I can’t pay back my payday loan, what can I do?

If you’re struggling to repay your payday loan, you should contact your lender as soon as possible. Regulatory rules mean lenders are obliged to help.

Lending guidance for payday loans

The OFT’s Irresponsible Lending Guidance requires lenders to treat borrowers in financial difficulty fairly and with forbearance, which means they should work with you to come up with a plan to repay your debt over a reasonable timescale.

Any action your lender takes must also be proportionate. For example, they can’t try to repossess your house just because you haven’t paid your credit card bill.

If you believe that a payday lender has been irresponsible, you can complain about the lender

In summary

OFT guidance means that payday lenders must treat borrowers fairly and must work with you to help you come up with a plan to repay your debt. And, any action taken by a lender must be proportionate. 

Payday loan customer charters

If you’ve borrowed money from a payday loan company, check if they’re a member of one of the main trade bodies, such as the Consumer Finance Association (CFA), the Finance and Leasing Association (FLA), the Consumer Credit Trade Association (CCTA) or the BCCA.

The main payday lenders have signed up to a customer charter which requires members to:

  • Deal with cases of financial difficulty sympathetically and positively
  • Tell you how the payday loan works and the total cost of the loan (including an example of the price for each £100 borrowed, together with fees and charges) before you apply
  • Freeze interest and charges if you make repayments under an agreed and reasonable repayment plan, or after a maximum of 60 days of non-payment

Help paying back your loan

If you’re struggling with a number of debts and need help, it’s worth speaking to a free debt advice organisation like Stepchange or National Debtline.

They’ll help you find the right debt solution for your personal circumstances and may help you negotiate new or reduced payment terms with your payday lenders.

Don’t use a commercial debt-management company. There is plenty of free, independent debt advice you can use.

If you do choose to work with a debt adviser, you can use this letter template to inform your payday lender.

Clean up credit campaign

Following a new Which? investigation, we believe that payday lenders are acting unlawfully by charging excessive default fees.

10 of the 17 leading payday lenders we looked at have default fees of £20 or more, and four charge £25 and above, with Wonga topping the table at £30.

We believe that excessive default fees are unlawful under the Unfair Terms in Consumer Contracts Regulations 1999.

We want the industry to clean up its act and lend responsibly. We’re calling on the Financial Conduct Authority to set tough rules on credit lenders.

Tell us your story and help make the financial regulator take action as part of our Clean up Credit campaign.

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