Payday Loan Deemed ‘Unaffordable’- How To Get Compensated?

In this article, you can find out about how to be compensated for an unaffordable loan. There is a possibility that you sought to get a payday loan, to help you with your everyday finances, but got stuck in a cycle and are unfairly paying a lot more than you had to.

What Is An Unaffordable Loan?

When a person has to take out a loan in order to pay the initial loan, the loan is deemed unaffordable. The lending for the second time can be from the same lender that gave you the initial loan or someone from another company trying to help you out, but you are still stuck in a cycle and can have lots of problems ahead.

The loan when considered to be unaffordable should not have been given out in the first place. This is one of the reasons that you should be asking for a refund on the interest you paid to the lender. A person who seeks out to get a payday loan should first consider all the other options he has before taking it out.

Payday loans although are very convenient, come with very heavy interest rates and if not paid on time can have a negative impact on your finances. If you have taken out further loans to cover the initial one, you can be eligible for a refund.

There is also some responsibility on the lender to consider providing you with more loans or not. There are considerable factors to look at when giving out a payday loan:

  • Late payments
  • More loans just within a few days of repaying the previous one
  • Borrowing from other lenders to pay another loan
  • Borrowing from the same lender to pay off the existing loan
  • The loan is equivalent to a considerable part of your income

Unfair Treatment?

Compensation is provided to the people who may be treated unfairly by the lender. In the case that you may have informed your lender that you are having trouble making payments, the lender needs to advise you in a way that does not require to take out more loans. In case of:

  • The lender suggesting roll over loans and borrowing more money
  • The lender threatens with court action or debt collectors for payments
  • The lender did not advise you to seek help from free debt advisers

If any of the following happened, you are eligible for compensation.

How Much Can You Get Back?

Conventionally, all the interest that you have paid on the loan gets paid back to you with an additional statutory interest rate of 8%.

You can also have any unaffordable loans removed from your credit records

How To Get It Back?

You need to be sure of all the facts and figures regarding your loan, such as initial payments, interest added to them, any other surcharges.

When that is done, write a letter to your lender. By law the lender is required to solve the issue themselves and respond in a positive way. If the lender fails to respond, you can take it up with the Financial Ombudsman Service after eight weeks of raising the issue with your company.

Your Car Financing Options Explained

The UK is in love with cars. Don’t believe us? The statistics show that there has been a continuous rise in sales of vehicles for the past 5 years.

Not only this, the car financing industry has also witnessed a tremendous growth because of this addiction of the UK towards buying new cars.

Buying a car on cash may be the biggest mistake that you make in your life. This is why car financing options are so popular in the UK. Though you can simply ask your bank to provide you financing for the car but there are other financing options that you can use. Here we have shed some light on conventional as well as non-conventional financing options.

Personal Loan

This one is the plain vanilla among various other car financing options. Under this car financing option, you can simply take out a personal loan either from a bank, a credit union, a building society or from online loan providers and buy a car from it.

The advantage of this type of loan that it is easy to get and can even be availed online without meeting a banker at the bank counter. One thing that you should watch out is that you must never keep your home as collateral when taking out a personal loan otherwise you will lose your home if you are not able to service the debt amount on time. Losing your home for a car sounds idiotic so avoid making this mistake.

Hire Purchase Agreement

In short, the car is collateral and it will be transferred to your name once you’ve made all the payments. This financing option is also fairly common in the UK. The advantage of this option is that you do not have to keep any other security or asset as collateral and the car itself serves as the collateral. For availing this car financing option, down payment must be made. The higher the down payment the lower will be the rate charged by the lending institution.

Car Leasing

If you are a financial wizard you will be choosing this option. Under this financing option financial institution will buy the car and will lease it out to its customers. Customers will be making monthly instalments but at the end of the period, the car does not belong to you and will be returned back to the lender.

What?! Returned back? This may sound like an option worthy to be sneezed off but if you notice and analyse you will realize that the resale value of the car would decline after you have used it for 5 or 7 years and there may be new and improved models in the market. So why would a person like to own out of date car after paying his/her instalments? Thus many customers who go for this type of financing will return the car back and will take out another new and improved car.

There are many more car financing options but the above ones are most common in the UK.

Credit worries?

It needn’t be so hard to get approved for credit. It’s more of a matter of understanding your own score and being mindful of where you may have adversely impacted your own credit history. Like anything, this is simply about knowing where to look and what to look out for. So what should you be doing? Well… to start with… you need a credit history, because without one… you wont be approved for credit. Huh!? That’s a bit strange isn’t it? You can’t get credit until until you have credit…? Yes–that’s right. It’s not the most intuitive analogy but it’s true. Let’s look at a scenario: Imagine you’ve had several credit cards for some years. Now let’s say that while you have have been using them… your repaymentshave been inconsistent. Some months you’ve paid on time, other months you’ve paid late, and some payments have been missed altogether. You then go to apply for a mortgage; the lending company performs its due diligence, which includes completing a credit history check. Your result comes back below the lender’s acceptable standard, due to your poorly maintained credit history. A couple things can happen at this point. 1) The lender can and probably will reject your request for a mortgage. 2) They may offer you some funds… but if they do, they’re likely to be subject to an increased interest rate and a reduction in the borrowing amount. This result is directly related to the way you have managed your previous credit commitments. One more scenario for good measure: You have a few credit cards and a car finance agreement. you’ve always kept up with payments. You’ve recently moved into a new rented house… but now you want to apply for a mortgage. The lender, as per the previous scenarios, does their checks. Your credit rating comes back rejected.What a shock! What happened? Well… it turns out that the last tenant in the property you’re living in built up lots of unpaid debt. Now the house is associated with bad debt, which affects any and all occupants! This is unfair but it happens. Don’t worry there are ways around it, which we will explain later.