Electrician Ryan Gilkes borrowed £7.5k from the guarantor firm but after falling ill he was unable to keep up with repayments
DAD-of-one Ryan Gilkes claims he was "hounded" to repay an Amigo loan after going blind in one eye meant he was unable to work.
The 28-year-old from Oxford borrowed £7,500 in total from the UK's largest guarantor loan firm in 2016 but now owes £18,000 - more than double the original amount.
The Sun has been calling for firms to stop charging customers more than double what they borrow as part of our Stop The Credit Rip-Off campaign.
Amigo Loans charges almost 50 per cent APR.
Its loans are aimed at people with poor credit history who have to get a friend or family member to act as a guarantor, meaning they are liable for the repayments if the loan applicant can’t keep up.
“I was with my partner and our baby last November when I woke up one morning and couldn’t see out of my left eye.
“My girlfriend Laura noticed my pupil wasn’t reacting to light,” Ryan told The Sun.
“I was told I had a blood clot behind my eye - which led to a detached retina.
“Since November, I’ve had five operations and at least three months off work.”
It meant Ryan, an electrician, was unable to drive for two months and was - at times - unable to work and only receiving statutory sick pay, reducing his £1,600 a month wage to less than £400 a month.
Initially he borrowed £5,500 over five years from Amigo Loans in August 2016 to pay for a car and then he upped the amount to £7,500 in March last year to prepare for the arrival of the couple’s first child.
Over the five-year loan term, he knew he would repay almost £18,000.
Ryan's best friend Martin, a lorry driver from Banbury, acted as his guarantor.
Little did Martin know that within 18 months, he would become liable for the outstanding loan repayments after Ryan's blood cot left him unable to work for periods of time while he was in and out of hospital.
When Ryan became unable to afford the loan repayments, he informed Amigo about his eye problem and the temporary changes in his pay during his recovery, but was given just an extra week to pay his monthly £298 instalment.
And during that week, Amigo Loans admits he received automated messages asking for the money.
During the next few months, he would ask for extra time and was usually given a few days' grace each time but still the reminder messengers would come.
“Christmas last year was the worst,” Ryan said.
“I was struggling to come to terms with the fact at 28, I’d lost my sight in one eye, fearing another blood clot and worrying about how I was going to support my family.”
“They are constant and persistent. I am still having surgery and regular hospital visits and I worry I will never regain sight fully in my left eye.
“Having a family to support and rent to pay is hard enough when you are going through this, having Amigo constantly on my back makes the experience even more stressful.”
If customers are struggling with debts then they can ask lenders to freeze the interest and charges, as well as give you 30 days breathing space from letters and debts.
But guarantor loans mean that the other person is also liable for your debts.
“Amigo will not freeze my repayments or reduce them, and now they are constantly hounding Martin too,” Ryan said.
“Luckily, Martin has been very understanding and paid three months for me.”
WE never want you to pay more than double the amount you've borrowed - whether it's for a new sofa or a loan to help pay your bills.
That's why The Sun has launched a campaign calling for a cap on the total cost of rent-to-own loans and doorstep lending at double the original price or loan amount.
In a major victory for our campaign, the City watchdog, the Financial Conduct Authority, is now consulting on the move, that could come into effect as soon as April 2019.
Also planned is a crackdown on catalogue and store card debt.
The regulator is proposing the following changes:
Earlier this month, it emerged Amigo Loans is planning to float on the stock market, which could see its owners make hundreds of millions of pounds.
And they’ll have made the money out of the millions of people in the UK – like Ryan, who are forced to rely on “mid-cost” credit providers - which Amigo Loans is defined as - and high-cost firms because of their poor credit history.
Last month, the Financial Conduct Authority announced plans to place a cap on the interest rates charged by other types of credit companies whose charges can result in customers repaying more than double what they originally borrowed, such as BrightHouse and Perfect Home.
It also announced stricter rules for doorstep lenders.
The move follows similar action against payday lenders in 2015 when it placed a cap on the total cost of credit - a move which has helped halve the amount of customers with unmanageable debts.
But the FCA's current work in the high-cost credit market doesn't include guarantor loans.
HAVING large amounts of debt can be really worrying. Here are some tips from Citizens Advice on how you can take action.
Check your bank balance on a regular basis - knowing your spending patterns is the first step to managing your money.
Work out your budget - by writing down your income and taking away your essential bills such as food and transport.
If you have money left over, plan in advance what else you’ll spend or save. If you don’t, look at ways to cut your costs.
Pay off more than the minimum - If you’ve got credit card debts, aim to pay off more than the minimum amount each month to bring down your bill quicker.
Pay your most expensive credit card sooner - If you have more than one credit card and can’t pay the balance off in full each month, prioritise the most expensive card (the one with the highest interest rate).
Prioritise your debts - If you’ve got several debts and you can’t afford to pay them all it’s important to prioritise them.
Your rent, mortgage, council tax and energy bills should be paid first because the consequences can be more serious if you don't pay.
Get free advice - If you’re struggling to pay your debts month after month it’s important you get advice as soon as possible, before they build up even further.
Groups such as Citizens Advice and National Debtline offer free advice and can help you prioritise and negotiate with your creditors to offer you more affordable repayment plans.
The Financial Ombudsman Service says it received 210 complaints about guarantor loans in the 2016/17 financial year and upheld about a fifth of them. In the last six months of 2017, it received 80 new complaints about Amigo Loans and upheld almost a third of them.
The FCA does admit that it's a rapidly growing market which it will continue to monitor, but at the moment it isn't taking this any further.
Amigo claims it offered Ryan the option to speak to them about an affordable longer-term repayment strategy.
And because it charges interest daily, it says the sooner Ryan repays the loan, the cheaper the interest cost will be.
A spokesperson from Amigo Loans said: “We are sorry that Ryan is going through a difficult time and we are keen to help him.
“We have been flexible, and Ryan has been given six short-term payment plans since the beginning of this year, and we have been willing to explore a longer-term solution.
“Despite contacting Ryan so we can reassess his circumstances again, we are yet to have a response. We wish Ryan a good recovery.”
Amigo Loans has now agreed to cancel Ryan’s £190 arrears, as a gesture of goodwill as they admit they didn’t communicate clearly with him.
Ryan says he cannot afford to pay off his debt any time soon so will end up repaying almost £18k in total over the five-year term he initially agreed to if another repayment plan can't be agreed on.
He also says Amigo told him a budget plan proposed wasn’t realistic and that he is now getting help from a debt charity to arrange a long-term affordable repayment plan with Amigo Loans.
He has returned to work but still needs treatment on his eye.
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