Are you being hassled by Purple Loans UK about an outstanding loan? Are you unable to repay the loans you have? Are you receiving threats and being told you will be taken to court? Was the loan unaffordable and should not have been given to you? If you are having these or similar problems with Purple Loans UK, you should gain some useful information by reading this article. You might be able to cancel your loan and even obtain a refund.
It’s not your fault. Complaints to the Financial Ombudsman have risen this year from 830 to 2,006, so it’s safe to say that you’re not alone.
Deal with your debt today and feel better tomorrow.
Who are Purple Loans?
Purple Loans is a lender that offers long-term loans between £3,000 and £100,000. The minimum repayment period is five years so this is not suitable for consumers who need a short-term loan solution. The company offers secured and unsecured loans and it’s a good option for people who need a larger amount of money without taking out a mortgage.
Are loan companies lending to the wrong people?
It seems to be increasingly easy to get credit from lenders, even for people who cannot afford to pay the money back. The internet is just full of companies that are only too happy to advance cash to you within a few minutes, to approve a loan for you of up to £1,500 in just seconds or to advance money to you instantly without any credit checks. Many loan companies will even go as far as providing funds to people with a “very bad credit” history or who are have already had problems paying debts before.
Read what to do if you can’t pay back your debt.
Why debt problems are common and what the government is doing to deal with loan sharks
It is not really surprising that there are so many people who end up facing debt problems with these organisations. Although debt problems still exist, they have greatly improved from where they were a few years ago. There were new regulations which came into force, as a result of the spiralling debt problems and these went some way to rectify the issues. At one point, the loan market toppled £2 billion, and this was fuelled by both irresponsible lending, together with astronomically high interest rates.
Unfair practices were identified by the Financial Conduct Authority and these resulted in huge fines being imposed on many of the top players in the industry. These companies included Wonga, who were fined £220 million, and others like The Money Shop and Quickquid who also received substantial fines. Some of these lending companies ended up having to shut up shop, due to these high fines. If money had been lent to people that should not have received a loan because of their “limited criteria”, the customers ended up with a refund. The interference and fines worked, as the loan market changed substantially. Over the three years after the regulation were brought into force, the number of loans being issued to borrowers decreased from 10 million to 1.8 million and the number of lenders also dropped from 240 to 60.
Are you due a refund? Read through the next section in which we look at these new rules in some detail. If Purple Loans UK is in breach YOU MAY BE DUE A REFUND EVEN IF YOU HAVE PAID OFF THE LOAN.
Government cap introduction of loan interest and other charges
The Financial Conduct Authority ended up introducing a price cap which was designed to protect borrowers from being faced with excessive charges. These caps include:
- A cost cap of 0.8% per day on the amount of money you have borrowed, which includes both interest and all fees charged.
- A cap on default fees of £15 – the lender may still charge interest after a default, but it cannot exceed the original rate of 0.8% per day.
- A complete cost cap of 100% – you should not be asked to repay more than 100% of the money you have borrowed.
These limits are relevant to all credit agreements with an interest rate of 100% or more a year, and that are will be due to be fully or substantially repaid within a year.
There are also additional regulations which were brought into force in May 2017. Lenders must now provide details of their products on a price comparison website, which should be authorised by the FCA and borrowers should also be provided with a summary of the cost of borrowing.
If Purple Loans UK are in breach of these regulations and they are attempting to charge you more than they should, your credit agreement with them would become unenforceable. As a result, they cannot force you to make the repayment.
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You will find that there are many so-called loan companies who are trying to do business when they are not actually authorised to do so. Only authorised businesses are allowed, by law, to make certain credit agreements. If these loan companies are not authorised, they will not be able to enforce repayments. This means you can just stop paying them and there is nothing they can do about it.
You can check whether Purple Loans UK is authorised, by just entering the name of the company on this Interim Permission Consumer Credit Register search page. You are also able to search the financial services register here. If there is no valid up to date entry either one of these registers, you may simply stop paying the, and they will not have the power to enforce the debt.
Some other indicators that Purple Loans UK may not be operating legally, include a lack of information on the company website, out of date information on the website, or information which is different on the website from the information on the two directories. Non-disclosure of true APR is also a clue that they may not be authorised.
Do you want to complain about Purple Loans UK?
If you are under the impression that Purple Loans UK are in breach of the regulations and they are failing to treat you in a fair way, you have the right to make a formal complaint. If your dispute fails to be resolved or the complaint is not dealt with within eight weeks, you may wish to escalate your complaint to the Financial Ombudsman.
To make a complaint, you should collect all the evidence together that you need, including details of any phone calls, emails or relevant texts. The best way to deal with a complaint, is to write to Purple Loans UK and this could include a heading on your letter with the word ‘Complaint.’ The more evidence you can provide relating to the complaint, the better. You should also mention how you would like the matter to be resolved.
If Purple Loans UK do not provide you with a satisfactory conclusion on your complaint, you may wish to take your complaint to the financial ombudsman. The best way of doing to is to contact them by phone on 0800 023 4567 or 0300 123 9123
If Purple Loans UK are found to have treated you unfairly, you might be entitled to a refund, even if you have already paid off the loan within the last six years. If this is the case, you may expect to be refunded on the interest you have paid on the loan, as well as any additional charges. You may also be permitted to receive 8% interest on these payments.
If the loan is considered to have been unaffordable when you received it, you have the right to insist that it is taken off your credit record and you may be eligible to get the balance cancelled too.
The first things to do is to write to your lender stating your case and asking for compensation.
If there is no satisfactory response within 8 weeks, you can also follow it up by speaking to the Financial Ombudsman by phone on 0800 023 4567 or 0300 123 9123.
New rules around Continuous Payment Authority
Most loan companies will request that you repay the debt using a Continuous Payment Authority (CPA). With the CPA, the loan company will have permission to debit any sum they want from your bank account at any time, without your permission. They should always inform you before they debit your bank account, but unfortunately, many of them do not carry out this crucial step. The result of this is that you won’t be aware the payment is going to be debited.
If you are already finding it difficult to make important payments such as your rent, mortgage or utility bill, and the money is suddenly debited by Purple Loans UK ahead of these bills, you could put yourself in serious financial trouble. You could put your home at risk, in the worst case scenario.
There are new regulations which have been brought in to protect borrowers. These new rules state that if a CPA fails to be paid on two occasions, the loan company is not able to try again.
There are also new rules around the amount of money the loan company can take using a CPA. They are not longer permitted to take partial payments. If there are insufficient funds in your account to cover the full amount of the payment due, they must not take any payment at all. If you wish them to take partial payments to clear off the debt they can do so, but you must have given them permission to do so.
If they do take more than two requests or they take a partial payment and you have not given them explicit permission, they are in breach of regulations. You can report them to the financial ombudsman on 0800 023 4567 or 0300 123 9123.
Can’t afford to repay the loan? Here’s what you can do!
If Purple Loans UK has operated in a legitimate way, but you are unable to afford to repay the loan, you can take some steps to deal with your situation.
If you have a CPA, standing order or direct debit set up, you can contact your bank and cancel these. If you do this, Purple Loans UK will not be able to collect payments automatically from your account, and you will get back control of your bank account. It is likely that your bank will advise you to inform Purple Loans UK that you cancelled the CPA, but you are not under any legal obligation to do so. They will not be able to collect any money from you, unlrss you give them explicit permission to do so.
Of course, you will still need to pay back the money, so you must take steps to deal with that directly. It may feel tempting to bury your head in the sand, but it is important that you don’t do this. Your first approach should be to speak to Purple Loans UK and discuss a plan to go forward with your payments. They should treat you fairly and should be prepared to come to an agreement to reschedule your repayments.
According to the law, lenders must:
- Provide you with information on where you can obtain free independent debt advice
- Pause the debt recovery for a reasonable period, while giving you time to develop a repayment plan, possibly using a debt advisor
- Provide you with reasonable time to repay, possibly freezing interest and additional charges.
Do not roll the loan over
Purple Loans UK may say that you should roll over the loan, but this is really not a good idea. You will be charged more interest and additional charges, which will leave you in even deeper debt. You will not be able to roll the loan over more than twice.
Getting debt help
There are some of the organisations that will provide you with free independent advice on debt:
Are loan companies all bad?
There is little doubt that people have a bad impression of loan companies. It may be argued that they also provide a valuable service by offering a lifeline to those who may be unable to get credit from other institutions, such as a bank or credit card. It is only when these companies put their profits ahead of everything else and exploit their customers that they can cause real harm. Of course, some sharks remain, but the new regulations have made it safer to use the loan companies. Unfortunately, many people still get into debt problems.
If Purple Loans UK have breached the regulations, you are entitled not to pay them, as the debt will have become unenforceable. If you are not able to afford to pay, then contact one of the organisations we have listed above, they will provide the help and guidance you require.
If you can’t pay back your loan do check out my other article here.