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.