What is an Affordability Check?

Navigating the world of Loans and Reclaims can be a little daunting, which is why we are here to help, answering any and all your questions and queries. Today we are answering one of our most common questions- What is an Affordability Check?

Before a creditor, such as a loan company, can lend money to an individual, they must take steps to ensure that the person can afford to pay the amount back. The creditor will run an affordability check, which indicates to a lender whether an individual can afford the loan. Irresponsible Lending is when a creditor or lender, has not conducted thorough affordability checks and issue a loan to an individual who cannot afford to pay it back.

The affordability check (also called an creditworthiness assessment) takes into account an individuals incomings and outgoings of money, for example a wage coming in versus personal expenses (like rent, mortgage, bills) going out. The affordability check will tell the lender whether the person can afford the loan and keep up with the repayment schedule of the loan, based upon the figures the individual has provided for the initial affordability check.

An Affordability Check is conducted by a lender before a loan is issued

When a lender does not conduct comprehensive and proper affordability checks, then this is when irresponsible lending can occur. For example, if the lender gives an individual a loan they cannot afford or pay back, the person may cut back on essential living costs in an attempt to keep up with the repayments. This is irresponsible lending.

Irresponsible Lending:

To lend responsibly a lender must be confident that the individual can repay the loan:

  • In full and on time
  • Without having to borrow more money
  • Without falling behind in existing commitments (i.e rent, bills)
  • Without causing financial hardship (i.e not being able to pay it back)

If a lender has not carried out the correct affordability checks and issued a loan that results in not achieving any (or all) the statements above, then this is irresponsible lending.

Irresponsible lending can cause stressful situations

Have I experienced Irresponsible Lending?

It’s one of the most frequently asked questions that we receive here at the Reclaim Experts, and one that is more commonly answered with yes.

Many people have experienced Irresponsible Lending but do not realise it. It is sometimes not clear that Irresponsible Lending has occurred. We have seen so many situations of Irresponsible lending that we have put together a list of the most common examples of this situation, to help people discover whether they have experienced this circumstance.

Do any of these statements sound familiar?

  • Unclear Fees?
    When you took out the loan, where the charges and associated fees completely clear to you? You should know what fees will be charged before you take out the loan.
  • Unpayable?
    Were your monthly payments for the loan so large that you were unable to pay for your essential bills, for example like your mortgage, food bills? No loan should leave you unable to pay your essential bills.
  • Supported Borrowing?
    Did your lender encourage you to take out additional loans, even though it was clear that you could not afford to pay the first loan back? A lender should not encourage you to borrow more if you cannot afford it.
  • Rolling Over Loans?
    Did you have to take out another loan just so you could pay the initial one back? Your lender should have checked that you could afford the first loan and the monthly payments.
  • Automatic Payments?
    Did you lender take automatic payments from your account, causing financial difficulties and leaving you unable to pay for essential items? Your lender should be clear about when payments will be taken and how.
  • Bigger Borrowing?
    Did your lender entice you to borrow more than you planned for with an offer that was bespoke you? Your lender should have looked at your financial situation and lent what you were requesting and what you could afford.
  • Correct information?
    When you took out the loan, did you provide the correct information of your financial situation including other debts. Your lender should have checked that the loan was feasible for you.
Many People, from all walks of life, have experienced Irresponsible Lending

What Can I Do About Irresponsible Lending?

If any of the statements, mentioned above, sound familiar, then it is highly likely you have experienced Irresponsible Lending.

The good news is that we here to help.

Loan companies have been made to refund interest or write off debts which were lent irresponsibly without affordability checks. We, the Reclaim Experts, are here to help our customers receive loan refunds, for loans that were incorrectly lent in the first place.

As an example of loan refunds, 90% of affordability complaints are being upheld against Amigo Loans, one of the biggest lenders of Guarantor Loans, with more and more people claiming against the company for mis-sold credit. Amigo has even been referred to as a “legal loan shark” by members of Parliament. Reports also confirm that Amigo initially set aside £26.6 million to deal with affordability complaints.

Another example is Provident Loans, a doorstep loan lender, who was instructed by the Financial Conduct Authority recently to pay “almost £169m in compensation to customers’ after mis-selling a particular loan product to customers.

Sadly, irresponsible lending is becoming very common, which is why it’s our mission here at the Reclaim Experts to correct that imbalance.

Loan Refunds is Claiming Back Money that You are Entitled To

How Can I Claim?

The common theme If any of these situations sound familiar to you, it meWe understand that claiming against a lender is a daunting task, which is why we are here to to support you throughout the whole process. As an established loan claims firm, we have helped thousands of customers receive refunds from loan companies. We understand and acknowledge that irresponsible lending is not fair and we are here to correct that in injustice.

We’ve created a clever little calculator on our website here, that will give you an approximate idea of how much you may be able to claim and receive as a loan refund. Using the slides, just move the tabs to the amounts relevant to your loan and then it will give you an estimation of how much compensation you maybe able to claim as a refund from the lender.

Please remember that amount displayed is NOT a confirmation of a refund and the calculator should only be used as a guide before completing your claim.

You can claim directly to a lender completely free of charge, a claims management company will charge you around 30% of the amount claimed, however we would advise you to run an up to date credit report before doing so.

Get in Touch

We’re here to help and if you have any questions or queries, simply drop us a message through our contact form or via email at [email protected] We also can be contacted through online chat and through our social media channels.

We look forward to helping you very soon.