Published on January 28th, 2015 | by FinanceLoophole0
Can’t Pay Payday Loans
Struggling with Payday Loans?
As soon as it looks likely that you won’t be able to pay off your payday loan on time, you need to get in touch with a debt advice service. Don’t wait until the repayment date. It may be too late to stop the lender trying to take money out of your account, or they may add extra charges to your loan.
Get in touch with a specialist debt advice service. We have teamed up with debt advice service Bright Debt Solutions as they have been rated the top UK Debt Help Portal. They will do their best to sort out a personal repayment plan for you, so that you can pay off the loan at a rate that you can afford.
They may also be able to persuade the lender to stop charging you more interest on the outstanding balance of your loan.
Don’t panic and assume that you’re in a hopeless situation. Even if the lender is constantly pestering you and contacting you with letters and phone calls about your outstanding debt, it may still be possible to negotiate with them.
Rolling Over Your Payday Loan
Payday loan lenders are more than likely to offer more time to people who can’t pay off their loan by the loan repayment date. This facility is often called a rollover. Rollovers usually last for the same period as the originally agreed loan term with the lender. So for example, if you have originally agreed to pay your loan back in 25 days, the rollover will also lasts for 25 days.
You need to be very careful when you are agreeing to roll over your payday loan. This is because the lender will charge you additional interest and charges on top of the amount you already owe. Just one rollover can quite easily double the amount of interest you have to pay.
If you still can’t pay off the sum you owe at the end of the rollover period, the lender may roll it over again. You can see how this can become a much larger amount of debt very quickly.
There are some recently introduced rules on how many times a loan can be rolled over so there is some protection but you can still get a much bigger debt than you can easily handle if you are not careful. Ask the payday loan company how many times it will roll over your debt. Many payday loan firms have guidelines that say you won’t be allowed to rollover for more than 60 days, but they still continue to add interest to your loan during this time.
Make Sure You Prioritise Your Payments
If you are having problems repaying a payday loan you need to make paying the essentials of rent or mortgage your first priority or you may lose the place where you live! It’s very important to make sure you are able pay your mortgage or rent before any other debts, including any payday loans you have.
Remember that missing a payday loan repayment will not put your home at risk (although it can damage your credit rating). But if you can’t pay your other bills, such as your rent or mortgage repayments, you could easily build up rent or mortgage arrears which could end up with you being evicted from your home.
Get advice quickly if you owe money to a payday lender but can’t pay it back. A debt adviser will help you to make sure that you will be able to pay your priority payments/debts first, such as the
mortgage or rent, and then help you deal with your lower priority debts such as energy and service supplier bills. They can also help you check you are claiming all the benefits you are entitled to, and suggest other sources of financial help to make sure you are not getting in bigger debts than you need to.
Report Payday Loan Fraud
It’s not unheard of people taking out loans in someone elses name. Payday loan companies do conduct stringent anti fraud checks but some will inevitably slip through the net. This can land you in debt that is not even yours and it may affect your credit rating with credit rating agencies if the debt is not repaid. You may wish to contact a specialist debt management company to help you unravel the problems which this may cause you and your credit rating. They may need to contact the credit rating agencies such as Experian who can remove any fraudulent records from your credit report. You may also wish to contact the Financial Ombudsman Service if someone has fraudulently taken out a payday loan in your name.
You may also wish to report the fraud to the Action Fraud help line.
Make A Complaint About A Payday Loan
If you feel you’ve been treated unfairly by your payday loan company, you should first contact the payday loan firm to raise your concerns with them and alow them time to rectify your problems. They have up to 8 weeks to try to sort out the problem you have had with their service.
If after this time they have not rectified your problem with them or feel they have not addressed you concerns you can make a complaint to the Financial Ombudsman Service (FOS).
You would have grounds for complaints to the FSO if the loan company:
- gave you a loan that you could not afford to pay back, and you should not have been given in the first place
- they did not explain the terms and conditions of the loan – such as penalty charges for missing repayments
- charged an interest rate that was too high outside of the limits of your agreement with them
- won’t accept a suitable repayment plan
If the lender is a member of a trade association, you can also make a complaint to the trade association. The main trade associations are:
- Consumer Finance Association (CFA) and;
- British Credit and Cheque Association (BCCA).
Problems With Lender Taking Money From Your Account
Normally when you take out a payday loan, lenders will often ask you to make an arrangement with your bank or card provider whereby it can take the money from your account automatically. This is called a Continuous Payment Authority (CPA).
This CPA allows the lender to withdraw money from your bank account to take all or part of the money you owe to the lender. The problem occurs when this occurs even if you don’t have sufficient funds in your account to repay the loan on the agreed date. Unlike a direct debit, a CPA allows any amount of money to be taken at any time. You don’t have to be given any notice of a transfer out of your account.
It is however quite easy to cancel a CPA by contacting your bank or card issuer. This is best done in writing so they have a record of your request and ask them to record your instruction to cancel. Keep a note of the person you talk and the time of your call. remember you need to also tell your lender that you’re cancelling the CPA.
See our template to stop automatic bank payments on CPA
Complain to your bank if it refuses to cancel the CPA. If you’re not satisfied with your bank’s response, complain to the Financial Ombudsman Service.