How to Claim for a Mis-Sold Payday Loan
Widespread mis-sold payday loans are causing people in the UK to claim for a refund.
Payday loans are a quick way for consumers to get extra cash. The short-term loans require repayment in full, plus interest, after payday. The problem with payday loans, however, is that interest on the loan can often be astronomical. Despite new regulations from the Financial Conduct Authority, many consumers have trouble repaying payday loans.
It is believed that thousands of payday loans were mis-sold to customers who were unable to make the repayments. Some individuals found themselves having to take out another payday loan to pay for a previous one.
The recently collapsed payday loan company Wonga announced that one of the reasons it went into administration was due to claims regarding mis-sold loans. The increase in claims has caused mounting financial pressure on many payday loan companies.
Some estimate that a million more people could be due a refund from a payday loan not sold correctly. This means payday loan companies can expect significantly more claims. After the PPI deadline, payday loan claims could take centre stage as the next mis-selling scandal.
Those wanting to make a claim for a mis-sold payday loan should do so as soon as possible to see if they have a case.
What Classifies as a Mis-Sold Payday Loan?
Payday loans are defined as mis-sold if the lending is deemed as unfair. The fact that many people had to take out another loan in order to repay the first payday loan indicates that the person should not have been given the money in the first place.
National Debt Advice cites two main reasons people are eligible for a refund and compensation from their payday loan lender. First, affordability — people couldn’t afford to pay the loan back. The second is Continuous Payment Authorities (CPA). This means that some people had part of their loan taken from their account, leaving them with issues repaying other bills. Some payday lenders used CPA and caused serious difficulties for consumers.
Making a Claim for a Mis-Sold Payday Loan
If you wish to make a claim for a mis-sold payday loan, there are two ways to do so. One will be to contact the relevant lender yourself. The other is to use the services of a claims management company.
To make a claim yourself, you need to gather all the relevant information. This includes information about the payday loan, credit agreements and bank statements. If something happened where you couldn’t repay the payday loan or you felt it was a bad idea to get the loan, you might have a case. You will need to discuss all of this in a claim letter to the lender. Include as much information as possible about why you think you were mis-sold the loan. Citizen’s Advice should be able to help you with the letter.
The alternative is to use a claims management company to do the work for you. Always work with a claims company that operates on a no win, no fee policy (cancellation charges may apply after a 14-day cooling off period, always check the terms and conditions). This means you will only pay the company if it is successful with your claim. Never pay a company upfront before it has done work for you.
Find a reputable company to handle your claim. Check online testimonials and always read the full terms and conditions before offering any information. The fee for successful claims can vary so make sure you know how much will be taken for a successful claim.
Logican creates claims management software for businesses, including those dealing with payday loan claims. If you’re a claims company in need of software to help handle claims, contact us for a free demo.