The repayments on many loans 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. Many people have used them and got refunds – see the comments below.
If you win your complaint you will get the interest refunded or – if you still owe a balance – removed so you only have to repay what you borrowed.
The complaints here are for unsecured loans.
You can also use this approach for logbook loans and car finance. But for car finance you may have a better option than an affordability complaint, so first read HP/PCP car finance problems first.
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.
Refunds from unaffordable loans – what is unaffordable?
A lender should have checked when you applied that a loan is affordable for you. The regulator says “affordable” means:
you can make the repayments without hardship or having to borrow elsewhere.
This applies to most forms of loans except mortgages, including large, long term loans, logbook loans and car finance.
It isn’t just for “bad credit” loans – you can win a complaint about an unaffordable loan from a high street bank. But as bad credit loans have very high interest rates, they are more often unaffordable.
For payday loans, it’s hard to get a refund if you only had one or two payday loans. That is because those loans are usually small so the lender doesn’t have to make good checks for the first few loans.
But the good news is that for larger and longer-term credit, the lender should have made better checks at the start!
Making a complaint and asking for a refund
Email addresses for lenders
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 some of the larger bad credit, large loan lenders. There are a lot of small lenders including Credit Unions. If your lender is not listed you can still complain, look at the lender’s website to find how.
Avant Credit firstname.lastname@example.org
Bamboo Loans email@example.com
Everyday Loans firstname.lastname@example.org
Koyo loans email@example.com
Lifestyle Loans firstname.lastname@example.org
Likely Loans email@example.com
Loans by Mal (Monthly Advance Loans) Complaints@loansbymal.co.uk
Loans 2 Go firstname.lastname@example.org – also read Loans2Go’s interest rate – “outrageous” – how to complain
MyJar in administration but you can still send in complaints – email email@example.com with CLAIM as the title
Progressive Money firstname.lastname@example.org
Quick Loans email@example.com
Satsuma now in a Scheme – see Provident and Satsuma Claims for what to do.
Sunflower firstname.lastname@example.org put “Sunflower affordability complaint” as the title
118 118 Money email@example.com
Here are some logbook lenders and bad credit car finance lenders, some of them also give normal unsecured loans:
Blue Motor firstname.lastname@example.org
First Response email@example.com
Loans 2 Go firstname.lastname@example.org
Mobile Money email@example.com
MotoNovo Finance firstname.lastname@example.org
Motor Kitty email@example.com
Oplo/1st Stop firstname.lastname@example.org
Ramsdens (logbook loans) email@example.com
Specialist Motor Finance firstname.lastname@example.org
If your loan has been sold to a debt collector, you send your complaint to the original lender
Start the complaint – ask for personal information & get your credit record.
Get a copy of your current credit report now and download it as you may need this later. You can get one from TransUnion. Do this first thing as sometimes the details change, so you want a full one saved to show the Ombudsman later if necessary.
Then email the lender and begin your complaint. Put AFFORDABILITY COMPLAINT as the subject 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. This will give you a lot of information that can be useful later if you have to send the complaint to the ombudsman, so ask for it right at the beginning.
SARs are often sent out by post, make sure the lender has your new address if you have moved.
If you want an affordable payment arrangement now, add a sentence to the complaint saying this:
- this is often a good idea as these complaints can take a long while to sort out so a payment arrangement gets your finances into a safe place while this gets sorted
- a payment arrangement shows on your credit record, but if you win the complaint all negative marks will be deleted
- talk to a debt adviser such as National Debtline if you want to know more about payments arrangements
- a payment arrangement for car finance or a logbook loan puts your car at risk, so you probably have to keep paying this.
While you are waiting for the lender’s reply, try to get copies of your bank statements from 3 months before a loan to three months afterwards. Do not wait until the Ombudsman asks you for these, you want them ready to hand.
Also read Lender says I lied. That looks at the various reasons why your application may not have been accurate. People have won complaints where they lied because they were desperate but there are other reasons too, so think what may have applied to you.
Other details you can add if you want
The template above is fine, you don’t have to add a lot more details. I am not even sure some lenders read what you write.
It is better to write a short complaint summarising your problems than send pages telling the lender stuff they already know. For example, the lender doesn’t need a list of your loans.
But if you want you can include extra points in the initial complaint above. Or send the lender another email afterwards to add to your case.
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. See How Subject Access Request information can help an affordability complaint which has details about what to look for.
Here are some points that may apply to your case:
- my bank statements and credit record (attached) show that I was unable to afford the loan repayments.
- This was a large loan, you knew I had poor credit and may have been in a difficult position so you should have tried to verify details. If you had done this, you would have rejected my application.
- During a telephone call, your agent talked me into agreeing that some figures should be lower in order to get my application accepted.
- I didn’t include payday loans as credit commitments on my application as I thought that was for long term credit, but you could see I had several from my credit record.
- you made deductions straight from salary/had my child benefit paid to you which has caused me difficulty when I have needed to ask for a payment arrangement.
And some examples of points about top-ups:
- a credit check would have shown that my finances had got worse since the first loan
- you didn’t ask if my income or expenses had changed, and they had.
- you didn’t ask for bank statements so you could check if the new repayments were affordable.
- I had said the first loan was to consolidate debt, but you should have seen that this hadn’t happened.
- you increased my interest rate, showing you realised I was in a more difficult position but you did not check whether I could actually afford the new repayments.
The lender replies – go to the Ombudsman if a poor offer
You should get a response from the lender within 8 weeks. If you don’t, phone them up and ask when you will get it – a couple of days is worth waiting for but many responses are rejections, so don’t wait weeks for one, go to the Ombudsman straight away.
Don’t be put off by a rejection! Or if the lender saying it was your fault because your loan application wasn’t accurate.
Sometimes a lender will send a long, complicated reply designed to make you look as though you should give up.
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, even if was your first loan from them. If they didn’t, send your case to the Ombudsman.
I suggest you rely on your gut feel – if you know repaying the loan caused you a lot of problems then it is worth sending the case to be looked at by the Ombudsman.
If you aren’t sure, ask what other people think in the Comments below this article. You only have 6 months to send the complaint to FOS, so it’s best to do this as soon as possible.
It isn’t usually worth trying to negotiate with these lenders, you are just wasting your time – two exceptions are Bamboo and Loans2Go.
Send to Financial Ombudsman Service (FOS)
It’s easy! 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 your complaint. Add any more details you want, including pointing out if you think there are errors in the lender’s reply. Also attach:
- the reply from the lender
- Trans Union statutory 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 rejects the adjudicator’s decision, it will then be looked at by an Ombudsman.
“What about a bank loan?”
The affordability test is the same – could you repay the loan without getting deeper into debt elsewhere. But the interest rates are lower than “bad credit lenders” so it’s harder to show that the smaller repayments are unaffordable – unless the loan was very large.
So it can be harder to win a case involving a typical bank loan, especially if your credit record was OK. But if you know the loan was unaffordable then give it a go and use the template letter here.
These affordability complaints do not apply to secured loans or mortgages. If you have a problem with one of these, talk to your local Citizens Advice.
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. And if you still owe money, then you may just get the interest removed so you owe less… which is great, but you don’t want to have to pay a claims company in cash when you never had a cash refund to pay it from.