Real Claim's Blog - Claims Management Company
Ingram Toft's Blog - Claims Management Company

Unaffordable Loans from Irresponsible Lenders

We at Ingram Toft believe that an unaffordable loan is one that a borrower cannot make repayments to without having difficulties such as paying them on time while meeting other commitments or without having to borrow to make the repayments. We take a firm stand against these irresponsible lenders to help you get compensated and/or refunded.

In an ideal world, loans would provide financial assistance without causing long-term harm. Unfortunately, many people find themselves in situations where the loan they’ve taken out becomes unmanageable. Unaffordable loans are more common than you might think, and they can quickly lead to financial strain, mounting debt, and damaged credit.

If you’ve found yourself struggling to make payments or feeling overwhelmed by debt, you’re not alone. This blog post will help you understand what makes a loan unaffordable, how to spot the warning signs, and what steps to take if you’re stuck with a loan you can’t afford.

What is an Unaffordable Loan?
An unaffordable loan is one that places an unmanageable financial burden on the borrower, making it difficult or impossible to keep up with the required payments. This usually happens when the loan payments, including interest and fees, exceed what the borrower can reasonably afford based on their income and financial obligations.

Common reasons loans become unaffordable include:

  • High-interest rates and fees: Loans with excessive interest rates, like payday loans or some personal loans, can quickly become difficult to repay.
  • Insufficient affordability checks: Lenders are supposed to assess whether you can afford a loan before offering it. If this process is not done properly, you could end up with a loan that’s beyond your means.
  • Changes in personal circumstances: Unexpected events like job loss, medical emergencies, or other financial setbacks can turn a previously affordable loan into an overwhelming burden.

How to Spot an Unaffordable Loan
Before taking out a loan—or even if you already have one—it’s crucial to recognize the warning signs of unaffordability. Here are some red flags to watch for:

1. High Monthly Payments Relative to Your Income
If your loan’s monthly payment takes up a significant portion of your income, it could be a sign that the loan is unaffordable. Financial experts typically recommend that no more than 30% of your monthly income go toward debt repayments. If your loan payments exceed this threshold, you may struggle to keep up.

2. Rising Debt Balances
With high-interest loans, especially payday loans or credit cards, you may find that even if you make your monthly payments, the loan balance doesn’t decrease significantly due to interest and fees. If your debt isn’t shrinking or is even growing, the loan could be unaffordable.

3. Reliance on New Loans to Repay Old Ones
If you’re borrowing money to cover other loan payments or are stuck in a cycle of debt (taking out new loans to pay off old ones), it’s a clear sign that your existing loans are unaffordable. This creates a debt spiral that can be hard to escape.

4. Missed Payments and Late Fees
When you’re regularly missing payments, being hit with late fees, or only making minimum payments, this could indicate that the loan is putting too much strain on your finances.

5. Lender Didn’t Assess Your Ability to Repay
Reputable lenders are required to conduct proper affordability checks to ensure you can repay the loan. If you received a loan without any consideration of your financial situation, it’s a sign the lender might have given you a loan you can’t afford.

The Dangers of Unaffordable Loans
Unaffordable loans can lead to a host of financial and personal problems, including:

  • Debt accumulation: The inability to repay loans often leads to more debt, as missed payments result in late fees and interest piling up.
  • Credit score damage: Late or missed payments will negatively impact your credit score, making it harder to get loans or credit in the future.
  • Stress and anxiety: Financial stress from struggling with unaffordable loans can impact your mental health and overall well-being.
  • Legal action: In some cases, lenders may take legal action to recover the debt, leading to wage garnishments, asset seizures, or bankruptcy.

What to Do if You Have an Unaffordable Loan

If you find yourself stuck with an unaffordable loan, don’t panic—there are steps you can take to get back on track. Here’s what to do:

1. Assess Your Financial Situation
Start by taking an honest look at your financial situation. List your income, expenses, and all your debts, including the loan you’re struggling with. This will help you understand how much you can realistically afford to pay each month.

2. Contact Your Lender
If you’re having trouble making payments, reach out to your lender as soon as possible. Many lenders are willing to work with borrowers who are facing financial difficulties. They may offer options like:

Loan restructuring: This could involve extending the loan term, reducing monthly payments, or lowering the interest rate to make the loan more affordable.
Temporary payment holidays: Some lenders allow borrowers to pause payments for a short period while they get back on their feet.

3. Seek Debt Advice
If you’re overwhelmed by debt, consider speaking to a financial advisor or a debt relief service. Many organizations offer free debt advice and can help you explore options like debt consolidation, debt management plans, or negotiating with creditors to reduce what you owe.

4. Explore Refinancing Options
If your loan has a high interest rate, refinancing might be a good option. By securing a new loan with better terms (such as a lower interest rate), you can replace your current loan with one that’s more affordable. However, be careful to avoid predatory refinancing offers that could leave you in a worse financial position.

5. File a Complaint for Mis-Selling
If you believe you were given a loan without proper affordability checks or were misled about the terms, you may be entitled to compensation. You can file a formal complaint with the lender, and if they don’t resolve the issue, escalate it to the Financial Ombudsman Service or a similar regulatory body in your country.

6. Consider Debt Relief Options
If your debt is truly unmanageable, you might need to consider more serious debt relief options, such as:

Debt consolidation: Combining all your debts into a single loan with a lower interest rate can make repayments more manageable.
Bankruptcy or Individual Voluntary Arrangements (IVAs): These options provide legal frameworks for reducing or eliminating debt, but they also have long-term consequences for your credit score and financial situation.

How to Avoid Unaffordable Loans

Prevention is key when it comes to unaffordable loans. Here are some tips to avoid ending up with debt you can’t handle:

  • Do your research: Before taking out a loan, carefully research the lender, the interest rates, and the terms and conditions. Use loan calculators to estimate your monthly payments.
  • Check your budget: Make sure the loan fits comfortably within your monthly budget, and consider whether you’d still be able to make payments if your financial situation changed.
  • Avoid high-interest loans: Be cautious of payday loans, guarantor loans, or other high-interest loans, which can quickly become unaffordable if not repaid in full on time.
Seek alternative solutions: Before resorting to a loan, consider other ways to solve your financial problems, such as building an emergency fund, cutting unnecessary expenses, or exploring grants or low-interest credit options.

Conclusion
Unaffordable loans can lead to a cycle of debt, stress, and financial hardship, but there are steps you can take to regain control. By recognizing the warning signs, contacting your lender, seeking advice, and exploring debt relief options, you can work toward a more manageable financial situation. Above all, it’s essential to approach borrowing with caution and only take out loans that fit within your budget and financial goals.

If you’re currently struggling with an unaffordable loan, don’t hesitate to reach out for help. There are resources and services available to assist you in finding a way forward.

Overpaying Council Tax: What You Need to Know and How to Claim a Refund

By Ruth Idemudia • November 5, 2020
Council tax is an essential part of living in the UK, funding vital local services like schools, roads, waste collection, and emergency services. However, many households are unknowingly overpaying their council tax, which could lead to unnecessary financial strain. If you've been paying too much, it’s worth investigating and claiming a refund.
Guarantor Loan Compensation: What is it all about?

Understanding Guarantor Loan Compensation: Are You Entitled to a Refund?

By Ruth Idemudia • November 2, 2020
Guarantor loans have long been a lifeline for those with poor or limited credit histories. These loans require a guarantor—often a friend or family member—who agrees to take on the debt if the borrower defaults. While they serve a purpose in providing credit to individuals who might otherwise struggle to get approved, guarantor loans have also been at the center of controversy for high interest rates, unfair lending practices, and mismanagement.
How will you manage to pay the bills?

How will you manage to pay the bills?

By Ruth Idemudia • October 15, 2020
Being in debt can feel overwhelming, especially when bills keep piling up. You may feel like you're constantly struggling to balance what you owe with the need to keep up with everyday expenses. But with the right approach, it’s possible to manage your finances and stay on top of your bills, even when you're in debt.
How will you manage to pay bills?
The COVID-19 pandemic has had far-reaching consequences as it caused the largest Global Recession in history. What do you do now that you can no longer pay your debts?

If you lost your Job due to the Pandemic, what steps or actions can you take?

Make a list! It is important to know how much you owe and how much you make. So, list down all the names of the lenders, banks and bills you have to pay. If you have to borrow again to pay an existing commitment, then you must have been mis-sold a loan.

Now that the majority of your household bills has been put on hold or extended due to the Pandemic and lenders have not been making a collection or adding interests to your unpaid bills, it is best to take advantage of the situation and time.
This is where we can help you! Getting back the unfair fees and charges takes time and the earliest we act, the faster we can help you have your money back. We have all the list of the areas we can work on for you on our website.

So, how can we help you manage to pay your bills?
Real Claims offers an all in one service for all your lending or debt worries. All you have to do is fill out a simple claim form and submit an identification. Our team of experts will build a compelling case that increases your chances of winning against these banks and lenders.

Take comfort knowing that someone is out there working on resolving your debt problems with a “no win, no fee” basis of course.




Here are the areas of claims we deal with:


Affordability Claim:


Non-Affordability



Mis-selling


Nevertheless, we have represented individuals in diverse legal areas and the list is continuously growing.


The reason why we posted this blog is for you! We wanted to build your trust and encourage you to interact with us. If you have questions, suggestions or recommendations, we encourage you to share your thoughts here to help us improve our processes to better serve you in the future.


Comment below!


Guarantor Loan Claim - Either a borrower or a guarantor qualifies to make a claim.

Guarantor Loan Compensation: What is it all about? 


NOTE: if your household income has been affected by the pandemic, you can ask Amigo and other guarantor lenders for a three-month payment break. During this time the lender should NOT be able to ask you or your guarantor for payment. If you already had one payment break, you can ask for a second three-month break if you are still affected.


This applies whether or not you are making an affordability complaint, which is what the rest of this article is about.


A guarantor loan is an expensive loan. Amigo is one of several lending companies that offer this type of loan. They have recently admitted to their flaws such as their inability to execute affordability checks prior to lending. They have also confirmed to have put aside millions of pounds to redress claims.


Their clients had overlapping loans and struggled with their payments. Believing that they were mis-sold loans, they will be able to make their claim for any fees and charges paid plus an additional 8% compensatory interest. 


This is not only applicable to Amigo loans. You may also submit a claim against other guarantor lending companies. Here are some of the companies we deal with:


1Plus1 

SUCO

Buddy Loans 

Talk Loans

George Banco 

TFS

Guarantor My Loan 

TrustTwo

LendFair 

UK Credit

Glo Guarantor


What is expected from the lender before granting a loan?


Proper assessments should have included a review of one or more of the following:

  • A review of our client’s bank statements
  • An analysis of our client’s income and expenditure


When a customer asks for a loan, the lending company must conduct proper credit and affordability checks to ensure the customer will be able to repay the loan. However, these important steps are somewhat neglected, especially for the repeat customers. In most cases, the lender would allow a customer to make a reloan without checking their current financial situation and without reviewing any change made during or after they had taken the previous loan. 


More often than not, the lending company grants another loan even before the client finishes the previous one. This entails irresponsible lending which the customer can complain about. Our basis for filing a complaint falls under the general heading of Inadequate Affordability Assessments. 


Watch our short video regarding Guarantor Loan Claim: https://youtu.be/KKleMpRCqoo


Who are entitled to a compensation?

If you are a borrower or a guarantor, you can qualify for a claim if you relate to any of the following reasons:


  • The loan was unaffordable to you.
  • A top-up to a previous loan was not explained to you.
  • You were pressured into becoming a guarantor.
  • You had other financial links to the borrower.
  • You did not properly understand what being a guarantor meant.


What is an affordability complaint?

Paying early does not mean the loan is affordable. It should rather cause concerns to the lending company. That could be the sort of behaviour indicating that someone is facing problems in managing their money and may need to refinance with loans on a regular basis. So, taking that into account before lending another loan would have been reasonable and responsible.


Of course, the loan payments being affordable on this basis might indicate that a consumer could sustainably make their repayments because they were paid early. However, it does not automatically follow in this case. This is because the Consumer Credit Sourcebook ("CONC") defines sustainable as “being without undue difficulties.” 

In particular, the customer should be able to make repayments on time, while meeting other reasonable commitments and without having to borrow to meet the repayments. It also follows that a lender should reasonably and fairly realise that a borrower will not be able to make their repayments sustainably if they are unlikely to make their repayments without having to borrow further.


If this situation is familiar, you might need to make an affordability complaint.


Are you overpaying your council tax?

In 1991, the new council tax system was launched. The government needed every property in the land to be put in a valuation band. But because time was short and the job was extensive, the people in charge asked estate agents and other relevant parties for help to hasten the process. 


Despite having all hands on deck, it was not enough to cover each property accurately. As a result, you may have been wrongly evaluated. You could be paying more than your neighbor, even though you live in exactly the same property size.


A lot of people are overpaying their council tax without even realizing it. Here are some of the reasons for overpayment:

  • You did not sign up for a single person’s discount. If you are living by yourself, you are entitled to a 25% discount.
  • You are living with a person with severe mental impairment such Alzheimer’s or Parkinson’s Disease. As such, you should be getting a 25% discount.
  • You are in the wrong band, also known as a banding alteration.
  • A discount has been awarded.
  • An exemption has been awarded.
  • A customer leaves the property and ends their liability.
  • Council tax support has been awarded.
  • Customer has simply overpaid.


If you are not getting your entitled discount for years, you must put a complaint in to claim it back. 


Changes that may affect your Council Tax band


Your property may be revalued and put in a different band due to certain circumstances, for example:

  • You demolish part of your property and did not rebuild it.
  • You alter your property to create 2 or more self-contained units, such as an annex wherein each unit will have its own band.
  • You split a single property into self-contained flats.
  • You convert flats into a single property.
  • You start or stop working from home.
  • The previous owner made changes to your property.
  • There are significant changes to your local area, such as a new road being built.
  • A similar property in your area has its Council Tax band changed.


Who has to pay?


You will usually have to pay Council Tax if you are 18 and above and you own or rent a home.


A full Council Tax bill is based on at least 2 adults living in a home. Spouses and partners who live together are jointly responsible for paying the bill.


You will get 25% off your bill if you count as an adult for Council Tax and either:

  • You live on your own; or
  • No-one else in your home counts as an adult.


You are entitled to a 50% discount if no-one living in your home counts as an adult, including yourself.


You will not have to pay any Council Tax if everyone in your home is a full-time student, including yourself.


Check if you need to pay any Council Tax or if you are eligible for a Council Tax discount.


Who does not count as an adult?


These people are not counted as adults for Council Tax:

  • Children under 18
  • People under apprenticeship schemes
  • 18 and 19-year-olds in full-time education
  • Full-time college and university students
  • Young people under 25 who get funding from the Skills Funding Agency or Young People’s Learning Agency
  • Student nurses
  • Foreign language assistants registered with the British Council
  • People with a severe mental impairment
  • Live-in carers who look after someone who is not their partner, spouse, or child under 18
  • Diplomats


Challenge


What happens if you do not agree with the outcome of a check?


Most enquiries are expected to be resolved during a check as the process is based on facts about your property.


Once a check is completed, you can challenge any valuation related to the same property within four months of the check decision, or within 16 months of your check submission if the challenge is about a change in the surrounding area. You may also make a challenge if the VOA has not made a decision on your check after 12 months. Properties may have several valuations from different dates due to physical facts changing over the period of the rating list.


You must have submitted a check before you can make a challenge.


One report stated that a resident from Stockton-on-Tees, County Durham questioned how much Council Tax he was paying. His challenge was initially rejected but he took his case further and was able to move his band from 'C' to 'B' – saving about £25/month on current council tax rates and getting £200 back in overpayments. Another resident who has been living in the same neighborhood since 2001 got £1,000 back.


Note: A refund will only be completed if your account is in credit and you do not owe any other amounts of Council Tax. If you move house within the city, any credit on your previous address will be transferred to your new address. If you have moved outside the city and have overpaid, then a refund will be made.


If you are certain you were overpaying your Council Tax, Ingram Toft can help you. Simply fill out our form and our expert legal advisers will build a solid case and put in a complaint for you.


You could receive a refund and be in a lower council band in less than 2 weeks. 


Contact us today!