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One in two dads was paid back more than £ 3,750 from a payday lender for a loan they couldn’t afford.
John Talbot, 38, from Peckham in London, managed to get all his money back – including all interest and late fees – from two Wonga loans worth £ 600 he took out six years ago .
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He is one of the the millions of Britons who owe compensation from a payday lender who got loans they couldn’t afford to repay.
In 2015, the city’s watchdog, the Financial Conduct Authority, introduced a price cap for payday lenders to prevent customers from repaying more than double the amount they originally borrowed.
He also ordered companies to introduce stricter affordability checks on customers before lending them money.
Last month, the FCA warned businesses that they must follow these rules and reimburse in cash if they don’t.
John was living from paycheck to paycheck every month when he turned to Wonga after his car broke down in December 2012.
The administrative assistant needed his car to get to work at an accounting firm, but when his credit card failed to cover the £ 800 bill to fix it, he took out a loan with Wonga for £ 400 over three months .
But the loan came with a whopping 4,214% interest, and after just a month he increased the loan by another £ 200 to cover credit card debts, pushing his monthly payments to £ 645.
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“It was hell. I was making around £ 1,200 a month and when the second payment was due I remember it was almost impossible to pay without ignoring some of the household bills,” John told The Sun. “Each month I was missing around £ 200.
“Over the next two years, I made payments where I could, but despite my attempts, the amount I owed increased due to interest charges and additional fees.
“I had stuttering for most of my life, before the problems with Wonga, I had it under control, but for three years my life was hell and my stuttering came back like never before.
“All of this stress had a ripple effect, I got very emotionally withdrawn with my girlfriend and kids.”
How to request a refund from payday lenders
YOU can claim compensation from a payday lender if the loan was unaffordable, even if you have finished paying it off.
If you believe you are entitled to compensation, you should follow these DebtCamel steps to find out how to make a claim.
1. Check if you sold the loan incorrectly
Before a lender gives you a loan, they must check whether you are able to repay it.
For a payday loan to be affordable, you need to be able to pay it off the next month as well as pay off your other bills and debts.
The loan was unaffordable if:
- you often renewed loans or borrowed again soon after repaying a loan;
- your loans from a lender increased in volume;
- some reimbursements were late; Where
- the loan was a big part of your income.
Ask the lender for a copy of your loan details, such as when you took out it and how much interest you paid.
Compare it to your bank statements from the time you took it out and see if you could have paid off the loan after paying your bills.
2. Make a complaint
There are websites that will help you submit your complaint to the lender, but be aware that if you are successful, they will take part of your compensation.
DebtHacker.co.uk is a completely free tool that will help you in the same process.
If you prefer to do it yourself, you should write a letter or email citing “unaffordable loans” and request a full refund of the interest and fees you paid, plus the 8% interest on the loan. ombudsman in addition.
Also request that the loan be removed from your credit report.
You can find sample letters in DebtCamel, MoneySavingExpert and MoneyTipsService.
3. Contact the Mediator
If you have not heard from them after eight weeks, you should bring the matter to the Financial mediator.
You should also contact them if your complaint is dismissed, the repayment is too low, or if they refuse to consider loans that are over six years old and have been sold to a debt collector.
After a friend mentioned that he might be able to file a claim, he started looking for ways to write off the debts.
John requested the original loan agreement from Wonga – who took office in August this year – including a list of everything he borrowed with all interest and charges.
He then compared them to his bank statements when he took out the loan, which showed that the repayments would leave him £ 200 a month for the bills.
John then wrote a letter of complaint to Wonga, claiming an irresponsible loan because the repayments were unaffordable.
Which lenders can I file a complaint with?
YOU can request a refund from any lender if the loan was unaffordable. Here are some of the lenders still active:
- Sunny loans
- Quid fast
- Peachy.co.uk
- Mr. lender
- My pot
- Piggy bank
- Cashasap
- Silver boat
- Quidie
- Fernovo
- Pay me
- Loan pig
- Kwik Cash
- Cash lady
It’s harder to claim a refund from a business that has gone bankrupt, but that doesn’t mean you shouldn’t try.
- Wonga customers should still make a complaint, even if it is being administered, but you are unlikely to see the money. The bad news is that if the complaint is confirmed, you will be added to a queue of creditors who are also owed money.
- The silver store stopped offering payday loans, but you can still ask for repayment.
He showed them his income and expenses at the time and stressed that he could never have made the repayments without giving up paying his bills.
He also asked them to repay interest, fees, and remove any negative information from his credit records.
After six weeks, the lenders accepted her complaint and refunded her the full £ 3,754.50, which also included all late payment charges.
“There was no fight at all,” explained John. “I didn’t even have to go to the financial mediator.
“I would recommend others to do the same as it can really help straighten their finances and prepare them for the future.
“At the time, I was planning on getting a mortgage before all of this happened and it probably put me back five years in my life plan.
“It pisses me off to think about it to be honest, I could have owned a home much sooner.”
Last year it was revealed that workers turn to payday loans to make ends meet and pay unexpected bills.
Hundreds of thousands of people are expected to save money through a capping of rental costs with option to purchase, thanks to The Sun Stop the credit scam campaign.
Earlier this year, the FCA announced plans to crack down on “unusually high” lease products, along with a series of overdraft changes and stricter rules for home lenders.
Why we want to stop the credit scam
WE never want you to pay more than double the amount you borrowed, whether it’s for a new sofa or a loan to help pay your bills.
That’s why The Sun has launched a campaign calling for a cap on the total cost of hire-purchase and home equity loans at double the price or amount of the original loan.
A similar cap was introduced for payday loans in 2015 and since then the number of people struggling with unmanageable debts to these lenders has more than halved, according to Citizens Advice.
People with the lowest incomes, living in the poorest places, pay a poverty premium – up to 7 million people have used high-cost credit, according to the Ministry of Work and Pensions.
People with insufficient wages or benefits need to borrow from home lenders or lenders to help pay for things like an unexpected bill or to furnish their home.
These come with exorbitant interest rates – over 1,500% in some home loan cases.
It is scandalous that a mother who borrowed money to help keep a roof over her family and ended up paying back more than THREE times the original amount.
It’s time to stop the credit scam.
Here is what we require:
Rent sale
- Cap on all reimbursable costs at double the list price of the items (including fees, surcharges and interest)
- Ban on incentives for all salespeople
- Prohibition of discounts for existing customers to encourage them to more credit
- Companies should post examples of interest rates and costs on all payment options
Home loan
- Ceiling twice the initial amount borrowed
- Stricter affordability controls
- Prohibition of discounts for existing customers to encourage them to more credit
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