Will mis-sold payday loans claims become the next PPI claims?
Consumers who were mis-sold payment protection insurance policies have been making PPI claims for several years now. Providers have been widely criticised for the way the policies were sold.
However, one financial product coming under more recent scrutiny is the payday loan. Lenders like Wonga, Uncle Buck, Mr Lender and a host of others lend smaller sums of money to consumers just to ‘tide them over’ until their next pay packet. The loans typically range from £50 to £750 and the sum must be paid back on the consumer’s next payday.
In many cases, the representative APR on these loans is over 4000%. So, for example, if you borrow £400.00 with Wonga.com for 30 days, you would have to pay back £525.00, but failing to make a repayment for a year could leave you owing more than 40 times what you borrowed!! Martin Lewis of Moneysaving Expert wrote a witty, if not somewhat alarming post on how long it would take to amass the equivalent of the US National Debt after borrowing £100 from Wonga! That post garnered a lot of attention!
Could Mis-Sold Payday Loans Claims Realistically be Successful?
Realistically, in order for anybody to make mis-sold payday loans claim, they have to be able to prove they were mis-sold the loan. Payday loans companies are generally all very up front about the product, about the representative APR and about exactly how much will have to be repaid if you take the loan out.
With PPI, common complaints included not being told you had the product with your loan or credit card. That’s because PPI is effectively a cross sell from another product (a loan, mortgae or credit card). It’s different with Payday Loans. The payday loan is the product and the consumer is aware of the product, of the cost of the loan and of its terms.
So while finance bloggers and experts speculate on whether mis-sold payday loans claims, it only takes a quick glance at the websites of the biggest providers to see the lengths they go to in order to make their fees absolutely crystal clear to potential customers. Yes, they’re an expensive way to borrow money and yes, it’s very easy to find yourself amassing debts far higher than the value of the loan, but as long as consumers are made aware of what they are being sold and as long as the product remains legal, there is no mis-selling taking place.