Some months have gone by since the UK exited the recession. At present, the economy is managing the after-effect, and the new coalition government is attempting this by introducing severe austerity measures. These include cuts in public spending and a rise in the VAT rate. But is the country getting any better at coping with money?
According to recent surveys, regular British consumers are becoming more deft at repaying their outstanding debts, yet this doesn’t automatically convey that they aren’t accumulating new ones. Saving has increased, so obviously there is a pattern which shows that individuals are behaving carefully about the sums of spending they undertake. But a compendium could simply attest to an overall picture for the whole country. In fact, private debt is still very high and there are lots of people who experience a daily struggle with money.
On a frequent basis, there are fresh cautions about shady lenders like loan sharks, which sell criminal pay day loans to people who are desperate for money. Loan sharks are not officially registered as lenders, and usually demand extortionate rates, which the borrower could never repay. When the victim finishes in further debt with the loan, the loan shark will either hand out more money at even higher rates or introduce violence to demand settlement. At no time is it worthwhile going to a loan shark as the situation is likely to end in tears. Yet what about other non-bank loans available nowadays? What exactly is possible and which products are secure?
There are masses of worthy loan products on the British loan market nowadays. These include payday loans or wage advance, logbook loans, guarantor loans and other types of specialist loans. They are not usually offered by commercial banks but are often found on the internet or in television adverts. Cash advance loans are on offer to individuals who do not have an ideal credit rating, or who might have been rejected for a lending product from a traditional bank.
So even if an individual has CCJs or doen’t earn an income, they will in most cases be accepted by payday loans lenders. Because the borrower carries a larger risk factor to the payday loan provider, the rates on pay day loans are generally a little higher compared with other loans. This is because the borrower is more than likely to experience some problems to repay the loan, based on their past performance with credit products. By bringing in a slightly bigger interest rate, the lender is dealing with the additional risk factor. On the other hand, payday loan providers are (in the majority of cases) fully legal lenders and will not resort to any of the strategies used by loan sharks. Of course, it is great news to someone who is short of cash, that they may borrow up to 1,000 pounds and receive the money fast. But if they are already in a lot of debt, then it may be careless to take more debts.