Some months have gone by since the UK exited the recession. At present, the economy is managing the after-effect, and the Conservative party is trying to do this by enforcing a tough new line. These include plans for public spending cuts and an increase in taxes. But is Britain getting any better at dealing with debt?
According to recent surveys, ordinary UK households are becoming more deft at dealing with their old debts, yet this doesn’t automatically convey that they aren’t accumulating new ones. Saving has increased, so clearly there is a trend which shows that consumers are being more careful about the level of cash they hand out. However an analysis can only show an overall picture for the whole country. Truthfully, individual debt is still very high and there are many individuals who deal with a daily battle against debt.
On an almost daily basis, there are fresh warnings about dodgy loan providers like loan sharks, which lend illegal payday loans to people who are in dire need of money. Loan sharks are not registered as official lenders, and generally charge extremely high interest rates, which the victim wouldn’t manage to pay back. When the borrower finishes in further debt with the loan, the loan shark will either provide more cash at even higher rates or introduce threatening or violent behaviour to dictate settlement. It is never worth going to a loan shark as the situation is likely to end in tears. However what about alternative non-bank loans available these days? What precisely is on offer and which products are secure?
There are masses of worthy loan products on the UK borrowing marketplace nowadays. These include payday loans or wage advance, logbook loan, guarantor loans and many more independent credit products. They are not usually sold by commercial banks but are often found on the internet or in television adverts. Payday loans are on offer to households who do not hold a perfect credit score, or who could have been turned away for a credit product from a mainstream bank.
Therefore even if an individual has has a court appearance under their belt or doen’t earn an income, they will generally be taken on by payday loans lenders. As the borrower carries a larger risk factor to the payday loan provider, the rates on these types of loans are usually a bit more steep than on other loans. This is because the borrower is more than likely to find it difficult to settle the loan, considering their past experiences with lending products. By introducing a slightly bigger rate, the lender is managing the added risk level. On the other hand, payday loan lenders are (in the majority of cases) fully legal lenders and will not use any of the strategies employed by loan sharks. Certainly, it is great news to an individual who is in debt, that they can borrow up to 500 pounds and get the funds fast. Yet if they have lots of existing debts, then it may be careless to apply for more loans.
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