In January, a reader told me about a loan he had for £650, with 18 monthly repayments of £147. This adds up to a total repayment of £2,650 – an eye-watering amount and more than four times what he borrowed.
At first I thought this was probably taken out years ago. But in fact, it was borrowed in late 2018 from Loans2Go.
Loans2Go also offer logbook loans, but this article is just about their standard personal loans. I have updated this article with information about what the Financial Ombudsman thought about one of these loans.
These Loans2Go personal loans:
- are for amounts between £250 and £1,000;
- all have an 18 month term;
- there is a set APR of 990%.
The quote above is for weekly repayments. You can also choose to repay monthly or fortnightly but this makes little difference to the total repayment.
Is it legal to charge that much interest?
The loan was taken out by the reader when he was desperate and didn’t think closely about the cost. But now he wants to know if it is actually legal to have to repay that amount.
There is a maximum cap on the amount of interest that can be charged on payday loans. Lenders can’t add more in interest and charges than the amount borrowed. If that payday loan price cap had applied to this Loans2Go loan:
- the maximum repayment would have been £1,300, less than half what L2G charges;
- the monthly repayments would have been lower than for L2G’s loan.
The FCA calls payday loans “High Cost Short Term Credit”. Its definition of High Cost Short Term Credit is a loan over 100% in APR and of 12 months or less.
So the Loans2go loan looks as though it is outside that definition because it is 18 months long.
But there is a small point in the FCA’s definition that says it also covers loans which are to be “substantially repaid within a maximum of 12 months“.
A recent Ombudsman decision on a Loans2go loan
Normally you don’t get very far if you complain to the Financial Ombudsman (FOS) that the interest on a loan was too high.
You can win complaints about expensive credit if you can show the loan was unaffordable for you, but not just because the interest was too high if it was clearly explained at the start… and it was legal.
But here is a decision from the Financial Ombudsman about one of these L2G loans: Miss R’s personal loan provided by Loans 2 Go Limited .
Miss R borrowed £900 and was due to repay about £3,700, so about £2,800 in interest – she complained this was too high. She didn’t make an affordability complaint.
Does the loan breach the price-cap?
The Ombudsman points out that some respondents to the FCA’s consultation on the price-cap rules wanted the definition to be more specific, warning that loans of up to 24 months could potentially be caught by it. But the FCA said the definition was broad in order to prevent firms from trying to avoid the rules.
The Ombudsman was concerned that:
the potential harm to a consumer – as a result of having to pay such excessive charges over a longer period – is arguably greater [than for a loan of less than 12 months].
I think that last point is exactly right. If Miss R had taken a payday loan she would have paid a lot less each month and for a much shorter period than taking the L2G loan.
The interest rate was outrageous
The Ombudsman decided he didn’t have to rule on whether the loan broke the payday loan price cap because the interest rate was in any case simply too high:
this loan had an interest rate so outrageous (i.e. one which works out at well in excess of 100% per annum) that I think a court may well have found it grossly exorbitant and that the agreement grossly contravened ordinary principles of fair dealing.
He reached that decision looking at Miss R’s situation and the fact that L2G knew she was in financial difficulty:
L2G … unfairly took advantage of the situation by providing such an expensive product.
So the Ombudsman’s decision was that L2G should reduce the starting balance on Miss R’s loan to £1,800 instead of c. £3,700 – a major cut in the amount of interest she had to pay.
How to complain about one of these loans
I think this is the worst loan in Britain. It’s not right that you should have to pay every month for 18 months than you would if you take a payday loan and make 12 monthly repayments.
You have two possible reasons to complain about this sort of L2G loan:
- that it was unaffordable for you – the monthly repayments were so high you couldn’t afford to pay them without hardship, borrowing more or getting behind with important bills. This is a standard affordability complaint, used for many other sorts of loan. If you win this you will get a refund of all the interest.
- that the interest rate was unreasonably high and that L2G was not treating you fairly in offering you this loan. This complaint is much more unusual. You could win this even if the loan repayments were affordable for you, and Miss R’s case suggests you would get the interest reduced if do.
I think most people should make an affordability complaint using this template as a basis:
I am also complaining that the interest rate was grossly excessive. It is unfair to charge someone more per month over 18 months than they would have paid to a payday lender for a loan the same size over 12 months.
I am asking you to refund the interest and any charges I paid, plus statutory interest, and to delete any negative information from my credit record.
[delete if you have repaid the loan] I would also like an affordable repayment plan to be put in place if I still owe a balance after this refund.
I am also making a Subject Access Request (SAR) for all the personal information you hold about me including, but not limited to, my applications, all credit and other affordability checks, a statement of account for my borrowing, and a record of all phone calls.
Change that so it is right for you and email it to ps@loans2go.co.uk.
Ask for a refund for large bad credit loans
Complaining about a guarantor loan
How to ask for a payday loan refund
Siobhan says
Thank you I will try that.
They’ve described quite clearly how they’ve come to the conclusion I should have had enough spare each month for the refunds to be affordable but my bank statements did show that I didn’t have any spare funds at the end of the month and my credit file showed I had numerous unsecured loans outstanding which were in arrears.
Thank you so much for your help
Roland says
I got quite a few top ups without providing how much I had to pay out think it’s called an expenditure could I claim any back
Sara (Debt Camel) says
were these “normal” loans or logbook loans?
Aaa says
I received a loan in December 2018 but had trouble keeping up with payments and my last payment was in May 2019. I sent an affordability complaint to loans2go in August 2019 with the template above. Is there something I can complain about other than affordability as they are now saying I am not eligible to complain. The issue I have is the huge interest charges which I could not afford to pay! I sent another affordability complaint on 23rd June 2020 and received the following response.
Good afternoon,
Thank you for your email.
However, you had previously raised an irresponsible lending complaint to us on 30 August 2019, with a final response letter issued on 6 September 2019; within that response, we stated the following:
If you do not refer your complaint in time, the Ombudsman will not have our permission to consider your complaint and so will only be able to do so in very limited circumstances. For example, if the Ombudsman believes that the delay was as a result of exceptional circumstances.’
Therefore, you had until 6 March 2020, to escalate your complaint to the Financial Ombudsman Service; however, this is now out of time, and is not an eligible complaint.
I did not receive the letters they sent and I also expected a response via the same method I sent the original complaint in which would have been via email.
Please can you advise what I can do about this now?
Tyler (Just a guy, paying off my debts) says
Raise your expired complaint to the Financial Ombudsman Service, explain their final response wasnt sent to you and you wasnt aware until you raised the query about your complaint again, the Ombudsman will likely agree your case was exceptionally delayed (you wasnt aware after all).. Theres absolutely no harm in trying anyway. I had a similar situation with Sunny, the Ombudsman was happy to take my case 8 months after their final response (2 months past expiry)
Stephen says
Hi there I had a loan of £250 from loans 2go didn’t mention anything about how much I would of had to pay back just said it’s a high interest loan at the time I didn’t think of it just needed the money for newborn baby, I was up to date with the £250 loan I had kept receiving texts in need of a top up so I rang them to see how much I could have £500 top up didn’t even get the full £500 they took £150 out of it but didn’t say that over the phone there exact words £500 will clear in to your bank within a couple of minutes, was in starting getting decorating stuff ready for newborn baby. After that I started getting into real difficulties with this lender total rip off be very careful.
Jimmy says
I sent them an email in April of a loan I took out with them at Xmas. Usual story, 2 years to pay back £1800 on a £400 loan. I didn’t miss a payment but the thought of £98 a month for another year and a bit was annoying me. They replied firstly with the offer to half what was left and agree a payment plan and I refused and they immediately came back and wiped the loan clean and removed it from my credit file. Don’t take what they say at first as gospel. The interests they charge are abhorrent and they are playing on vulnerable people!
Rikki heron says
What did you say in your letter to them pls, I borrowed 1k and have to pay back well over 4k
Sara (Debt Camel) says
the article above has a template that you can use.
Pierce says
Hi all,
I put in my complaint last week for an £800 loan I took out in Jan (costing £3k+ for 18months). Went back and forth, received final response where they rejected my complaint the letter implied that they sent me an email requesting bank statements and other evidence as to help with my claims of the loan being unaffordable (which I never received). However, looking at my statements previous to taking the loan it looks like I can afford the repayments, but during the term of my repayments now I’m having difficulty and ended up borrowing from other places. I don’t know what to do I’ve already paid £914.20 to them. Should I send them the statements and my credit report? They’ve already seen that my score was very bad before but its gone up a bit since then and I’ve had previous defaults etc. and I’ve settled all of my previous debts last year. Their current settlement figure is at £908 and some change… what else can I do?
Sara (Debt Camel) says
I suggest you reply (assuming this is all accurate obviously) that they never asked for your bank statements or credit record and that you have already repaid more than you borrowed. Say that as a compromise you will be happy if the balance is written off [or reduced to £200 say? this is up to you. I guess they will be more prepared to accept a higher about rather a complete write off] otherwise you will be sending your complaint to the Ombudsman.
Marie says
Hi Sara
I put in a complaint with loans2go about their outrageous interest and it wasn’t upheld.
Since then they have been hounding me and I’ve just received a final demand letter saying if I don’t pay £520 (on a £250 loan that I’ve already paid over £500) that they will take me to court, contact my employer asking them to make the payments from my salary, or come to my house and repossess my items to pay for the outstanding items.
I am going to make a complaint to the Ombudsman but the letter has left me feeling terrified, during a time where I’m already experiencing intense anxiety.
Could you pls advise me on next steps with them whilst I wait for the ombudsman to deal with the complaint?
Thanks
Marie
Sara (Debt Camel) says
ok, so they are being unpleasant and trying to pressure you to pay them money.
But when you have a complaint in with the Ombudsman, they should not start court action. So send your complaint to FOS now and tell L2G that you have done this and that as you are disputing the debt and ask them not to start court action.
I haven’t seen them try to take anyone to court when there is a FOS case.
But what if they do? Worst case? I don’t think this is going to happen but here are the facts so you know just how looooong it would take!
They can’t get money taken from your wages or send bailiffs around unless they have already gone to court and got a CCJ.
The first stage in getting a CCJ is for them to send you a special letter with a Reply Form attached. See https://debtcamel.co.uk/letter-before-claim-ccj/ for what this looks like. until you get this form they are just bluffing.
If you get that letter you have 30 days to reply. so you can sit on it for 3 weeks and then send back the reply Form asking for more information (that link explains what to say). They then have to send you that information and they can’t start court case for 30 days after that. So this will have taken 2 months so far.
If you ever get a court form (which I do NOT expect! – and I can say where you can get help if you do so you know what to put on the form!) you have 28 days to send in a defence if you have acknowledged getting the form. So that’s another month.
After that you can request a “stay” of the court case so that it goes on hold while the Ombudsman case is held. At this point FOS should give your case priority.
If you didn’t ask for a stay but just carried on with the case, it took on average 9 months in 2019 for a case to go to court. And things will probably have got a lot slower now post Covid-19 as there is a backlog built up.
Marie says
Thanks so much Sara, I will put the complaint into the ombudsman now. I’ve felt so anxious all morning! Thank you for this website and all the support you give
Thomas says
Hi,
Does anyone know the response times of the financial ombudsman?
I put a complaint on about loans 2 go around 8 weeks ago? I’ve only had one email saying they had received it. I understand things will be slower with COVID-19.
Loans 2 go have taken one payment since me putting the complaint in then I have cancelled the payment and they’ve sent me a letter saying my account is in arrears etc.
Any help would be appreciated
Sara (Debt Camel) says
How much did you borrow and how much have you paid so far?
Thomas says
Hi I borrowed 750
I have currently paid £1,700 back and still have another £1000 roughly to pay.
They rejected my complaint around 9 weeks ago
Sara (Debt Camel) says
ok, well it’s best not to pay them any more but they will push you to. See my reply to Marie above.
Tyler N says
Just wanna contribute a little if you dont mind Sara, im sure you’ll want to shorten it after a read.
I have an active affordability complaint against loans2go.. I recently spoke to the financial ombudsman service to find out an update on my case as its been over 11 months since i raised it with FOS after Loans2go fully rejected my complaint (after only 3 days of raising it believe it or not)
The FOS told me i would receive a full decision in about 2 weeks as they are 12-13 months behind on short term cases at the moment..
But the adjucator i was on the phone to had just made a decision a few minutes ago on a loans2go case so was well aware of the company, but he had a quick look at my case regarding how unaffordable the loan was too me (because of the interest being so high its unaffordable sustainably) the adjucator agreed based on the decision he just made i will very likely receive all the interest back.
An important point The adjucator told me loans2go are the recently being investigated so all cases being referred to them are now being investigated separately by another team which may add to the delay before a decision can be made..
So id highly recommended anyone who has taken a loans2go loan that was unaffordable to them to put in a complaint soon, this could be the next loan company “2go”