REFUNDS / REFUND CLAIMS / SHORT TERM LOAN REFUNDS - EVERYTHING YOU NEED...
8th August, 2019
Have you ever borrowed through a short term loan company like Quick Quid, Sunny, Lending Stream etc? Do you owe money to short term loan company at the moment?
If the answer is yes, you may not realise that you could be entitled to a part or full refund of the money you’ve been charged. In some cases, the short term loan debt is written off altogether.
In this article, we explain what short term loan refunds are, why you might be entitled to one – and, if you think you are, how you would go about pursuing a refund – and where you could get support from.
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What exactly are short term loans?
There’s a good chance you’ve seen advertising for short term loans – whether it’s on TV, while you’re browsing the internet – or even in shop windows and on posters.
A short term loan is intended to be short-term borrowing that’s used for unexpected expenses. In reality, the majority of short term loans aren’t used in this way – and that’s where problems occur.
If you’ve used a short term loan to cover the shopping, phone bills, rent – or even the repayments on another short term loan – you’re very definitely not alone. In fact, out of thousands of people who took part in a financial study last year, around 7 out of 10 said that their most recent loan was to cover normal life expenses or other short term loan repayments.
The rules that surround the finance industry make it clear that any kind of lending should only be offered if the borrower has the ability to pay it back – and as many people borrow because they simply cannot afford life expenses, the evidence would suggest many of those people aren’t going to be able to consistently make loan repayments either…
Loans on top of loans
If you’ve ever taken a short term loan to pay off another, again, you’re in a similar position to millions of other people in the UK.
In fact, last year’s study also shows that 3 out of 4 short term loan borrowers will take at least one more loan in the same year – and that those borrowers will, on average, take 6 different short term loans across any 12-month periods.
While a short-term loan can be useful to help you get to your next wage slip, the fact that you now have another outgoing the following month can make reaching the next short termeven more tricky. With more to pay next month, it’s easy for people to find themselves in a difficult situation, never being able to pay back their debt because more and more of their outgoings are taken up with short term loan repayments.
Are you entitled to a short term loan refund?
To work out if you might be eligible for a short term loan refund you simply need to ask yourself a few questions.
The first one is simple:
- Have you had a short term loan in the last 8 years?
The chances are the term ‘short term loan’ was used when you applied for or discussed the loan, but even if it wasn’t, you could still have had a short term loan. If you remember dealing with a company like Quick Quid, Sunny, Peachy or Satsuma you may well have had a short term loan.
If you’re not sure, check back over old bank statements – a quick Google search of any loan company names you’re not sure of will help you work out if you’ve borrowed from a short term lender.
Assuming you’ve borrowed from a short term lender, you then need to consider:
- Was the loan ‘rolled’ from month to month?
‘Rolling’ a loan simply means that it has not been paid off after the intended period – so, if you borrowed £200 but could only afford to repay £100 after your next wage slip, the chances are the lender would have extended the time you had to pay it off – while also adding significant charges for doing so.
If this has happened, the lender you borrowed from should perform an ‘affordability check’ each month – i.e. an assessment of your incomings and outgoings to check if you can afford the continued credit agreement they’re tying you into.
Often, lenders do not perform these checks, so people who cannot afford the loan continue to accrue charges – often ending up owing more than was ever intended.
- Did you have more than one short term loan at the same time?
Again, similar to rolling loans month to month, potential lenders are expected to look at all your outgoings when they assess you for a further short term loan, including other short term loans – and loans that are being rolled from previous months.
Without this full assessment, a lender cannot decide whether you have the means to repay the loan.
If you’ve struggled with short term loan repayments and the answer to either of these additional questions is yes, there’s a strong possibility that you’d be entitled to a full or part refund from the lender, at least for the charges that you paid.
While these are the most common issues that come up for borrowers who’ve used short term loans, they’re not the only ones. We’ll take a closer look at how lenders should treat you.
Did you ask for help?
Some people hesitate to pursue short term loan refunds because they asked for help from a short term lender but didn’t receive it – or didn’t get the right kind of help.
The Financial Ombudsman Service is the organisation who ensure any company offering financial services (including short term loans) treats their customers appropriately. They state that short term lenders have a responsibility to respond fairly if someone contacts them explaining they are struggling with repayments.
Responding fairly would usually mean freezing the interest that’s building up on the amount you’ve borrowed – and often organising smaller, more affordable payments.
If you’ve discussed having troubles repaying your loan with your lender and they haven’t offered any help – or they’ve delayed getting back to you (meaning you’re charged more interest in the meantime) this could be further evidence that you’re due a refund.
Did you struggle with payments?
Missed payments are a lucrative source of income for short term lenders. If you’ve missed a repayment or asked that your loan is rolled into the next month, you’ll be well aware that the penalty charged can be quite high.
Missed payments and requests to extend the loan should be indications to the lender that you’re struggling – and they should offer to help. However, more often than not, lenders have not helped – simply continuing to add charges.
Even if you haven’t asked for help – that doesn’t mean you didn’t need it – and as a result, you may be entitled to some or all of these charges refunding.
Did you have a Continuous Payment Authority set up?
A ‘Continuous Payment Authority’ or CPA for short, is a type of repayment method that most short term lenders use.
When you give authority for a short term loan company to use a CPA, it means they can attempt to take payment from your account without seeking authorisation from you each time – even if the amount differs. In some instances, short term lenders will try to take a large amount that includes additional charges for rolling or missing payments – sometimes leaving you short.
Even if the lender can’t take a large full amount, they have been known to try to take smaller amounts – sometimes multiple times, again, potentially leaving you short for other bills and living expenses.
A continuous payment authority isn’t necessarily bad (especially as it doesn’t leave you with bank charges if payments are unsuccessful) – but can often be used by lenders seeking repayment in a way that makes it very difficult to manage your money, especially if you’re struggling already.
If you think a short term lender has misused a CPA or failed to explain how it will work, it can be further evidence to suggest you couldn’t afford the loan and may be due a refund.
Could you afford the loan in the first place?
Getting into money trouble is far more common than you might think – but that doesn’t stop people feeling embarrassed that they can’t afford their day-to-day expenses. A short term loan sometimes prevents the need for admitting to anyone else that you need help.
A short term loan can look like an attractive way of handling your short-term money issues – even if you can’t afford the repayments. While short term lenders should perform checks that pick up on affordability issues, these checks aren’t always sufficient, meaning you could have been given a loan you just cannot afford.
Some people are embarrassed to put their hand up and admit that this has been the case – but if this situation sounds familiar, don’t worry – it is not your responsibility to check affordability; it’s the lenders – and if they haven’t, it could be evidence that your borrowing has not been handled properly and that you’re entitled to a refund.
The changing face of short term loans
While TV and internet adverts have always made short term loans look helpful, harmless and friendly – the truth has often been quite different.
Prior to 2015, there were no rules around the amount of interest that could be charged, the amount of fees that could be added to a borrower’s account or the size of those fees – but that’s different now:
- Lenders now have limit of 0.8% of the amount borrowed that they can charge as interest each day. They shouldn’t be charging you more.
- Lenders are now banned from expecting you to pay back more than 100% of the amount you borrowed – so, if you’ve borrowed £100, you should not be paying back more than £200.
- There is now a limit on the amount that can be charged for defaulting (failing to keep up payments) on the loan. That limit should not be more than £15.
Even though these controls are in place, that doesn’t always mean short term lenders get it right – and it doesn’t mean that they acted fairly if they charged you more prior to 2015.
Getting a refund
If anything we’ve covered here looks or sounds familiar there’s a good chance you could pursue a claim against the lender or lenders you’ve used – but how would you go about it?
Use a short term loan refund service
There are plenty of companies who’ll pursue a short term loan company on your behalf if they think you’ve been unfairly treated or mis-sold a product.
From here, they’ll talk to lenders on your behalf – putting together enough information to decide whether or not you were mis-sold your short term loan or whether you were treated unfairly. If they decide you were, they’ll pursue the lender(s) for you.
Companies who offer this service do so on a ‘no win no fee’ basis, meaning that it won’t cost you anything if they don’t recover any money for you.
Check to see if you are owed money here.