How to reclaim interest on a loan you couldn't afford
If a lender approved a loan, credit card or catalogue account without checking it was affordable, and you ended up drowning in interest, that's irresponsible lending. You can complain for free and reclaim the interest, even years later.
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Your rights
Before lending, a firm must make reasonable checks that you can repay without hardship. Signs they ignored, like maxed cards, repeated minimum payments, or borrowing to cover borrowing, support an irresponsible-lending complaint. If upheld, they refund the interest and charges you paid, add 8% statutory interest, and correct your credit file. The capital you borrowed is normally still owed, but the cost of it comes back.
Step by step
- 1List every facility you think was unaffordable: lender, rough amount, dates, and why you couldn't really afford it.
- 2Write to each lender's complaints team asking for a refund of interest and charges, 8% statutory interest, and credit-file correction.
- 3Wait for their final response (up to 8 weeks).
- 4If refused, take it to the Financial Ombudsman Service for free. Affordability complaints have a strong track record there.
What they'll say, and your comeback
““You passed our credit check.””
Comeback, A basic credit check isn't a proper affordability assessment. Ask what income and expenditure checks they actually did.
““You made your repayments.””
Comeback, Making payments by borrowing elsewhere or never clearing the balance is evidence the lending was unaffordable, not proof it was fine.
““The account is closed now.””
Comeback, You can still complain about closed or repaid accounts. The interest you paid is still reclaimable.
FAQ
Can I complain about a loan I've already repaid?
Yes. Affordability complaints cover closed and repaid accounts. If upheld, you're refunded the interest and charges you paid, plus 8%.
Does it cost anything to go to the Ombudsman?
No. The Financial Ombudsman Service is free for consumers, and you keep 100% of any refund.
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A self-serve tool, not a law firm. General information, not legal advice.