Claim a Loan Refund

If you are unable to repay a short-term loan that you had taken in the past, we can assist you in claiming compensation if the lender acted unfairly or irresponsibly.

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What are short term loans?

Short term loans involve borrowing money over a relatively short repayment period, typically between 12-36 months. Unlike payday loans, which typically lend money for a few days to a few months at most, short term loans have a longer repayment period and may attract lower interest rates as a result.

Since the financial industry has become more regulated, many payday lenders have either ceased trading or rebranded as short-term loan providers. Like payday loans, short term loans are targeted at individuals who need money quickly to cover urgent expenses. Also, similar to payday loans, short term loans are unsecured, which means that no collateral such as a house or car is required to secure the loan.

“the position where a customer’s current account overdraft remains persistently overdrawn for more than a month without returning to credit during that period”.

The lending code

How to check you had a loan

To determine if you have had a loan, you can easily follow these steps:

Check your email

To determine if you have had a loan in the past, you can start by searching for the names of loan companies that you think you may have used. Additionally, you can check your email for any messages from these companies and search for keywords such as "credit," "loan," and "settlement." If the company has sent you statements or other account information, this is further evidence that you have a credit account with them.

Search your credit record

You can utilize the Experian credit check tool for free to review your credit history over the past six years. Check to see if any credit has been marked as 'repaid'. However, please note that you can still make a compensation claim for loans older than six years, even if they have not been fully repaid. However, the amount of compensation may be lower in such cases.

Check your bank statements

Reviewing your old bank statements is often an effective way to determine whether you had a loan in the past. If you no longer have your statements, you can request a copy under GDPR regulations by submitting a Subject Access Request (SAR) to your bank. After obtaining your statements, look for a pattern of money coming in and going out each month, which is typical of loan or credit facility repayments.

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Check to see if you have a valid claim

If you can relate to any of the below you may have claim:

No upfront costs

Were all fees and charges clear?

Were the charges and associated fees made clear to you, when you took out the loan?

No upfront costs

Did you end up struggling to pay bills?

Were your loan repayments so large that you found it hard to find the money for your bills or mortgage payments or living costs?

No upfront costs

Did you need a loan to pay back your loan?

Were you forced to take out another short term loan in order to pay the initial one back?

No upfront costs

Did your lenders take automatic payments from you?

Did the lender take automatic payments from your account without informing you and which put you in financial difficulty?

No upfront costs

Were you encouraged to borrow more?

Did the loan company promote special offers to you as an existing customer that promised better deals the more you borrow?

No upfront costs

Irresponsible lending?

Despite not being able to pay the first loan back, did your lender continue to offer you more through debt consolidation?

If you can relate to any of these, you may have claim and should complete our 5 minute form now.

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The Legal View

"Rules imposed by the Financial Conduct Authority mean any firm offering credit has an obligation to check your financial situation to make sure you could afford the credit they were providing, before giving it to you."

Key Fact

The Financial Ombudsman Service (FOS) reviews complaints made about short term loan companies by checking to see if they completed the necessary affordibility checks before lending money. Many claims are ruled in the claimants favour if the lender was shown not to acted responsibly by carrying out the necessary checks needed to identify if you were in financial difficulty.

The legal bit

The basis of any claim is split into two arguments. First, did the lender properly assess your 'creditworthiness' before lending to you, known as 'unaffordable lending'. Second, how did the lender treat you, known as 'unfair treatment'.

Unaffordable Lending - "Assessing Creditworthiness"

The FCA sets out in Chapter 5 of the Consumer Credit sourcebook (CONC) that before anyone enters into a regulated credit agreement, they must first be assessed for "creditworthiness". This 'assessment' must be repeated for any significant increase in credit or credit limit given in the future(CONC 5.2A.4). The FCA does not prescribe what checks should be made by firms, it just says checks should be 'reasonable' and 'proportionate' to the type and amount of credit, its cost and the customer's financial position (CONC 5.2.3G); this is called the firms "affordability risk".

What checks the firm should carry out are covered in CONC 5.2A.20R (Scope, extent and proportionality of assessment). The FCA does state that credit worthiness checks should take into account (where appropriate) information from the customer and credit reference agency (CONC 5.2A.7R).

Repayment Checks

A firm must consider the customers ability to make repayments from:

  • Income
  • Income from savings
  • Savings or other assets indicated to be used to repay the debt
  • Without having to borrow more to meet repayments
  • Without failing to make other payments contractually obliged to meet
  • Without the repayments having a significant adverse impact on the customers financial situation.

Assessing Income

The firm must take reasonable steps to determine the amount, or make a reasonable estimate, of the customers current income and reasonably foresee a likely drop in future income. For the purpose of considering the customers income under CONC 5.2A.15R it is not generally sufficient to rely solely on a statement of current income made by the customer without independant evidence (for example, in the form of information supplied by a credit reference agency or documentation of a third party supplied by the third party or by the customer).

Assessing Expenditure

Non-disctretionary expenditure referred to in CONC 5.2A.17R includes payments needed to meet proirity debts and other essential living expenses and other expenditure which it is hard to reduce to maintain a basic quality of life. It also includes payments the customer has a contractual or statutory obligation to make, such as payment obligations arising under a credit agreement or mortgage contract.

Use of Credit

The FCA states (CONC 5.2A.21G) that firms 'may' ask how the customer intends to use the credit. Debt consolidation loans are allowed, but this shows existing financial difficulty which could spark further creditworthiness checkers by lender. The FOS has ruled in the past in favour of claimants where this information was provided and not acted upon.

Extended Credit

If the lender encouraged you to borrow further with 'good customer' offers or didn't inform you of the risks of borrowing more or didn't check your affordibility to increase your limit, you may have a claim.

Unfair Treatment - "How the lender acted"

The list below sets out additional grounds to complain if you felt the lender treated you unfairly.

Fair treatment

If you felt pressured to extend your loan or if you felt the lender didn't listen to you or deal with you "sympathetically and positively".

Repayment Plan

The lender didn't freeze charges or you were unable to make payments under a reasonable repayment plan.

Key Facts

The lender should have provided you with a Key Facts Document that details in simple terms all the information you needed to know before signing any agreement, if they didn't you could have a claim.

Use of Debt Collection

If your lender resorted to using a debt collection agency without first taking to you and trying to create a repayment plan.

No Late Payments Warning

The lender didn't warn you in their advertising or personal communication what would happen if you missed repayments.

No CPA Warning

The Continuous Payment Authority (CPA) didn't give you prior warning that it was going to take money from your account.

The evidence you need

To prove that your loan company acted recklessly by providing you with a loan that you couldn't repay without significant difficulty, you'll need to compile a list of lenders that meet this criterion. Then, you should document your income, whether weekly or monthly, as well as all of your expenses, including rent, utilities (such as electricity, gas, and water), council tax, broadband, mobile phone, car and home insurance, grocery bills, clothing, childcare, other debts, and other expenses.

Finally, compose a letter to each lender that contains this information and explains that the loan was unaffordable, requesting a refund. However, if this seems intimidating, you don't need to worry because we can handle it all for you. Simply fill out our online form and let our knowledgeable claims team manage the stress and hassle on your behalf.

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Did you know?

On average, the uphold rate for payday loan redress claims is 44%.

Frequently Asked Questions

It all depends on the specifics of the case as each one is different, but almost 60% of claims that are reviewed by the Financial Ombudsman Service (FOS) are successful.

The law says that how much you receive in compensation, is dependent on what your financial situation would be now if you had been treated ‘fairly’ and ‘responsibly’ in the first place. Claims range from hundreds to thousands and are calculated by working out all the interest, fees and charges you paid and then adding a statutory 8% interest rate for each year you had the loan.

For example, if you had a £1,000 refund in fee, charges and interest, you would also receive £1,000 x 8% = £80 x 4 years = £320. so in total you would receive £1,320.

If you have had other loans or credit that you have struggled to pay back, then you should think about claiming. Be they payday loans, doorstep loans, or guarantor loans or if you've had unaffordable credit from credit cards, or even an overdraft that has been hard to reduce, then check out the specific pages on our website. You can complete our simple form in just 5 minutes.

The FOS states that you have 6 years after the loan was issued or 3 years from ‘when you were first made aware’ you could claim, whichever is longer. This means you have a good chance of claiming loans older than 6 years if you weren’t aware you could claim., so give it a try and but don’t delay the journey any longer - you could be due thousands!

Don’t Delay. Check Now.

Each company has a different deadline for claims, and for some payday lenders, the deadline has already passed. It only takes 5 minutes to complete the form, so it's worth checking now to see if you're eligible to make a claim.

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