Can you complain about a personal loan?

shelf1984

Hi. 18 months ago my brother consolidated some credit card and loan debt into a new personal loan. I think the bank based affordability on his earnings including non-guaranteed overtime and now this is not available he is struggling to keep the repayments up.

I believe the bank has been irresponsible with it's lending. The repayments are unaffordable and, in my opinion, this would have been obvious when the loan was taken out had proper affordability checks been carried out.

Would he have grounds for complaint with this? Is there any point pursuing it?

Any thoughts would be appreciated. thanks.

foxy-stoat

Your borther could complain, but I doubt he would get very far. Not the same affordability checks when you take out a personal loan, you know how much the loan is for, interest rate and term before you sign up. You sign up based on your earnings - if the overtime is not guaranteed then your brother should of thought about what happens if the overtime is not there.

How much is the loan, how long and whats the interest rate?

This is irresponsible borrowing really.....if he consolidated all his current debt to one easy manageable monthly payment then this would of been cheaper than what he was paying originally? So is he in a worser position than before?

I hope he has cancelled all of his credit cards that he cleared otherwise he will be in double the debt he was in originally at some point in the future and then he will be looking at BR or IVA.

Best head over to debt free wanna be and post up his expenditure and see if there are any cuts he can make, he could try and clear down the loan quicker buy selling stuff, down valuing the car or try and earn more.

PeacefulWaters

If he already had the debt to consolidate then why blame the bank?

[Deleted User]

shelf1984 wrote: »

The repayments are unaffordable and, in my opinion, this would have been obvious when the loan was taken out

If it was obvious, why did he take the loan?

shelf1984

I totally agreed he's been irresponsible with the borrowing, I'm just trying to help him explore his options before he goes for an IVA or goes bankrupt.

Personally I don't believe he should have been encouraged to consolidate the credit cards (where he was making minimum monthly payments) into a repayment loan with an 18% interest rate and repayment commitment each month which increased his outgoings. He was in a mess and this doesn't seem to be a responsible solution to me.

daniel86_2

If you feel there is cause to complaint then it is your prerogative to do so.

If your brothers circumstances have changed then the best action would be to re-evaluate his spending. Look at exactly what is coming in vs. going out and try cutting his expenses anyway possible.

Can you say what is the loan amount, repayment term and the monthly payment as well has his current level of other debts as this would determine what advice he would need.

andyfromotley

Hi shelf,

i have never seen a case on here of anyone sucessfully arguing a case of irresponsible lending with the bank or the regulator. (apart from payday loans). So your chances of success in this will be almost nil imo. Move on and seek other solutions.

I wish your brother good luck on his journey.

ViolaLass

shelf1984 wrote: »

I totally agreed he's been irresponsible with the borrowing, I'm just trying to help him explore his options before he goes for an IVA or goes bankrupt.

Personally I don't believe he should have been encouraged to consolidate the credit cards (where he was making minimum monthly payments) into a repayment loan with an 18% interest rate and repayment commitment each month which increased his outgoings. He was in a mess and this doesn't seem to be a responsible solution to me.

Why did he agree to it if it made things worse?

bargainbetty

If he was basing his repayments on overtime, can he find a second job to cover the lost hours?


To go bankrupt is an extremely strong response to a single loan (assuming he has not run debts back up). Ask him to complete a proper budget and consider his income and outgoings properly. He may be able to make some changes that reduce the difficulty.


Plenty of people on here (me included) have worked second jobs to get themselves out of a financial hole. Rather than go bankrupt and spend the next six years with a wrecked credit history, maybe he could rethink his approach and work his way out?

poppasmurf_bewdley

There are too many people in this country who think borrowing more money can be a cure for debt. Unfortunately, they then find out that it isn't. It merely increases their debt.

You and your brother will get nowhere claiming that the bank has mis-lent the money. I know of no-one who has succeeded in doing this although many claim they are going to try. Then everything goes quiet and we hear no more.

It may be best if your brother does seek an IVA or bankruptcy, or even maybe a Debt Relief Order.

daniel86_2

It is really for the customer to decide when taking out a debt consolidation loan if it is better for them for some this will be lowering APR and paying debt off quicker by having a larger commitment for some it might be to lower their payments per month, which will mean they pay back more in the long-term by taking a longer loan out.

It was really for your brother to decide if it was better for him to make the CC minimum payments over taking out the consolidation loan. The bank should access that the loan was affordable at the time with the information they had.