Thrifty Loans

In these days of rising interest rates, rising fuel and energy prices and a consumer spending boom, many people are getting caught in the credit trap. They may get into difficulties, default on payments and when in need of more credit, they are refused. In such circumstances they may be tempted to find lenders who are not on the high street. It’s a risky business to ask rogue lenders of loan sharks.

These people are unlicensed and lend money illegally, without any form of regulation that governs the legal finance industry. The way they operate is to lend money to those who are in a vulnerable financial situation, but the interest they charge is way above the norm, and there is no protection for the borrower by any contract or terms and conditions.

It is estimated that maybe up to 7 million people have made use of loan sharks, simply because they are unable to find credit from anywhere else.

Incredibly, interest rates can be more than 100%, making these type of loans far and away the most expensive way to borrow money. A failure to make repayments can result in intimidation or threats of violence to get the money.

The Government is aware of the problem and is working on making affordable credit and facilities for saving available to everyone. It has also asked consumers who have fallen foul of these illegal lenders to give information to the police or the Department of Trade & Industry.

If you are refused credit on the high street, it is worth looking for your local financial co-operative Credit Union to see if you can join. These are owned and run by the members to pool savings in order to be able to offer loans to members at better interest rates. Each Credit Union has a common bond which links the members and determines who can join. It may be local people, workers for a single employer or similar. These “people’s banks” are growing popularity and can offer savings schemes, loans, directs debits and even mortgages.

Another option is to talk to your local Citizens Advice Bureau or a legal debt management company who can give you unbiased advice.

Related posts:

1. Why you should avoid loan sharks
2. Loan rates on the rise
3. MP fights against unscrupulous loan sharks
4. Northern Rock borrows from Bank Of England
5. How to make the best use of a bad credit loan