Before a creditor, such as a loan company or mortgage lender, can lend you money, they must first ensure that you can afford to repay it. They accomplish this by conducting a cost-benefit analysis. You can file a complaint against them for irresponsible lending if they lend you more than you can afford to repay.

If you are worried about money and are falling behind on your payments, please contact us to file for an unaffordable lending claim.

What exactly is irresponsible lending?

If a creditor does not conduct proper affordability checks, they may grant you a loan that is larger than you require or that you cannot afford to repay. This may force you to choose between cutting back on essential living expenses to keep up with payments or missing payments to the debt, which may result in your account defaulting.

Irresponsible lending is defined as lending money without first determining affordability.

For a creditor to lend responsibly, they must be confident in your ability to repay the debt:

* Completely and on time

* Without the need to take out additional loans

* Without jeopardizing your current commitments, and

* Without putting you in financial difficulty

If this has happened to you and you've struggled to repay a debt as a result, you can file a complaint with the creditor.

Some payday loan companies have been forced to refund interest or write off debts incurred as a result of irresponsible lending without affordability checks.

There is no guarantee that your creditor will agree to this if you file a complaint, but you may be able to agree to other concessions, such as allowing you to repay the debt at a lower interest rate.

What exactly is an affordability check?

When you apply for a loan or other credit agreement, you will usually be asked about your income and regular household expenses. Responsible lenders can use this information, as well as information from your credit file about your other debts, to determine whether the agreement is manageable.

If extending or refinancing a credit agreement, creditors should also take steps to ensure affordability. This is true for all lenders governed by the Consumer Credit Act.

When you apply for a guarantor loan, the lender must consider the affordability of both the primary (or 'principal') borrower and the guarantor.

How does a cost-benefit analysis work?

In general, the lender should consider the following when it comes to your household budget:

* How much money you make

* How much you spend on bills and other regular payments, including any existing credit obligations.

* They can determine how much you can afford to pay them on a regular basis by calculating how much you have left over from your income.

If your lender failed to consider these circumstances, then you may have been mis-sold a loan.

Contact us or click below to file a claim.