The repayments on many loans from bad credit lenders are too high to be manageable so people get deeper into debt trying to repay them.
If you have an unaffordable loan, you can complain and ask for interest to be removed from your balance. If the loan has been settled, you can ask for a refund of the interest you paid.
This article describes how to complain, with templates. It is a variation on the standard approach for payday loan refunds – this works better where the loans are very large, longer term and you only had 1 or 2 loans, possibly with top ups.
NB the complaints here are for “normal” unsecured loans and HP/PCP car finance. You can also use this approach for logbook loans. If you have a guarantor loan, read Refunds from guarantor loans as it’s very different, and the guarantor may be able to complain as well.
Like payday loan refunds – with some extra twists
The regulator says for a loan to be affordable:
you have to be able to make the repayments without hardship or having to borrow elsewhere.
This is the same test as for payday loan refunds. It applies to most forms of credit, including large, long term loans and logbook loans.
Many people have successfully adapted the payday loan refund template letters to get money back on large loans.
That letter emphasises the problems that repeat borrowing caused. It’s a strong point in favour of payday loan complaints and why I always say that it’s hard to get a refund if you only had one or two loans from a payday lender.
That sounds like bad news for these complaints about large loans, where you normally only have one loan plus possibly a top up or two…
But the good news is that because these loans are larger and longer term, the lender should have made better checks before giving you the first loan!
Making a complaint and asking for a refund
There is a four stage complaints process for these large, bad credit loans:
- Get a copy of your personal information from the lender.
- Put in a detailed complaint.
- Consider lender’s response.
- Send the complaint to the Finanical Ombudsman.
Complain by email
It’s easiest if all communications are by email – free, instant and you have a copy with a date stamp to show the ombudsman. So here are the email addresses to use for the main lenders. If the email address doesnty include the word complaint in it, always put COMPLAINT in as the title of an email to them:
Avant Credit firstname.lastname@example.org
Bamboo Loans email@example.com
Everyday Loans firstname.lastname@example.org
Likely Loans email@example.com
Loans 2 Go (and their logbookloans.co.uk brand) firstname.lastname@example.org
Mobile Money email@example.com
Motor Kitty firstname.lastname@example.org
On Stride email@example.com
Progressive Money firstname.lastname@example.org
Quick Loans email@example.com
Ramsdens (logbook loans) firstname.lastname@example.org
118 118 Money email@example.com
Stage 1 – ask for personal information
This first stage lodges an affordability complaint and starts the clock going on the 8 weeks a lender has to respond to you. Put AFFORDABILITY COMPLAINT as the title of your email.
You probably already know when you took out the loan and any top-ups. But it’s good to ask the lender to send you a copy of all the personal information they have about you.
SARs are often sent out by post, so if you have moved, make sure the lender has your new address.
NB The template says you are asking for an affordable payments arrangement at the end of your complaint. If you cannot afford the repayments right now, you can ask for an affordable payments arrangement immediately unless you have a logbook loan, where you have to keep up the payments or you may lose the car.
While you are waiting for this, assemble some other information that may help your case. Get copies of your bank statements from 3 months before the first loan.
Download a copy of your Noddle free credit report. Use this to do two things for each loan or top-up you took:
- make a list of all your outstanding credit when you applied – all the credit cards, loans, payday loans, overdraft. You want to the details of how much you owed in total and what your monthly payments should have been;
- make a list of credit report problems in the 6 months before your application – new defaults, missed payments, arrangements to pay, DMPs, insolvency.
Also read Payday lender says I lied. That looks at the various reasons why you may not have given an accurate account of your income or expenses. People have won complaints where they lied because they were desperate but there are other reasons too, so think what (if any) may have applied to you.
Stage 2 – give complaint details
When you have the SAR back from the lender, you can look for things that the lender knew but chose to ignore or didn’t ask about.
Change this template so it reflects what happened to you, both why the loan was unaffordable and why the lender should have realised this. Where I have given some options, delete them all and put in another one if that is more accurate.
No-one will include all these points. It is better to write a short complaint pointing out real problems than send pages telling the lender general stuff they already know.
You may think that’s a lot of work or you don’t want to mention a lot of these things to a lender. It’s up to you, you can just put in a brief complaint and give the Ombudsman fuller information later. But going into details has worked for some readers.
Stage 3 – consider lender’s response
You should get a response from the lender within 8 weeks.
Normally you can tell straight away if a response is acceptable or not good enough. If you aren’t sure, ask what other people think in the Comments below this article.
Don’t be put off by a rejection, or the lender saying it was your fault because of your loan application. As the complaint letter says, lenders are obliged to do checks. For one small payday loan, these checks could have been brief. But for your large loan, the lender should have made sure they knew enough to be confident you could afford it. If they didn’t, send your case to the Ombudsman.
If you think there is something very wrong with what the lender said, perhaps some information they have completely ignored, you could go back and point this out. Say you would like them to look again at this and you will send it to the Ombudsman in a week if they haven’t come back with an improved offer.
Stage 4 – send to Financial Ombudsman Service (FOS)
I suggest you use the “do it online” option to send a complaint to the Ombudsman. It asks you for all the details they need.
The main part of your complaint can be a version of what you sent the lender in Stage two. Add any more details you want, including pointing out if you think there are errors in the lender’s reply. You should attach the following:
- the reply from the lender
- Noddle credit record
- bank statements starting 3 months before first loan.
Your complaint will first be looked at by an adjudicator. If either you or the lender reject the adjudicator’s decision, it will then be looked at by an Ombudsman.
“Is this really going to work?”
Here are some recent comments from people who have had refunds for this sort of loan. They show how some people get a good result directly and others have to go to the Ombudsman. Don’t assume a rejection by the lender means you can’t win!
Andy: A flat out refusal from 118118 Money. One loan (£1,000) plus one top up (£2,500). Stating they had done nothing wrong, all payments made on time and paid top up loan off early. Saying I had a good income, verified by a bank statement and they had phone call recordings that I had made it clear the repayments were affordable.
Sent to FOS as I was in loads of debt at the time, loads of repeat pay day loans etc. Didn’t hold out much hope but thought I may get a positive decision on the top up loan. Adjudicator held in my favour on both loans. 118118 accepted decision and offered circa £800. I had my loan statements and the total interest (plus 8% interest) was nearer £1,300. Adjudicator queried this for me with 118118. They agreed with my calculations. Adjudicator gave them 28 days to pay. It was in my bank the very same day.
Dan: I had a complaint upheld by the adjudicator at the Ombudsman against Avant Credit: Refund of all interest and 8%, £75 compensation, removal of loan from my credit file. Avant Credit agreed with the adjudicator.
Louise: Have had my response from Everyday Loans and complaint upheld. All interest been removed and I only have to pay back what they lent. Excellent outcome. Lent 5000 and have paid 3k so just 2k left to go. On my DMPthe balance was showing at 6.5k still left. Took them 5 weeks to uphold my complaint a lot of emails going back and forth.
Soph: Had 2 loans from Avant Credit. Rejected within 2 days, sent to FOS Jan, upheld in March, Avant agreed with FOS and refund in the bank within 7 days.
Robert: I was successful in getting all interest wiped from my topped up loan with 118 118, didn’t go to the FOS or anything.
And here is a decision from the Ombudsman about one of these sorts of cases – Loans2Go ignored some of the details their credit showed when decided to give Mr W two large loans.
“What about a bank loan?”
The affordability test is the same – could you repay the loan without getting deeper into debt elsewhere. But there are two problems with normal bank loans:
- their interest rates are lower so it’s harder to show that the smaller repayments are unaffordable; and
- if your credit record was OK or even good, the bank wouldn’t have been alerted that way to the fact you may have difficulty.
So it can be hard to win a case involving a typical bank loan, especially if your credit record was OK. But if you want to try, you can use the template letters here.
Need some help?
If you need help to complain, go to your local Citizens Advice, they will help for free.
Don’t use a claims management company. They are expensive and often incompetent. A good claim involves telling your own story, not sending a standard letter!