Mis-sold Wonga customers have been legally stolen.
More than 350,000 former clients of Wonga, who were mis-sold payday loans, have received letters telling them they will receive a paltry 4.3% of what was owed to them after it goes into effect.
So this is a red flag for anyone who may have sold a payday loan badly – DON’T WAIT to check if you owe £ 100 or £ 1000, or it could be too late …
Why have Wonga customers received so little?
Wonga clients who got payments after mis-selling their loans only get 4.3 pence per £ 100 owed. In other words, for £ 2,000, you get just £ 86.
I and others have campaigned for a long time for payday loan regulation, but when it happened in 2015, it was far too late. These vultures had attacked and taken advantage of vulnerable people with impunity for years. Then when the regulations finally came in allowing people to claim some of these international companies declared their arms sale to the UK so they weren’t responsible, probably leaving some of the founders sitting on cushions of money fueled by usurious profits.
Yet ultimately, legally UK Wonga no longer exists – it’s a dead business. So (oversimplifying) administrators simply add up his assets and divide them among those to whom he owed money – including those who must be repaid in error. In the end, I suspect the only thing you’ll be able to do now is spit, swear, stomp your foot and then move on with your life.
If you have been mis-sold, make a complaint urgently.
Many of these companies go bankrupt because of a combination of regulation that squeezes profits and paying the price for mis-selling so many loans. If you’ve been mis-sold for a payday loan by a still-credit-worthy company, you get the full amount back. But if he goes bankrupt you are just one of the creditors and will be lucky enough to get pennies per pound – like with Wonga – others who are already bankrupt include QuickQuid, Piggy Bank, and Wage Day Advance .
How to verify that you have been mis-sold.
The payday loan companies should have performed a number of checks to make sure the loan was appropriate or else you were sold poorly. For example… – He hasn’t looked at your finances to make sure you can pay the loan and the fees. For example, you shouldn’t be on a £ 1,000 loan if you only earn £ 500 / month.
– It was not clear how much it would cost you in total to repay the loan.
– You have not received complete or precise information on how and when to repay your loan.
– He didn’t tell you that a personal loan shouldn’t be used for long term borrowing or if you are in financial difficulty.
– You weren’t told what to do if you had a complaint.
If you have been mis-sold, you are liable for all interest, fees, charges and 8% legal interest per year more since you purchased it. This can be important because Paydayloanalice said, “I took Martin’s advice after getting 16 payday loans in 2 years. I received the refund from Lending Stream and received over £ 1,600. This has allowed me to pay off a credit card, so I look forward to less stress. ”
You can claim both existing loans and loans that you have already paid off, usually as long as you raise the case within six years of taking out the loan. My guide www.mse.me/reclaimpaydayloan offers free help and a tool, or just write the lender yourself explaining why you think you’ve been mis-sold.
And if the payday lender rejects you, take your case to the free site www.financial-ombudsman.org.uk – over 60% of people who won.
Alternatives to a payday loan
Payday loans are a flawed concept for most. How many needy people would see such an improvement in a month that they wouldn’t need to borrow again and could pay off last month’s loan plus huge interest? Still, there may be short-term emergencies where some need to borrow. Always reduce the amount you borrow, make sure you can afford the repayments, and pay off as quickly as possible (without killing your finances).
Here are some possibilities …
Discover a credit union
They are independently run, local, nonprofit organizations that help people who may not have access to financial products and services elsewhere. Find if there is one for you at www.findyourcreditunion.co.uk. Loan rates are capped at 43% of the representative APR.
Use an existing credit card as long as you can repay it in full the following month
If you spend on a credit card this month, you’re billed the next month, and as long as you can write off all debt, there’s no interest. So if you are looking for a month’s respite, it works. Even if not, an expensive credit card still tends to be cheaper over a month than a payday loan or if you can get a 0% card for purchases (more on www.moneysavingexpert.com/0%).
Ask your family or friends for help
It can be tricky, but it can be worth asking for help, even if it’s just dinner or babysitting to help save costs. Plus, talking often about your money issues can be a huge relief. However, think carefully about the pros and cons of doing this – especially if it puts you in debt to someone who can use it as leverage on you.
Find out if you qualify for a government loan
Those on certain strict conditions may be eligible for an interest-free loan of up to £ 800, it’s worth checking out www.gov.uk/budgeting-help-benefits – but don’t expect it not.
Get help with nonprofit debt counseling
If you are really struggling with money, you need one-on-one debt counseling help. Make an appointment with citizenadvice.org.uk, capuk.org, stepchange.org or nationaldebtline.org. They are there to help, not to judge. The biggest message I get after people leave is “I finally slept last night”.
Martin Lewis is the founder of MoneySavingExpert.com.
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