Unaffordable Lending Claims

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What Is Irresponsible Lending and How Do You Claim It?

Author: Samuel Beckingham
Updated: Jan 15, 2024
7 minutes read
  • An overview of irresponsible lending claims
  • Reset your financial situation
  • Make repayments easier and receive 8% simple interest

When it comes to irresponsible lending, loans can be granted without proper checks being conducted, or without fully explaining the risks involved. Sometimes companies can increase the amount of available credit to their customers without consultation. This forces you to spend more and become trapped in a spiral of debt. Fortunately, irresponsible lending claims can be made that can rectify this situation and help you out at the same time.

This article will explain how irresponsible lending claims work. It will also detail what happens with irresponsible lending complaints and how they are dealt with. Finally, the article will go over how to claim and why it can help your financial situation.

Ready to begin your irresponsible lending claim? Use our online form to start. It only takes a minute.

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What Is Irresponsible Lending?

In short, irresponsible lending is when a loan company or lender approves you for credit but you’re not in a stable enough position to pay it back. This comes in many forms, and can include having your credit limit increased without consultation. Irresponsible lending claims can be made in these situations because your finances are much worse off and you struggle to keep up repayments.

Some people in these situations find that they have to take on additional loans to pay off existing debts, signalling that the loan should never have been granted in the first place. This could have been because of hidden fees or high interest rates, possibly because you were encouraged to borrow more without realising how unaffordable it would be. Any dire financial situation can be resolved through irresponsible lending claims.

To make your situation right, irresponsible lending complaints can help as follows:

  • Write off or reduce your debt

  • Compensate you for the struggle

  • Remove negatives from your credit score

If your loan hasn’t yet been paid off, this will affect how you’re compensated, but irresponsible lending claims are designed to help regardless.

Eligibility for Irresponsible Lending Claims

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You may not already realise your situation is covered because there are plenty of instances that count. Most of the criteria concern lenders not performing their job correctly.

Irresponsible lending claims can be made if any of the following situations apply:

  • No affordability checks took place

  • You are struggling to pay bills and repayments

  • You’ve had to take out another loan to help

  • The lender did not fully explain the risks associated with borrowing more

  • The lender did not explain any fees or charges properly

  • You were encouraged to borrow more for better rates

  • The lender did not look at your personal circumstances

Being denied credit or a loan is an indication that your financial situation may not be strong enough to keep up repayments. By checking you can afford to pay back what you’re borrowing, along with interest, a lender is doing their job properly. If you’re much worse off and are struggling with repayments, irresponsible lending claims can help.

How an Irresponsible Lending Claim Works

When you make an irresponsible lending complaint, you’re asking your lender to review the agreement and your financial situation. Lenders are regulated and must adhere to a strict set of rules when dealing with their customers. This means that irresponsible lending claims will be treated fairly and with understanding.

If you finished paying back the loan, a claim will refund you interest and charges and award you 8% simple interest on top of this. If you’re still paying back the loan, these charges are refunded, the loan is stripped of any interest and what’s left goes towards the outstanding amount. If this then covers the loan, you can receive 8% simple interest as well.

Irresponsible lending claims can be broken down into three parts: the refund, the interest and the credit file. When claiming for credit cards, the process works in a similar way.

The Refund

With a loan you were unable to afford, successful irresponsible lending claims give you a refund for the money spent on it. All interest and charges spent on the loan are refunded, but you are still expected to pay back the loan value. What happens in this scenario is that the loan becomes interest-free.

The Interest

You could receive 8% simple interest, calculated per day, on top of the refunded amounts. This is meant as compensation for being without money throughout the whole repayment process. If there is still money to be returned to the lender, you won’t receive this interest.

It’s important to note that this simple interest counts as taxable income, so most lenders will take off the basic rate of tax from this before paying it to you. The refund on interest or charges will not be taxed.

The Credit File

Successful irresponsible lending claims have the power to restore your credit history. If the loan was deemed to be a result of unfair lending, any negatives on your credit score will be removed. It basically resets you to the point you were before the loan was mis-sold in the first place.

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Irresponsible Lending Claims for Credit Cards

Credit or store cards work in a similar way with irresponsible lending complaints. Most of the time, they are deemed irresponsible because your credit limit was increased. Without consultation or taking into account your financial situation, this shouldn’t have been done in the first place. When you make a claim in this situation, you are reset to the point where the increase never happened.

For example, a £500 additional amount of credit could push you up to £1,000. Irresponsible lending claims refund interest and charges above the original £500 limit. You then return to where you were previously before the increase took place. You can do this with Very credit, for example.

Claiming Irresponsible Lending

You can make a claim in a few different ways, but the easiest thing to do is to make use of a claims management company. This takes the stress off your plate so you can focus on your everyday life without adding any more hassle and needless waiting.

What You First Need

You need to have plenty of evidence to support your claim. Bank statements, payslips and records of debts and payments need to be collected for this. Any communication between you and your lender can also be useful with irresponsible lending claims to see if they’ve missed anything.

Use a Claims Management Company

A speedy claim through a company can help relieve the stress and financial troubles associated with irresponsible lending. You won’t have to wait for anyone to get back to you as everything will be happening in the background. An irresponsible lending claims company has the knowledge and expertise to process your claim for you to take away the hassle.

These companies have the legal experience to process your claim, knowing how to fight your case for an effective result. They review your paperwork and financial agreement and effectively force your lender to resolve your situation. If any awards are due, they will pursue the 8% simple interest.

Talk To Your Lender

Alternatively, you can talk to your lender and ask them to review your case on the grounds of irresponsible lending. Include all evidence with your correspondence and point out why it demonstrates an unfair relationship. Irresponsible lending claims to your lender must be replied to within 8 weeks.

Financial Ombudsman

Lenders may disagree with your case or simply not give you a response within 8 weeks. In both these scenarios, you must then take irresponsible lending claims to the Financial Ombudsman Service. They will then communicate with your lender and advise on what will happen next.

Don’t Stop Repayments

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Despite pursuing irresponsible lending claims, you shouldn’t stop paying your lender back. It’s much better for you if you can continue to do so. With an ongoing claim, you can cause more damage by defaulting on your loan as a lender can still try to use legal means to recover costs. While a claim for irresponsible lending can reset a bad credit score, you don’t want to make the whole process worse by avoiding payments.

Why Claim?

Repayments for loans, credit or store cards should be done in such a way that you aren’t struggling. Extra loans that are taken out to cover other payments are a sign that you are not coping well financially. Irresponsible lending claims should be made if you’re finding it difficult to pay off a mortgage or rent because of these repayments.

When making a claim, it can ease repayments and help reduce a lot of the financial stress associated with it. Irresponsible lending claims make repayments more affordable for your situation. Making a claim after a loan has been repaid can be done, but you are only able to do this within the last 6 years. Once paid off, a claim aims to compensate you for money you missed out on during the painful repayment period.

You can start irresponsible lending claims by clicking on the button below.

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