Amigo Loans was once a surefire way for people with poor credit scores to borrow money. The company would lend money to anyone who could find a guarantor – someone who would pay the loan if the borrower couldn’t. However, in recent years, Amigo’s practices have come under fire, with many customers claiming they were mis-sold loans. As a result, Amigo Loans refunds are now being offered to those who were affected.
What is Amigo Loans?
Amigo Loans started out in 2005, with the aim of providing loans to people who had been declined by other lenders. The company’s unique selling point was that it would lend money to anyone, as long as they could find a guarantor. This allowed people with poor credit scores to borrow money at more affordable rates than they would typically be offered.
Initially, Amigo’s business model seemed to be a game-changer for the loan industry. The company saw rapid growth, and by 2018, it was issuing loans worth £1.1bn annually. However, it wasn’t long before Amigo’s practices came under scrutiny.
What went wrong at Amigo Loans?
The primary complaint about Amigo Loans was that the company was guilty of irresponsible lending. Many borrowers claimed that they were given loans that they could not afford to repay, and that they were not properly informed of the risks. The Financial Ombudsman Service (FOS) received hundreds of complaints about Amigo Loans, and it found in favor of the borrower in 88% of cases.
In one case, a man was given a loan of £10,000 despite being on benefits and having no job. He was charged an interest rate of 49.9%, and his guarantor was his mother, who was 75 years old and suffering from dementia. This is just one example of the kind of loans that Amigo was offering to people who could not afford them.
What are Amigo Loans refunds?
Following the complaints about Amigo Loans, the Financial Conduct Authority (FCA) launched an investigation into the company. In November 2020, Amigo agreed to a series of changes to its lending practices, including capping interest rates at 30.99% and conducting more thorough affordability checks.
Amigo also agreed to set aside funds to compensate customers who were mis-sold loans. The company has stated that it will contact eligible customers and offer them compensation, but customers who believe they were mis-sold a loan can also make a claim themselves.
How to claim an Amigo Loans refund
If you believe that you were mis-sold a loan by Amigo, you can make a claim for compensation. The first step is to contact Amigo directly and explain why you believe that you were mis-sold the loan. Amigo will investigate your claim and will let you know whether you are eligible for compensation.
If Amigo decides that you are eligible for compensation, it will make you an offer. You can choose to accept this offer or to reject it. If you reject the offer, you can take your case to the Financial Ombudsman Service.
It’s worth noting that you do not need to use a claims management company to make a claim for an Amigo Loans refund. These companies will take a percentage of your compensation as a fee, so it’s generally better to make a claim yourself.
What to do if you’re struggling with debt
If you’re struggling with debt, it’s important to seek help as soon as possible. There are a range of debt charities and advice services that can help you to manage your debts and negotiate with creditors.
The first step is to work out a budget and see how much you can afford to pay towards your debts each month. You can use a debt calculator to help you with this. Once you know how much you can afford to pay, you can contact your creditors and explain the situation. They may be willing to agree to a repayment plan that is more affordable for you.
If you’re still struggling, you can seek the help of a debt charity or advice service. These organisations can help you to negotiate with your creditors and provide you with advice on managing your debts.
Conclusion
If you were mis-sold a loan by Amigo Loans, you may be eligible for compensation. Amigo Loans refunds are being offered to customers who were given loans that they could not afford to repay or who were not properly informed of the risks. If you believe that you were mis-sold a loan, you can contact Amigo directly to make a claim for compensation.