Charges on payday loans

[Skelly1983]

Hi guys, just a quick query.

Over the last year i was stupid enough to have several payday loans to which i was not able to pay.

First was with MiniCredit which is being dealt with, and sure most people that use this site are aware of the issues with this company.

The Second loan is with CFO Lending.

Both have issued me with several charges to my account, including missed payment charges and interest charged per day (49% per month for CFO, and £4 per day for MiniCredit).

On this site and others I have seen stated that the amount that people have to pay is "amount borrowed plus one month's interest" I've informed both companies of this to which they say this is not the case, i have tried to do some research on this matter online and have failed to find any other reference to this on any other sites other than forums, this does not appear (from what i can see) within Consumer Credit Act 1974 or any amendments and does not seem to appear under any OFT guidelines.

I don't doubt in the slightest that this information is correct but i can find any law that would back up this.

Where would i find these laws or guidelines which states this amount of charges applied to accounts?

Dont get me wrong I know I am liable to these debts and will pay these back, but I think i should only be paying what is lawful.

[miliitant]

Re: Charges on payday loans

You will find no case law as such because the consumer credit act was no designed for these thirty day loans. stand by your guns and only pay the capital borrowed plus one months interest. it is very rare for a payday loan company to go to court. The judge will ask questions on the apr and under the unfair contracts. Also, for a creditor to charge interest or charges a notice of default sums under section 86a of the consumer credit act needs to be sent before and excess sums can be charged. payday loan companies fail to realise that

[Skelly1983]

Re: Charges on payday loans

Thank you, although i still dont see where this "capital borrowed plus one months interest" comes from i see it quoted all the time, but have found no reference to it any where.

[miliitant]

Re: Charges on payday loans

these loans expire after thirty days, its a contract, you borrow xyz, you pay back xyz plus interest after 30 days

[Skelly1983]

Re: Charges on payday loans

Thank you for your response.

If this was not paid within the period within the terms then they can not charge anything extra?

I've told them this, and they say that it is wrong, i can exactly say "people have told me on forums", to back my claims i wanted to check the legislation that outlines this rule but can not find it.

I agree that they will not take it to court as they will probably lose, but it dont stop them registering a default on my file, i am fine with paying what i owe but ain't being ripped off.

[miliitant]

Re: Charges on payday loans

pay day loan companies as a rule don't touch your credit file, only a small number do such as Wonga, your only option would by the financial ombudsman but that can take a year to get any decision

[Skelly1983]

Re: Charges on payday loans

They already said they will mark a default.

Also on page 25 of OFT1107, it says:

The principal consequences for the borrower of not keeping up
with repayments
In our view, the risk of the following should be explained to the borrower,
where applicable:

• The total cost of the debt growing
• incurring default charges and interest where applicable

These both sugest that that they can apply these charges.

[miliitant]

Re: Charges on payday loans

but the whole system of the charges is unfair under the unfair contracts legislation contained under section 140a of the consumer credit act 1974

[miliitant]

Re: Charges on payday loans

Section 140A of the 1974 Act provides that a court may determine that the relationship between a lender and a borrower arising out of a credit agreement (or the agreement taken with any related agreement) is unfair to the borrower because of:

• any of the terms of the credit agreement or a related agreement
• the way in which the lender has exercised or enforced its rights under the credit agreement or a related agreement, or
• any other thing done (or not done) by or on behalf of the lender either before or after the making of the credit agreement or a related agreement.

The courts have a wide range of powers where a credit relationship is found to be unfair, including:

• altering the terms of the credit agreement or a related agreement
• reducing the amount payable by the borrower
• requiring the lender to refund money to the borrower
• removing any duty placed on the borrower under the agreement, and
• imposing requirements on the lender or an associate.

[Skelly1983]

Re: Charges on payday loans

Still does not mention about the charges being unfair.

[miliitant]

Re: Charges on payday loans

The terms of the contract are unfair, the contract includes the excessive charges. you are really reading to much into this. legislation cannot include every eventuality and have it written down on paper to cross reference. if you are being stung by the payday loan company on excessive interest and fees after the term of the loan has finished, you go through the companies own complaints procedure, if that fails, its then the FOS. THEN YOU GO TO COURT FOR REDRESS IF NEEDED. That includes an application for the removel of any negative data given to the credit agencies. post contractual interest at 5000 % interest is unfair, trying to debit your card three times a day and charging £5 a time is unfair when their is no contractual provision for them to do it is unfair. that's two examples for a start. The Consumer Credit Act 1974 enables borrowers to challenge unfair credit agreements in court and obtain redress, if the overall relationship is unfair to the borrower.

[Skelly1983]

Re: Charges on payday loans

I understand that in the long run this can all work out, but advising that they can only make you pay "loan plus 1 months interest" is incorrect, and in some situations the charges will not be deemed as unfair, but the debtor has decided not to pay the minor extra charge because they think they dont have to, further down the line they get told these charges are fair and they will have to pay the charges and the default then remains on there file for 6 years causing a further cascading effect do to a poor credit score, all due to poor information that has been provided to them.

CFO informed me that the charges was lawful and even offered a discount on them, and i told them that they are not, to which i am wrong and in fact the charges seem to be fair so, i will probably get a default on this and have to pay way more then i should.

I aint bothered about Minicredit, as i think we are all aware of there misdealings.

Dont get me wrong i have received a lot of good advise from these forums over the last year and am very grateful to everyone who has provided this information.

[miliitant]

Re: Charges on payday loans

We are not talking of minor charges" though are we. 5000% apr for example, £100 to transfer for debt collecting when it is not even in the contract. These are not minor charges. I myself have had Minicredit in court and won, well he withdrew his claim. I have yet to read of a thread where he has taken anyone else to court since. If a default is registered with the credit agencies through these excessive charges then you go through the FOS,OFT, and the ICO to get redress and claim compensation using relevant case law in support

[Skelly1983]

Re: Charges on payday loans

Thanks a lot, miliitant will report the to FOS.

[cazza1881]

Re: Charges on payday loans

i myself are having problems with this so called minicredit, microcredit whatever they wanna call themselves i borrowed £100 but as you are probably aware they only give you £80.50 i have paid them £157 back through ukash vouchers as i was not giving them my bank card details this was after the due date though and now i probably owe them over £1000 i am just trying to find out how i can deal with this from my dmp but i have no hopes as they will not accept payments from dmp or any other 3rd party did they take you to court at all skelly1983? i am sick of worrying about it all the time