This page brings together Debt Camel’s articles about payday loans. Payday lending is often in the news and this page is kept updated.
The problems with payday loans
As millions of people have found, it was easy to get a payday loan but then get trapped into a cycle of borrowing more. If you couldn’t afford £300 this month to buy a new washing machine or pay a garage bill, you probably couldn’t repay that amount – plus the high interest – the next month. So people ended up rolling the loan or borrowing from one lender to repay another or not paying priority bills such as council tax and utilities.
The consequences were often impossible levels of debt. Telling my partner about my payday loans is the story of a Debt Camel reader who kept her debt problems a secret for four years.
Escaping from the payday loan trap
If you are currently borrowing from one or more payday lenders, it can be very hard to escape from their clutches. It can seem very scary to tell them that you can’t afford to repay them this month and you would like a repayments plan over a much longer period. But changes to the regulations in 2014 mean the lenders can’t carry on adding interest so your debt baloons.
Read What to do if you are still using payday loans – a temporary DMP may be your best option, letting you pay less to your debts whilst you start asking for some compensation.
Asking for compensation
You may be able to reclaim money even if you repaid your loans on time! The main ground for making a claim is that you were given an unaffordable loan and that the lender should have been able to tell from your credit record, your low income or the fact you are repeatedly borrowing that the loan was unaffordable.
If you borrowed or rollowed over loans from the same lender repeatedly, then you may have a good case. People are getting outstanding debts written off and/or large refunds. We have seen many over £5,000! The Financial Ombudsman is getting 200+ complaints a week about unaffordable lending, so if you had a probalm a few few years ago, or you still have one now, find out the details.
The following articles explain how to do this:
- Payday loan refunds – how to ask for one This article is a step by step guide including sample letters for you to use. If the lender refuses, then go to the Financial Ombudsman who is upholding many of these complaints. There are many comments from readers that have used these letters to get refunds!
- Payday loan compensation FAQs – this brings together the most commonly asked questions about whether you should claim and how to do it.
- Payday lenders email addresses a list of contact details for dozens of lenders for putting in complaints.
- What to do if a lender refuses to send you a list of your loans
- What to do if a lender says your loans are over 6 years old so they won’t consider a complant The Ombudsman is now considering these older cases, so don’t beleive a payday lender when they tell you they are too old!
- Payday lender says you lied – does this mean you can’t get refund? No! We have seen lots of cases where people have had refunds in this situation.
- Should a lender write off your outstanding balance? If you only had one or a few loans, this can be a difficult decision – this article looks at how the Ombudsman decides these cases.
- How is 8% simple interest worked out? The calculation is easy in theory but fiddly in practice – luckily you don’t have to to the maths yourself!
The process is the same for all lenders, but here are some pages that look at what to expect if you are complaining about specific lenders:
- Wonga – the largest UK payday lender is better than most at complaint handling.
- How Quick Quid are handling complaints – rather slowly is the answer! But readers are getting good results from going to the Ombudsman.
- Payday UK, Payday Express and the Money Shop – these brands are all part of the same group.
Some people are being cold-called by Claims Management firms saying they are payday loan refund experts – but here are Four reasons not to use a claims firm for a payday loan complaint.
Some of the alternatives are just as bad
Many lenders are getting out of the business and the ones that remain are offering fewer loans. The payday lending industry says it is really worried that if there are less payday loans, more people will borrow from loan sharks – however debt charities call this dishonest and scare-mongering, pointing out that that there is no evidence this is happening. In January 2017, Citizens Advice noted that it had not seen any increase in the numbers of people it was seeing with loan shark debts since the clampdown of payday loans in 2014.
Many of the other high-interest alternatives to payday loans can be very damaging – Bad credit loans to avoid looks at logbook loans, guarantor loans (such as Amigo) and rent-to-buy shops (such as Brighthouse).
The payday lenders themselves are starting to offer more longer term loans – see Wonga’s new installment loans – Good or Bad? which looks at the pros and cons of these.
What to do if you are refused a payday loan looks at the better alternatives that might work for you.
News about payday loans and payday lenders
Payday loans are often in the news:
- Wonga’s HUGE data breach (2017) One of the biggest ever seen in briatiabn, and customers had their bank account numbers and sort codes stolen.
- MotorMile Finance (MMF) – should you get a refund or a balance write off? (2016) MMF area debt collector that has bought a lot of payday loans and handled many of them very poorly.
- The Money Shop won’t send loan details (2016).
- Swift Sterling and Pounds Till Payday – don’t be misled (2015) If your payday lender isn’t UK based and isn’t regulated by the FCA, you have much less chance of getting a refund.
- Should payday loans be advertised on TV before 9pm? (2015) Apart from the payday lenders, who thinks the answer to this questions should Yes?!?
- More payday lenders start to pay out (2015). Other lenders such as Sunny, Cash Genie, The Money Shop, Quick Quid and Pounds to Pocket are starting to offer some forms of compensation, including interest or charges being written off.
- Payday loans cap – three implications for borrowers – In January 2015, the FCA imposed a cap on the interest payday lenders can charge and the number of times a loan can be rolled – a major shake up for the industry
- Perhaps a million people should be able to claim redress (2014)
- Wonga loan write-offs – in October 2014, Wonga was made to compensate 375,000 customers, mainly because they had been given loans that were unaffordable;