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Payday Loan Claims (Refunds) - What Are They and How to Get One

Payday loan claims are on the rise. You may be able to get money back for interest or other charges from an unfair payday loan.

Payday loans are short-term loans with high costs, typically for smaller amounts. Borrowers are sometimes required to repay the loan amount plus interest by their next payday or when they next receive income. There are, however, options for longer-term repayments.

Can You Get a Payday Loan Refund?

It is possible to get make a payday loan claim. Payday loans can be an expensive option to receive additional finances until you get paid again.

It is the lender’s responsibility to check your ability to repay a loan before lending you money. If that was not the case with your payday loan, you can file a complaint.

Payday lenders have set requirements from the Financial Conduct Authority that they must follow when lending money. These requirements often include:

  • Provide information on filing a complaint
  • Advise that payday loans are not long-term borrowing solutions or solutions for financial difficulties
  • Checking finances and personal situations to ensure a borrower can repay the loan
  • Being clear on the cost of repaying a loan in total

When Can You Make a Payday loan claim? 

You may qualify for a payday loan refund if you took out a payday loan in the previous six years. There are some other factors to consider as well, including the following:

  • The lender took payments from your bank account automatically, which made it difficult to cover your expenses and bills.
  • You had multiple payday loans at once.
  • The charges and fees were not made completely clear when you took out a payday loan.
  • You rolled your payday loan from month to month.
  • You were encouraged to borrow further when taking out a payday loan.

How Can You File a Payday Loan Claim?

When lenders do not follow these rules, you can complain to the lender. You may be able to receive compensation. If you are not satisfied with your resolution from the lender, you can file a complaint with the Financial Ombudsman Service.

Contacting your lender with a complaint or filing a complaint with the Financial Ombudsman Service are both free options for any borrower.

A complaint to a lender generally starts in the form of an email or formal letter. When you write to your lender, you should list the complaints and concerns you have. You can also add examples of your lender not following the rules.

In your complaint, include what you want from your lender in terms of a solution. You can let the lender know whether you wish to reach a repayment agreement. Or you might want to work out the amount you can afford to repay and how often you can make payments.

You might not be satisfied with the response from your lender, or you might not receive a response in the required timeframe. If so, you can submit a complaint to the Financial Ombudsman Service for review.

How Long Does It Take for a Payday Loan to Be Refunded?

Once you file payday loan claims, the lender has five days to acknowledge that they received it. They are also required to provide regular updates on the status of your complaint. You can also always request an update when needed.

Hopefully, you are able to work out a plan with your lender to rectify the issues and come to a repayment agreement that is suitable for your needs and financial situation.

Lenders have eight weeks to respond or make efforts to resolve the issue after receiving a complaint.

It is possible that your complaints or payday loan claims are rejected by the lender or ignored altogether. It is also possible that the lender takes too long to provide a solution. Or they might provide an unfavourable or unfair solution that you are not happy with.

In these instances, you can submit your complaint to the Financial Ombudsman Service.

You have six months after receiving a final decision from your lender to make a complaint with the Financial Ombudsman Service. If you do not receive a response from your lender, you have six months to file a claim. This period starts from the end of the eight week period your lender had to respond.

It will take some time for the Financial Ombudsman Service to review your complaint, provide a response, and potentially open an investigation. The investigation process involves receiving information from the lender and weighing all facts in a case.

 

Can You Claim Back Interest on a Loan?

It is possible to receive a refund for the amount of interest you paid on a payday loan. If your complaint is valid, the Financial Ombudsman Service or a court may require the lender to pay you.

This reimbursement is often in the amount of interest paid on a payday loan as well as fees or charges associated with the loan. Be aware that each complaint is handled individually. A solution involving repayment or a refund for interest is not guaranteed.

What Happens If You Don't Pay Back a Payday Loan?

Failing to make payments on time for a payday loan typically results in late fees. When you borrow money in the form of a payday loan, you agree to repay the amount in a certain period of time.

The most common method of payment is an electronic withdrawal from your bank account on the date you agreed to repay the loan, interest, and fees. If there is not enough money to cover the entire balance, your lender will continue to attempt to collect payment until they receive the amount in full.

If you know that you will have issues repaying a payday loan, you should contact your lender as soon as possible. There are options available for arranging a repayment plan that works for your financial situation.

Late payment fees are applied when a lender is unable to collect the debt in full. And your payday loan will continue to attract interest.

What Happens if a Payday Loan Check Bounced?

Whether you write a postdated check for your payday loan or set up an automatic withdrawal from your bank account, the full amount of the loan must be available on the day agreed upon for repayment.

If the lender attempts to collect the debt but there is not enough money in your account, your check will bounce. You will receive a late fee from the lender. Your bank may also charge you an overdraft fee.

There are also legal issues surrounding bad checks. Postdated checks and payday loans are not always included in bad check laws, so it is important to research the laws that apply to you.