Tuesday, 26 September 2017

Amigo loans

This is a slightly tricky blog as it relates to someone I know.

I made the mistake (and it was a mistake) of guaranteeing an Amigo loan for someone I know. If you are asked to do this my advice, in my opinion, is DON'T DO IT!

The interest is stupid anyway, but that is not the issue.

I don't say this simply because you may have to repay some or all of their loan, but because of the hassle you suffer.

It should be simple, IMHO, in that you guarantee the payments, so if they do not pay then maybe a letter or an email to say I have to pay, charge me, and done.

But no - it is weeks of calls (sometimes several a day), letters (sometimes several a day) and emails hassling you. Why is this not simple?

The calls and letters and emails are not just that I have to pay the missed payment but they talk of court action and recovery and all manner of nasty things.

What is worse, they are calling my office - seriously! Whilst they say very little they do say they are calling from "Amigo" and their number, so clearly Amigo *LOANS* calling me. That is embarrassing to say the least.

IT IS NOT MY LOAN!!! I AM NOT REFUSING TO PAY!!!

I wonder how this is not a simple breach of Administration of Justice Act 1970 section 40.

After all, they have means and the contract in place to charge me, why not do that and be done with it? Why all the harassment? Why call my office?

I have emailed them :-

You have a contract in place with me to guarantee payments for XXXXXXXXX.
You have the means to collect those payments. I have the funds to cover
those collections.

However, if you continue to harass me, or if you EVER call my office
again I will have to consider you in breach of section 40 of The
Administration of Justice Act 1970 and report you to the POLICE for
consideration of CRIMINAL charges against you.

Is that clear?

P.S. The option of paying Amigo off and lending the money myself may well happen, so I checked! As well as owning me several hundred for missed payments, in 19 months of the loan it has gone down by £9.11 in total. Wow...

30 comments:

  1. I'm not entirely clear why they're continually hassling you? Are they asking you to do something to enable them to collect the overdue payment?

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    1. Quite, they have collected from be before (card or DD) so I don't understand the calls and emails and letters.

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  2. If you guaranteed the loan, why did you not just lend them the money at half the interest rate?

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  3. Does the agreement give them permission to dip in and take payments ad-hoc? I think usually the setup is that the guarantor is the last resort option and they need to go to court to enforce. You could make voluntary payments but they'd need permission each time - I imagine the contract specifies what they can do?

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    1. Yes and that would mean my spending more time going to check the contract. They have fines so before so clearly it must allow it.

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  4. Oh I am reading the terms, yes it's quite clear they can take the money ad-hoc and it's in addition to their right to enforce.
    https://www.amigoloans.co.uk/loans/terms#gt_card_payment_authority

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  5. Never heard of them so googled, seems they have previous https://www.consumeractiongroup.co.uk/forum/showthread.php?398265-Amigo-loans-hel

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  6. What's the advantage of guaranteeing someone's loan instead of just getting the loan yourself and handing the balance over to them?

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    Replies
    1. The extra fines and interest increase GDP?

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    2. "instead of just getting the loan yourself and handing the balance over to them?"

      The individual who really wants the money does not build up a positive (or negative!) credit history at the credit reference agencies.

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    3. Well, one would expect that (a) they are less likely to default on a company than a friend, and (b) they will be hassled by said company if they do. The issue is amigo hassle *ME* for no good reason, when I have not refused a payment collection. That is what breaks the whole system. And as for calling my office, that is just outrageous!

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    4. The logic is presumably that you are either a friend (hence the name) or family member - so hassling you is likely to apply peer pressure to the borrower, in a more effective way than Amigo can do directly?

      Making it easy for you to pay the overdue installment would make a lot of sense, but maybe they make more money by letting late fees build up a bit more: they'd rather get a late payment (with penalties) than a prompt one from you?

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  7. I have been noticing over the last few years that ad-hoc Direct Debit payments seem to go wrong in one way or another with increasing frequency. I wonder if this is what has happened here? Is the DD mandate still in place on your bank account?

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    1. As far as I know they are not even trying to collect from me, they are hassling *ME* about the fact that this other person has not paid. They are letting them go in to arrears rather than collecting from me as per their agreement, and then threatening court action because of the arrears. I don't believe I have refused or bound any payment request from them. It is just plain stupid and annoying and hassle.

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    2. Direct Debits remain valid for, IIRC, 13 months from last use. Even then, they could submit a new AUDDIS.

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    3. You misunderstand the business model.

      It's more profitable for them to charge fees for late payment than to take on-time payment from the guarantor. That messes up the guarantor's credit rating, but that's not their problem. Presumably their contract says they *can* take payment from the guarantor not they *must* take payment. Once the arrears get big enough then they'll presumably take a payment.

      They're more likely to get payment from their customer if they hassle both the customer and the guarantor well before the payment is due. This also provides good cover for them if payment is late - "we told you both that payment was due and you didn't pay, you get a late fee". At this point you're already a customer, and presumably the sort of people who take Amigo loans are unlikely to be able to pay off the loan early, so there's not much you can do about it.

      Why yes, I am cynical about this...

      And WARNING: RevK, if a payment is late it WILL damage YOUR credit rating for the next 2 years, just as if it was your loan. Because basically it is a joint loan.
      Heck, just guaranteeing the loan will link your credit report to theirs, which will probably damage your credit rating.

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    4. surely for a guarantors credit rating to be damaged they would first need to take the guarantor to court and for a ccj to be awarded against the guarantor AND the guarantor to then fail to pay the ccj within 30 days (a ccj paid within 30 days would not be registered)

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    5. I think they just file crap with the credit reference agencies, even if they have the means to collect from the guarantor and choose themselves not to, thereby creating the arrears themselves.

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  8. "Direct Debits remain valid for, IIRC, 13 months from last use. Even then, they could submit a new AUDDIS."

    Yes, I agree. And that is how it should work. But both these seem to go wrong increasingly frequently lately. Neither banks nor merchants have an understanding of the 13 month dormancy rule. Both claim that the other has deleted the DD mandate, whether within 13 months or not and whether true or not. And the merchants never understand how to re-submit the DD, blaming the customer for deleting the DD and making the customer do a whole new DD form again. I am seeing all this more and more.

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    1. Wow, did not realise that was an issue. We (A&A) certainly know how the DD rules work - there is a big book on the subject and it is all very clear. Never had a problem :-)

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    2. But AFAIK, nothing in the amigo letters says they have no longer got the means to collect payment from me!

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    3. I had a problem with Npower a few years ago where they stopped collecting the DD for a year (I didn't notice) and then sent my case to their debt collectors because I was massively in arrears (DD mandate was still valid, they just hadn't tried collecting it, and hadn't even sent me a bill).

      There were a whole bunch of other issues, such as them miscalculating the bill, etc. but they blamed the whole thing on me and refused to take any responsibility. The ombudsman told them to stop taking the piss and awarded me a big chunk of compensation. Seems pretty common though.

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  9. Wow, this Amigo loan company has definitely found the equivalent of a licence to print money. 50% interest on loans which they are almost certain to always recover (the guarantor is credit checked and has to be a home owner).

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    1. If I valued a friend enough to help them with a 50% interest loan, I would just have given them the money myself. It is silly to borrow at 50% interest. Of course the problem then becomes that friends strapped for cash probably won't pay the loan back. It's a very awkward situation all round.

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    2. Quite, I was hoping to avoid awkward. Sound like I get the worst of both options this way.

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  10. Loan guarantees are a con. Never do it.

    I guess in their usual customer base, the guarantors can't afford to pay, so they have a way to rip off 2 people rather than 1.

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  11. ianal but subsection 3a of section 40 may protect amigo loans from section 40 and move this under the scope of the consumer protection from unfair trading regulations 2008. The definition of commercial practice could be twisted to argue that collections part of the service. It would then be a case of if this was an aggressive commercial practice.

    from The Consumer Protection from Unfair Trading Regulations 2008
    “commercial practice” means any act, omission, course of conduct, representation or commercial communication (including advertising and marketing) by a trader, which is directly connected with the promotion, sale or supply of a product to or from consumers, whether occurring before, during or after a commercial transaction (if any) in relation to a product;

    “product” means any goods or service and includes immovable property, rights and obligations;

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  12. I can understand a quick phone call to inform you that the person you have guaranteed has defaulted and they will be taking the money from you, but that is just ridiculous.

    Did you provide them with the office number or did they look it up?

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    1. I don't think I would have ever given the office number!

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  13. https://www.citizensadvice.org.uk/debt-and-money/action-your-creditor-can-take/harassment-by-creditors/

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