How to Make a Payday Loan Claim

At some point in all of our lives, there comes a point where it is difficult to make ends meet. These financial problems can often cause people to find other ways to pay the bills. You have probably heard of payday loans before and possibly even considered using them for those financial tight spots you occasionally find yourself in.

Payday loans are short-term advanced loans that can be granted quickly and be in your account and ready to spend within hours. They are generally used to keep you afloat financially until your next payday — hence the name. Many modern payday loans no longer require repayment as soon as you receive your paycheck and instead will come to an arrangement that includes a date by which you have to make your repayment.

Although for many borrowers, payday loans can be a useful option for borrowing money for the short-term, they have developed somewhat of a negative reputation and are generally not considered the best option when experiencing a shortage of liquidity. If you have taken out a payday loan but feel that you have been treated unfairly or mis-sold your loan, then keep reading to find out how to make a payday loan claim.

Why Should You Avoid Payday Loans?

As previously stated, many borrowers have found these short-term financial services a perfect solution for unexpected financial outgoings. However, payday loan companies are often accused of lending money too easily to borrowers who stand little chance of paying the money back.

However, the main reason why payday loans are not always the best option for those in financial difficulty is the astronomically high interest rates that you have to pay back on the money you owe. If you are looking to borrow £100, you will typically have to pay back around £24 per month, which means that getting yourself into financial trouble with payday loans can be simple.

What Is Payday Loan Mis-Selling?

Mis-selling is when a product or service is misrepresented or the customer is led to believe that the product or service is suitable for their needs. If you believe that you have been mis-sold a payday loan, you could claim a refund on your existing loan and potentially on the money that you have paid back. Here are the main ways that you may have been mis-sold your payday loan:

● There was no warning about late payments from the lender.
● The lender did not inform you that payday loans are not adequate long-term solutions.
● The lender didn’t give you any indication on how to make a complaint.
● You did not receive accurate or adequate information about how and when to pay back your loan.
● The lender did not check your personal situation or finances to ensure that you could afford to pay it back.
● You weren’t given clear information regarding the amount of money that you would have to repay.

Were You Treated Fairly?

Mis-selling isn’t the only reason you might want to make a claim against your payday loan provider. Once you are a customer with one of these payday lenders, they have a duty to treat you fairly. If you believe that you haven’t been treated fairly, you can lodge a formal complaint and maybe even be entitled to money back. (You will likely be refunded interest plus any charges or fees you have had to pay.) Below are some examples of how you may have been treated unfairly:

● You felt pressured into extending your loan.
● The lender didn’t check your finances or situation to see if you could afford to pay back the loan.
● You weren’t offered frozen interest rates and charges if you couldn’t make repayments under a repayment plan.
● You were not told about free debt counselling.
● You didn’t feel like you were treated positively or sympathetically by your lender.

What Is the Complaints Process?

The first step to the complaints process is making sure that you have started your claim within six years of taking the loan out. Then you need to decide whether you want to carry out the complaints process by yourself or with the help of a claims management company.

Claims management companies will charge you for their services, but they do offer years of experience with complaints handling, effective claims management software and take the burden off your shoulders.

Contact Your Loan Company

If you have decided that you are going to handle your payday loan complaint by yourself, you will first need to gather all the relevant information regarding your payday loan. It is obviously best to have any physical evidence that supports the claim you are making.

After you have gathered all the relevant information you need, you have to get in touch with the lender to inform them of your complaint and allow them to make amends for their error. With any luck, you and the lender will be able to settle the dispute without having to take the matter any further.

Contact the Financial Ombudsman

If your lender fails to respond to your complaint within eight weeks or the response they give you is unsatisfactory, you can raise the complaint with the Financial Ombudsman Service. This is a free and independent service that settles complaints between consumers and financial companies.

The Financial Ombudsman Service will require detailed information about the situation and will then take you through the process of determining whether your complaint is upheld. The Ombudsman Service will also decide on what you will receive from the lender.

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