Martin Lewis, 46, appeared on This Morning today to let viewers know how they can claim back money on their payday loans. He explained how those who had taken out a payday loan may have been mis-sold this and could be entitled to thousands of pounds. There is a simple way to find out if this applies to you and the expert revealed how to check this. For those who have been mis-sold, Martin also gave advice of how it can be claimed back.
The Money Saving Expert explained a payday loan is a short-term loan designed to tide people over between paydays.
He said: “Payday loans are quick, short-term loans of £100 – £1,000 that tides you over till your next payday, at which point you have to pay it back, plus the massive amount of interest charged on top too.
“Sometimes they’ve been used to cover an emergency cost like a broken fridge that you couldn’t afford from your monthly salary or savings – other times people fell for marketing of often irresponsible firms pushing people to grab these outrageously expensive loans – often over 1,000 percent APR, which people then used to spend or even gamble.
“They only started being regulated in 2014, and by January 2015 the regulator, the FCA imposed a price cap of 100 percent of the amount borrowed, so you should never repay more than double what you borrowed.”
Martin explained many people have been mis-sold this, but they must act fast if they want to reclaim the money.
“Relatively recently, big payday loan firms Wonga, Wage Day Advance and Juo Loans have all gone bust – often due to the combined weight of unaffordable mis-selling claims and the regulator’s price cap,” he revealed.
“While I’m far from mourning them, my main concern is that, as is likely, other payday dominoes continue to fall, reclaiming will become ‘first come, first served’.”
To find out if they have been mis-sold, Martin explained they can do this by checking if the correct procedure was followed by the lender.
He explained: “The lender must examine your finances to ensure you can afford the loan and fees. So for instance you shouldn’t have been given a £1,000 loan if you only earn £500 per month.
“You were mis-sold if the lender didn’t make it clear to you how much it would cost you in total to repay the loan or you weren’t given full or accurate information about how and when to pay back your loan.
“Also if the lender didn’t tell you that a payday loan should not be used for long-term borrowing or if you are in financial difficulty, or if you weren’t told by the lender what to do if you have a complaint.
“If you were mis-sold then you are due back all the interest, fees, charges and eight percent per year statutory interest on top since you took it out.”
For those who realise they have been mis-sold, Martin shared what they can do to get back what they are owed.
He said: “You can claim on existing loans and loans you’ve already paid off, usually as long as you raise the case within six years of taking out the loan, though in a few rare circumstances you may get longer.
“Importantly, there’s no need to pay anyone to reclaim, you can do it yourself for free.
“If the payday lender rejects you, don’t think it’s over. Over 60 percent of people who then take their case on to the free Financial Ombudsman Service win.”
There is more information and full help available for those hoping to claim money back on Martin’s ‘Free payday loan reclaiming tool & guide’.
Martin Lewis recently explained how couples could get £1150 for free by claiming marriage tax.
He also shared with viewers how they could get full service breakdown cover for just £50.