

What happens if you miss your repayments?

It’s important to communicate honestly with your loan provider and reach out as early as possible if you encounter difficulties with repayments. Many providers offer support options that may grant you additional time to manage your payments. While some lenders include late fees as outlined in their loan agreements or terms and conditions, we pride ourselves on offering flexible solutions without late fees, reflecting our commitment to supporting you during challenging times.

Why is safe lending important? 

Missing repayments with an FCA-regulated lender like a Credit Union means you’ll have access to support and fair solutions, including flexible plans without late fees.

But not all lenders are the same. Borrowing from unlicensed lenders, like loan sharks, can be risky. They usually don’t offer clear terms, and if you fall behind, you might face unfair demands or even threats. It’s one more reason to make sure you’re borrowing from a trusted, regulated provider,  someone who’s on your side when life gets tough.

About Us

At Advance Credit Union, we believe that borrowing should be straightforward, transparent, and fair. We offer affordable loan options tailored to your needs, with clear terms and no hidden fees. Our goal is to empower you with the financial tools and support you need to reach your goals confidently. Whether you’re planning a big purchase, consolidating debt, or managing unexpected expenses, we’re here to help you every step of the way.

Learn more here: https://advancecu.org.uk/products-and-services/loans/