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People who have been mis-sold loans can potentially recover some large sums from their lenders – and some Britons have received several hundreds or even thousands of pounds.

Some of the UK’s most well-known lenders including Amigo Loans and Provident have entered into redress schemes with the regulator, where they aim to offer ‘redresses’ or refunds to customers who were given loans that they could not afford.

This type of reclaiming emerged around two years ago, with Wonga.com giving around £500 million back to their customers, QuickQuid following suit with around £50 million and several other lenders continuing to refund customers including The Money Shop, Uncle Buck and PiggyBank.

But reclaiming back money from your lender is not always straightforward. There is a process involved and knowing the right approach can help you get the maximum refund. The lenders try to create obstacles to limit the amount you can reclaim, but having all the right information can help you recover a size-able amount.

Where do I apply for a refund?

You can apply through the FCA website, through the lender’s website directly or through a law firm/claims management company. The first two options are free and using a claims management firm will come with a fee or commission upon your claim being accepted (so this is not advised).

The lender may review your claim internally and provide a settlement (full or partial) or reject your claim. Through the FCA, they will make a decision and judge on your behalf and are more likely to act favourable.

How much can I claim from a mis-sold loan?

For personal and payday loans in the UK, the average reclaim is the full loan amount + interest paid + compensation of around 8%.

For a £1,000 payday loan over 12 months, the total amount you could receive as a refund is £1992.00 with 8% interest (£159) = £2,151

The potential refund is quite large and certainly worth applying for, since it is free to do so. This final amount may deduct any payments that you have made. So if you have paid off £300 previously, the total refund would be £1,851.

Am I eligible?

You are eligible for a loan refund if you struggled to repay your original loan and entered into arrears or an arrangement to pay with the lender. There are a lot of people looking for loans with poor credit and lenders often granted them, with limited checks.

The main reason that refunds are being issued is because customers should not have received them or have been eligible in the first place – maybe due to being unemployed, on benefits or already having a large amount of debt outstanding through payday or CCJ loans.

If you found that you were struggling to repay your loan and this resulted in paying late fees, falling into arrears or you required help from a family member or friend, this could make you eligible for a loan refund.

However, if you paid your loan on time or are using this process to get out of paying an outstanding loan, the lender may be stricter and less lenient when reviewing your case.

What information do I require?

The more information you can provide, the better. This includes the original loan agreement, loan dates, amount you have paid so far and any further useful information about your loan.

As mentioned, the lenders do not want to claim your loan unless they have to. The more information you can provide and any proof of struggling to repay will help your case.

Do lenders have refund deadlines?

Yes, to avoid claims going on forever, the lenders are putting deadlines into place. You can check the lender’s website for more information or speak to the FCA. But making sure you get your claim in early as possible will certainly help. Especially if the lenders slowly start to run out of funds, the earliest claims are likely to be paid in full and later claims are likely to receive partial refunds or low amounts.