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Common Types of Unaffordable Lending

Understanding different types of unaffordable lending can help you identify if you've been affected.

Payday Loans: Short-term, high-cost loans with APRs often exceeding 1000%. Common issues include multiple loans, rollovers, and insufficient affordability checks.
Guarantor Loans: Loans backed by a guarantor, often with high interest rates. Issues include inadequate affordability assessments for both borrower and guarantor.
Car Finance: Including PCP, HP, and lease agreements. Issues often involve hidden fees, balloon payments, and misrepresented terms leading to unaffordable commitments.
High-Cost Credit: Including doorstep loans and rent-to-own agreements. Often involves long-term commitments with excessive interest rates and fees.

Unaffordable Lending Examples

Examples of successful unaffordable lending claims from FOS (Financial Ombudsman Service).

Payday LoansSuccessful Claim

Multiple Payday Loans Case

FOS (Financial Ombudsman Service) found that the lender could have identified patterns of borrowing as problematic after the tenth loan. The lender agreed and offered to refund the fees and charges from all subsequent loans, after the first ten.

Key Findings:

Insufficient affordability assessment
Pattern of dependency on loans
Failure to recognise financial difficulty

*Full case study here

Guarantor LoanSuccessful Claim

Guarantor Loan Assessment Failure

A guarantor was approved despite the guarantor's income being solely from disability and other benefits. The FOS ruled the lender's affordability assessment was inadequate, as it didn't properly consider the guarantor's ability to make repayments if required.

Key Findings:

Poor assessment of guarantor's circumstances
Fixed income not properly considered
Vulnerability factors ignored

*Full case study here

Car FinanceSuccessful Claim

PCP Agreement Mis-selling

A customer was sold a PCP agreement without proper affordability checks. FOS found the dealer failed to clearly explain the terms and assess if monthly payments were sustainable long-term. The finance company were ordered to take the car back and refund the deposit with interest.

Key Findings:

Terms not properly explained
Insufficient affordability assessment
Personal circumstances not considered

*Full case study here

How We Can Help

We provide comprehensive support in identifying and addressing unaffordable lending situations in order to help you make an unaffordable lending claim.

Expert Assessment: Get a thorough evaluation of your lending situation with our specialised assessment tools, using your credit report and bank statements.
Clear Solutions: Get actionable steps tailored to your specific lending situation.
Expert Claims Support: Our expert claims team can make your unaffordable lending claim for you.

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