Unless you act quickly you could miss out on getting thousands back you’e owed from mis-behaving payday lenders, Martin Lewis has warned
Payday loan firms have gone from barely existing, to surging popularity, to regulation and possible extinction in less than a decade.
Wonga – poster boy for the industry – collapsed into administration last summer, while Wage Day Advance and Juno Loans also disappeared.
“These irresponsible firms fell to the weight of unaffordable mis-selling claims and the regulator’s price cap,” MoneySavingExpert.com’s Martin Lewis explained in his weekly newsletter .
But that means if you, or anyone you know, has taken out a loan there is very little time left to see if you’re owed cash back from dodgy practices.
“If you were mis-sold and a firm is solvent you get the full amount back, but if it goes bust you’re just one of the creditors, and will be lucky to get a few pence per pound. So hurry,” Martin explained.
The first things payday loans customers need to do is work out if they can claim. The good news is a lot of people can.
“Lenders must examine your finances to ensure you can afford the loan and fees. If, as was common, that wasn’t done properly and you shouldn’t have been lent the cash, or the costs or the repayment timetable weren’t clear, you were mis-sold,” Martin explained
And payouts can be in the thousands – as people can get all their interest, fees and charges as well as a 8% interest a year on all the money you’re owed.
MoneysavingExpert has a checklist here where you can see if you qualify .
It’s also important to point out you don’t need a claims management firm to get your cash back – with free tools like those offered by Resolver.co.uk available to guide you through the process.
The better news is that if you sort it out yourself, you don’t have to pay a fee to the claims management firm that can gobble up more than a quarter of your payout.
And what about people who had a loan from a company, like Wonga, that has since ceased trading?
Well all is not quite lost.
“If a credit firm goes bust, you join a long line of other creditors,” explained James Walker of free customer complaints service Resolver.co.uk.
In Wonga’s case that’s Grant Thornton – who has now opened a Wonga claims portal .
But you don’t quite have the same rights as you do if the firm is still operating.
“If you don’t like the answer, there’s little you can do,” Walker said.