If your loan repayments are wiping you out, you may have been mis-sold credit. And if you can prove your lender acted irresponsibly, you might be due compensation
IF you’re struggling with a rip-off doorstep loan or rent-to-own bill, you may be able to get a refund.
Your provider may have failed to properly check you could afford the repayments and if it did it may have to give your money back.
Rent-to-own providers, such as BrightHouse and Perfect Home, sell household items such as washing machines and computers that customers pay for on a weekly or monthly basis.
But rent-to-own firms charge very high rates of credit – and that’s often on top of much more expensive selling prices compared to the high street.
And doorstep lenders typically make loans of up to around £1,000 and collect weekly repayments in person.
Interest rates have exceeded 1,500 per cent in some cases, the Citizens Advice has found.
WE never want you to pay more than double the amount you've borrowed - whether it's for a new sofa or a loan to help pay your bills.
That's why The Sun has launched a campaign calling for a cap on the total cost of rent-to-own loans and doorstep lending at double the original price or loan amount.
In a major victory for our campaign, the Financial Conduct Authority is now consulting on the bringing in the rule - which could be brought in as soon as April 2019.
A similar cap was introduced for payday loans in 2015 and since then the number of people struggling with unmanageable debts to those lenders has more than halved, according to Citizens Advice.
People on the lowest incomes, living in the poorest places, are paying a poverty premium - up to 7million people have resorted to high-cost credit, according to the Department for Work and Pensions.
People whose wages or benefits don't stretch far enough need to borrow from rent-to-own or doorstep lenders to help pay for things such as an unexpected bill or to furnish their homes.
These come with exorbitant rates of interest - more than 1,500 per cent in some cases of doorstep lending.
It is scandalous that one mum who borrowed cash to help keep a roof over her family's head ended up paying back over THREE times the original amount.
It's time to stop the credit rip-off.
Here's what we demand:
Rent-to-own
Doorstep lending
As a result, rent-to-own and doorstep loan customers can end up struggling to manage their payments.
Debt charities have called on the companies to improve their checks on customers before granting loans, warning that unaffordable credit could push them into further "financial hardship".
This is also what the Sun’s Stop The Credit Rip-Off campaign has been calling for, as well as a cap on the total cost of credit at double the original item price or loan amount.
In a major victory for our campaign, the City watchdog, the Financial Conduct Authority (FCA), is now consulting on introducing the cap as soon as April 2019.
The need for change in the rent-to-own market is obvious.
Just last year, weekly payment store BrightHouse was ordered to pay back £14.8million to customers after the FCA found that it had treated customers unfairly by not properly assessing whether they could afford a loan.
MUM-of-four, Jade Whitworth, 25, has taken out between 30 and 40 loans for items from BrightHouse, including a sofa, fridge freezer and a laptop, over the past six years.
The rent-to-own firm allowed her to rack up thousands of pounds in repayments despite having taken out an IVA - at least nine of the loans were after the FCA clampdown.
She said: “They just kept calling me up and offering me things that I didn't have.
"So even though they knew I had an IVA when they did the credit check, they still let me take more stuff out.
“When my washing machine broke I couldn’t afford to get it fixed or to buy a new one.
“I had to get one out with BrightHouse, even though I couldn’t really pay the other payments.
“I had four young kids, one’s got special needs. They needed clean clothes.
“I couldn’t afford one from anywhere else. I had no choice.”
BrightHouse emphasises that it provides a service to customers who may not be able to attain credit elsewhere, undertakes stringent affordability checks and limits the amount of credit available.
Sara Williams, who runs independent website , says: “If you have been given a loan where the repayments left you so short of money that you got behind with your bills or had to borrow more to get through the rest of the month, then this loan was not affordable.”
The regulator’s rules say lenders have to check a loan is affordable for someone before they lend the money.
Affordable means you can pay the loan back on time, without hardship and without having to borrow more.
Williams adds: “Many people with doorstep loans were encouraged to take another loan if they got into difficulty – these loans were probably not affordable. And if you already had rent-to-own goods then, when you wanted to buy something else, the provider should have seen if all of your borrowing added up to too much of your income or benefits.”
To find out if you are due a refund, you should first contact the provider who your loan or rent-to-own agreement is with and explain your situation and concerns.
Lorraine Charlton, debt expert at Citizens Advice, says: “You should list the ways you think their affordability check was not properly done, the problems it has caused and what you would like to be done about it.”
If the lender doesn’t respond to you or you’re not happy with what it has to say, you can ask the Financial Ombudsman to look at your case.
This is an independent adjudicator that has the power to order the provider to refund your loan or pay compensation.
Andrew Shaw at debt charity StepChange explains: “How much compensation you could be eligible for depends on the circumstances.
"Typically, the lender will write off the interest and any charges so you just repay the amount you originally borrowed.”
If your rent-to-own or doorstep loan repayments are unmanageable, you may have been mis-sold credit. If it can be proven your lender acted irresponsibly, you may be due a refund. Here's what you need to do to find out where you stand.
Step one: Complain to your lender in writing
Explain why you think the loan was unaffordable and how you think the lender should put this right, such as refunding your interest and charges or writing off the outstanding balance. Websites such as can help you put the letter together.
Step two: Follow procedure
Ask for a copy of the lender’s complaints procedure so you can understand the process it follows.
Step three: Ask the Ombudsman
The lender should acknowledge your letter within five days and resolve it within eight weeks. If you’re not happy with the outcome you have six months from that point to appeal to the Financial Ombudsman. You can contact the Ombudsman
Step four: Don’t use a claims firm
A claims management company might get in touch offering to help. Say no – it won’t get you any more compensation than you could get yourself but it will either charge a fee or take a cut of any money refunded to you.
Step five: Speak to a debt adviser
If you are worried about debt, an adviser can provide information and advice and help you manage it. It’s particularly important to speak to an adviser if you’re bankrupt or in a formal debt solution such as an IVA as a refund may affect this.
One customer told Debt Camel they received a refund of £13,000 from a doorstep lender after the Ombudsman ruled it had approved unaffordable loans.
Another got a refund on 15 of the 26 loans they had taken out – it is often the case that the first few loans you take out are deemed affordable but that changes if you have to keep borrowing.
The Ombudsman says if customers feel they have not been treated fairly by their provider – if the goods they received were not good enough quality or repairs took too long, for example – they should complain.
Complaints to the Ombudsman about these providers come under the category of hire purchase agreements.
Some 5,332 complaints about hire purchase agreements were made between April and December 2017 and the Ombudsman found in favour of the customer 34 per cent of the time.
Williams says: “Many people who get a refund are happy just to get their current loan wiped out.
"Sometimes it will be the first time that they haven’t been in debt to a doorstep lender or rent-to-own shop for more than five years.”
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