Loans2go what a joke

momumission

In my absolute vulnerable moment in 2022 January (just after Christmas) to pay my council tax to avoid bailiffs I took out a loan with this company £400 
Im shocked to be still paying this company £82.22 per month and so far I have paid them £1,479 and still owe them £164.44. I have written to them with my concerns of how they can do this legally. Just feel it’s disgusting. Yes you may say you signed and agreed to it (your right but I didn’t think it was this much interest) 
Is there anything I can do as I have been reading on escalating to the financial Ombudsman

any advice would be really appreciated 
please be kind as people do get into financial trouble and I’ve worked hard at getting out of debt and building up my credit record x

thanks 

CliveOfIndia

Looking on their website it says the representative APR is 770% (ouch !!!).  And the rate you were actually given could quite easily be even higher than that.

Legally they've done nothing wrong - it's an extremely high-rate loan for - presumably - high-risk customers.  Morally, well that's a different matter.

Sadly, probably your only recourse may be if they failed to conduct proper affordability checks.  Did they ask for details of your income when you applied for the loan?

momumission

Yes I filled in my Annual income job details ect 

sourcrates

I`m afraid there interest rates are prominently displayed on their website 770% APR is mouth wateringly high.

This is a representative example: 

if you borrow £550 over 18 months at a flat rate of 180% per annum (fixed) with a representative 770% APR you will make 18 monthly payments of £113.06, repaying £2,035.08 in total.

You pay back on average nearly 4 times what you borrowed.

Unless they didn`t perform suitable affordability checks, you won`t have cause for complaint unfortunately.

These companies tend to target those most likely to need a loan quickly, you could make a complaint, but it must have some substance to be upheld.

momumission

Ok thanks for taking the time to reply 👍

MalMonroe

Hi, it all does really boil down to affordability. If you are affording the repayments - and it sounds like you have been doing so on a regular basis - then the Financial Ombudsman may not be able to help.

But do have a read of the info in this link -  https://debtcamel.co.uk/worst-loan-in-britain/

There would be nothing to stop you escalating a complaint to the Financial Ombudsman if you try to negotiate with Loans2Go and they refuse to take notice of your request.

https://www.financial-ombudsman.org.uk/

I'd have a go because this company really is ripping people off. And you don't have anything to lose by asking.

All the best to you.

Herzlos

Your best course of action is to find some other source for the £164.44 outstanding and clear the finance. That'll at least stop you wasting more money in interest.

Whether you'd be entitled to any money back from them is debatable - it was a terrible deal but it doesn't seem to have been mis-sold.

macman

Did you already have a liability order against you when you took out the loan? Bailiff recovery for CT debt is relatively uncommon, the usual step after a liability order is to apply for an AOE order, if you are working.
The Ombudsman would not even look at it until you have been through the lender's own complaints procedure, but, on the basis of what you have told us, you have no grounds at all for a complaint.
Charging outrageously high interest does not equate to 'mis-selling'.

Exodi

CliveOfIndia said:

Legally they've done nothing wrong - it's an extremely high-rate loan for - presumably - high-risk customers.  Morally, well that's a different matter.

Agree - lenders set interest rates based on risk and profit.

In it's simplest form, if a company wants to make 10% profit, and they lend to the most low risk borrowers on the planet that they estimate have 100% chance of paying them back, they'll charge 10% interest.

If the same company wants to make the same profit, but they lend to higher risk borrowers, perhaps ones that already have other debts/defaults, and they estimate that they have a 50% chance of being paid back, they'll charge 20% interest.

It's a free market, so generally lenders are kept honest (not trying to make huge profits) as if they charge too high of an interest rate, people will just borrow money elsewhere.

But this kind idea breaks when we look at subprime lenders. What happens if you have lenders willing to lend to the absolute highest risk borrowers, of whom they expect the majority may not repay the debt, and of whom they don't need to be kept honest because these borrowers often don't have any other options? Well you have loans2go and the like.

It is morally questionable, and I don't think anyone has a clear answer to it.

We can all rally around and say "770% too high!" but if these subprime lenders didn't exist, then the alternative for the OP would have been not "pay(ing) my council tax to avoid bailiffs". I'm not necessarily saying this is a worse option, just that many borrowers only develop a dislike for subprime lenders after they've spent the money.

That's not to say I support them. Personally I think the subprime lending market should be destroyed, and forcing people to face creditors early on (who they may find sympathetic). I don't think anyone ever got out of debt by taking out 770% loans unfortunately. I've been in the payday spiral years ago, it sucks once you're trapped in it.

When I run the OP's numbers, I work this out to be ~240% p/a interest:

			Payment			Balance			Interest
Jan-22			£400.00			£400.00			£80.00		Annual	240.00%
Feb-22			-£82.22			£397.78			£79.56		Monthly	20.00%
Mar-22			-£82.22			£395.12			£79.02
Apr-22			-£82.22			£391.92			£78.38
May-22			-£82.22			£388.08			£77.62
Jun-22			-£82.22			£383.48			£76.70
Jul-22			-£82.22			£377.96			£75.59
Aug-22			-£82.22			£371.33			£74.27
Sep-22			-£82.22			£363.37			£72.67
Oct-22			-£82.22			£353.83			£70.77
Nov-22			-£82.22			£342.37			£68.47
Dec-22			-£82.22			£328.63			£65.73
Jan-23			-£82.22			£312.13			£62.43
Feb-23			-£82.22			£292.34			£58.47
Mar-23			-£82.22			£268.59			£53.72
Apr-23			-£82.22			£240.08			£48.02
May-23			-£82.22			£205.88			£41.18
Jun-23			-£82.22			£164.83			£32.97

ManyWays

I see Debt Camel calls this "the worst loan in Britain", and says the monthly payment for 18 months is higher than a payday lender would charge for the same loan over a year.  It's really hard to see how that is legal!  

enthusiasticsaver

Unfortunately you have little recourse if they conducted basic affordability checks and the rate was publicised. The rates are indecently high but I assume their customer base have a higher risk of default than average although in your case they have obviously made a packet.  I would just pay it off and resign never to use these loan sharks again.