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ever borrowed money to tide you over?

Many people contact us saying they’ve got money worries. And we often find people who’ve taken out short-term loans are particularly likely to be having trouble.

It’s important you're upfront with lenders if you’re struggling. They should be working with you to sort out how best you can pay back what you owe. But some people feel their lender hasn’t been helpful, even though they’ve explained things are difficult. Others think their lender shouldn’t have given them so much in the first place.

Businesses offering payday loans, "logbook loans" (a loan secured against your car) and other types of short-term credit are covered by the Financial Conduct Authority (FCA) - which means they must follow rules about how they lend money and how they deal with their customers.

It also means that if you think you’ve been treated unfairly, you can ask us to step in. Here are some examples of what can go wrong - and how we’ve helped sort things out.

people we've helped

Julie

Julie

I was in an accident - but the lender didn’t care

It was really bad timing. I wound up in hospital a couple of weeks after taking out a payday loan.

I smashed up my car - and myself in the process. I had pretty serious injuries, and my hearing was permanently damaged. But the loan was on my mind. I managed to email the lender from my phone to say I’d be in hospital the day it was due - and so I’d need more time.

I didn’t get anything back for a couple of weeks. Then I got a reply from the lender telling me to phone them. They kept saying that, even though I kept explaining I couldn’t call because of my hearing.

It turned out I had to give up work, and my disability benefit wasn’t enough to pay back the loan. As soon as I got home, I emailed the lender to try to work things out. But I got the same old story - that I had to phone. And when they sent me an income and expenditure form, they kept coming up with amounts that I just couldn’t afford.

We were going round in circles. All I was could think about was the black marks on my credit file. I knew I’d need to adapt my home, and I didn’t know if I’d be able to get credit. I thought the ombudsman might make the lender see sense.

it was such a relief …

I sent the ombudsman all the emails I’d sent the lender. It was clear how long they’d taken to reply - and how they’d kept saying I should phone them.

It turned out the lender should’ve taken me seriously when I said I couldn’t call. The ombudsman thought I was being perfectly reasonable - after all, I couldn’t hear a thing.

The ombudsman also looked at my income and expenditure form, and agreed with me that I couldn’t have paid my bills if I’d given the lender what they’d asked for.

The ombudsman said the lender should take off some of the interest and charges - everything they’d applied after I told them I wasn’t working. And the ombudsman also told the lender to email me to work out a monthly payment I could afford. I got £100 to make up for the unnecessary stress. But more importantly, my credit file was put right. It was such a relief.

Kevin

Kevin

I thought the loan company should’ve realised I couldn’t pay it back

After I lost my job last year, I couldn’t pay my bills. I knew the council give out crisis loans, but when I rang them they said it could take weeks to come through. I’d always been good with budgeting, but I was at my wit’s end. I took out a payday loan because I didn’t know what else to do.

Things didn’t go to plan, though. I thought I’d be able to find work quickly, but it just didn’t happen. When it was time to pay the loan back, I was still signed on. I got really angry with the loan company - to me, they should’ve realised the situation I was in and known I couldn’t pay back all that money.

I wrote to complain, but they just didn’t see where I was coming from. I phoned the ombudsman because I thought they’d fight my corner.

it was good to have it explained …

The person I spoke to at the ombudsman was upfront that they wouldn’t take sides.

I didn’t want the hassle of showing them my bank statements or anything like that - to be honest, I was embarrassed about the mess I’d got myself in.

The ombudsman said they’d seen my application form. I knew I hadn’t been honest - I’d said I was earning £20,000 like I used to, even though I was only getting benefits. Looking back, it was a stupid thing to do. But I thought I wouldn’t get any money at all if they knew I was unemployed. And that was why I needed it in the first place.

I understood why the ombudsman didn’t think the loan company was in the wrong. Apparently, the company had written to me saying I could pay a lower amount if I needed to. I was so stressed out with things I think I missed the letter. But the ombudsman let me know that was still on the cards.

Stuart

Stuart

the loan company wouldn’t let me pay it back

I’d had to take a pay cut, and I just couldn’t cover my bills. I didn’t know what to do, so I borrowed £200 to tide me over.

As it got closer to the date the loan was due, though, I realised I wasn’t going to have enough money. I called the lender but could only leave a message, so I sent an email explaining I was having trouble. It wasn’t that I didn’t want to repay - I just wanted more time.

But they took ages to reply. And by the time they did, they said they’d already started applying interest and charges. They’d been trying to take money straight from my bank account - and even though I didn’t have enough money in there, they’d charged me every time they tried.

There was no way I could pay back everything they were asking for. I offered to pay back the loan and some of the added money, but they said they wanted it all.

I thought I’d done the right thing by being upfront about my money troubles. But I just couldn’t make the lender see where I was coming from. They were saying they hadn’t got the message I’d left. And every time I made an offer, they said it wasn’t enough.

By now, I owed more than £1,000. Eventually I started getting letters from a debt collector, threatening me with legal action. Things were getting out of hand, so I got in touch with the ombudsman.

the ombudsman agreed with me ...

The ombudsman asked me for a few bits of information to get them started. They wanted to see the emails between me and the lender, as well as proof of any calls I’d made. I sent them my payslips and bank statements, so they could see the situation I was in.

The ombudsman explained that they couldn’t be sure I’d called the lender. That was frustrating, but I understand some people might have tried it on.

The ombudsman did have all my emails, though - showing I’d made loads of offers to the lender, and they’d kept turning them down.

The ombudsman explained that the lender didn’t have to accept my offers. But they should’ve tried to make things easier for me - and found a way I could afford to pay back what I owed.

That meant the lender should have stopped applying interest and charges after I’d told them I was struggling. And it was obvious I couldn’t afford the payments, so they shouldn’t have kept going into my bank account.

I’d never tried to get out of paying back the loan, but I just needed a bit of help. I was so relieved when the ombudsman said I didn’t have to pay back the interest added after I emailed the lender. The lender had really made my life really stressful - and the ombudsman told them to pay me £100 to make up for it.

After that, the lender got in touch - and I’m now paying my loan back in smaller parts, which is what I was trying to do in the first place.

Tejal

Tejal

the credit union didn’t tell me when to make repayments

I belong to a local credit union, and when I wanted to do up my kitchen I took out a loan with them. I got the money on 11 August and set to work picking out tiles, units and a new oven. I set up a standing order to pay the union on the 12th of each month.

But a couple of months later, I checked my share account and noticed that the union had taken money from my account on 2 September and 3 October. A payment into my share account had also been used as a payment against my loan too.

I was quite surprised so I called the credit union to find out what was going on.

They said I should have been making payments on the first day of each month, and when I hadn’t, they took the money from my account.

The union and I kept going back-and-forth arguing about how they had handled my payments. I ended up getting so aggravated that I stopped paying them for two months.

But when I did that, they closed my loan account and took the remaining money from my share account. I was furious - so I phoned the ombudsman to see if they could help.

the ombudsman worked out a good solution ...

At their request, I sent the ombudsman copies of all the letters and emails I’d had from the union - as well as a copy of the loan agreement I’d signed. I also had the chance to give the ombudsman my side of the story.

My feelings were a little mixed when I got the ombudsman’s decision.

They told me that while I was unhappy with the way the union had done, they really were able to take money from my share account. The ombudsman explained that under the terms of the loan agreement that I’d signed, lack of payment on my part was enough for the union to take funds directly from me.

They also explained why you shouldn’t withhold payments just because you’re unhappy with a lender’s actions.

But the ombudsman did recognise why I got the payment date wrong. They said that the union should use “payment schedules” - lists detailing when to make payments. The ombudsman told the credit union that, even though they were allowed to take money from me, the union should still pay me £100 to compensate for the confusion they’d caused.

so what's keeping you awake at night?

phone us for a chat and free, confidential help on 0300 123 9 123 …alternatively email us at paydayhelp@financial-ombudsman.org.uk

you don’t have to deal with things like this alone

phone us for a chat and free confidential help on 0300 123 9 123

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been charged a fee for a loan - but didn’t get one?

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