I’m taking out payday loan after payday loan – and I can’t get out of my debt

Payday Lending

Orla asked us to step in when her payday lender refused to help her with her debts.

What happened

Orla told us she often had to take out a new loan soon after paying off the previous one, and was trapped in a cycle of debt. She explained she’d already complained to the payday loan company – but they’d just said they hadn’t done anything wrong.

What we said

We asked the loan company for the details of all of Orla’s loans. We also asked them to show us what affordability checks had been done for each loan.

From the lender’s records, we could see she’d first taken out a payday loan seven years previously. Over the following years, she’d gone on to take out over 60 loans with that lender.

The lender told us they’d asked about Orla’s income and for some personal information – such as her residential status – at the point Orla applied for each loan. They also told us they’d carried out credit checks – and for some of the later loans, they’d asked about Orla’s living expenses.

We looked at Orla’s pattern of borrowing. This varied from month to month – sometimes, she’d borrowed as much as £600, but in other months it had been £50. Where there had been a gap between loans, it hadn’t been for more than week or so. It seemed to us that some of the smaller loans had been used as top-ups, to help Orla repay her larger outstanding debts.

We thought Orla’s pattern of borrowing suggested she’d become reliant on payday loans – rather than using them as a temporary financial stopgap. And in our view, the lender had had enough information to see that she was experiencing longer-term financial difficulties, and wasn’t ever able to get out of debt.

Even looking at the information the lender had about Orla's financial circumstances, it seemed that the repayment for her current loan was taking more than a third of her monthly income. We also saw she had credit card debt of more than £10,000.

We carefully reviewed Orla’s history with the payday lender. And we thought that after she’d applied for her eighth loan – by which point she’d been using payday loans for more than eight months – the lender should have known she was having trouble repaying her debts.

So we told the lender refund the interest and charges paid on all of Orla’s loans after the first eight – and to ensure anything relating to the later loans was removed from her credit file.