GUARANTOR loans firm, Amigo, has put itself up for sale in the face of what it calls a “challenging operating environment” that’s seen other similar lenders go under.
While the lender says it “remains confident”, its owners say they are concerned by “increased pressure” and what they say is the changing approach of the Financial Ombudsman Service to complaints.
Payday loan complaints soared by 130 per cent in 2018 (the latest figures available) with the Ombudsman taking on nearly 40,000 new complaints.
And when Wonga went bust, it said it couldn’t cope with demand for mis-selling compensation, which saw complaints about unaffordable loans rise threefold.
Amigo Loans, which was founded in 2005, is slightly different to payday lenders in that it offers loans over a longer time frame of 12 to 60 months at a lower interest rate of 49.9 per cent.
Are you due a payday loan refund?
MILLIONS of payday loan customers may be due refunds.
Refunds or compensation are often given when the loan was mis-sold or where affordability checks weren’t stringent enough. Here’s all you need to know:
- Customers who’ve paid off payday loans debts can still claim. Even if you’ve paid off your debts you may still be able to get a refund if you struggled to repay the money at the time.
- If you’re still paying off payday loan debts you can still complain. You can complain if you’ve struggled to make repayments. If your complaint is successful it could lower the amount you owe.
- You can still claim is the firm no longer exists. When payday lenders go bust you can still submit claims to the company’s administrator, although it is less likely you will receive a refund as you’ll just be one in a long line of people owed cash. Also check for complaints deadlines as some administators, such as those for Wonga, have imposed deadlines.
Its loans are known as “guarantor loans”, which is when a friend or family member guarantees that they’ll stump up the cash if the borrower falls behind on repayments.
Here’s what’s happening at Amigo and what it means for new and existing borrowers.
Richmond Group, which owns both the largest and controlling stake of the Amigo Loans business at 61 per cent, has today put its part of the business up for sale as well as launched a review of how the lender is run.
This review will looks at Amigo’s strategy, operating model, and ownership, and examine whether the entire company or parts of the business should be sold.
At the time of writing, no offers for the company had been made, but Amigo has given interested parties a deadline of February 17, 2020 to get in touch.
It said it couldn’t give any timescales for what might happen after this as it depends on whether there’s any interest in buying the company.
What does this mean for my loan?
Existing borrowers should continue to repay their loans as normal, as Amigo says it’s business as usual for now.
It wouldn’t speculate on whether things could change under a new owner.
If the firm ends up going under that doesn’t necessarily mean your loan will be wiped as it’s likely you’ll continue to have to repay what you owe to any administrator that takes over.
What about new borrowers?
New borrowers can continue to take out loans with Amigo as usual.
Just think hard before you do – can you borrow more cheaply elsewhere first? For example, with a personal loan from a bank or a credit card.
Use eligibility checkers from the likes of MoneySavingExpert to check whether you’re likely to be accepted without it hurting your credit file.
If you’re struggling, speak to a free debt advice charity, such as Citizens Advice.