Nearly a year has passed since Britain exited the recession. At present, the economy is dealing with the big clean-up, and the country’s new leader is attempting this by introducing severe austerity measures. These include slashes to public funds and a rise in the VAT rate. Yet is the UK improving at dealing with debt?
If the latest surveys are anything to go by, ordinary UK households are improving at dealing with their existing debts, but that does not mean that they aren’t gathering further debt. Saving has improved, so it goes to show there is a pattern which proves that individuals are more wary about the level of cash they hand out. But an analysis is only capable of displaying a general medium for an entire nation. Actually, private debt is still rather steep and there are masses of consumers who have a hard time with money every day.
On an almost daily basis, there are fresh cautions about dodgy loan providers like loan sharks, which sell criminal loans to households who are in dire need of money. Loan sharks are not legitimate loan providers, 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 using a loan shark because the situation will inevitably end badly. But what about other independent loans available nowadays? What exactly is on offer and which ones are safe to use?
There are plenty of acknowledged loans on the UK borrowing marketplace these days. These include bad credit 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 online or in TV commercials.
Pay day loans are available to people who do not hold a perfect credit score, or who could have been turned away for a lending product from a mainstream bank.
Therefore even if an individual has been bankrupt or doesn’t have regular work, they will generally be taken on by payday loans lenders. Because the loan taker carries a larger risk factor to the payday loan lender, the interest rates on payday loans are usually a bit more steep compared with other loans. This is due to the fact that the loan taker is more likely to have some difficulty to pay back the loan, taking into account their past experiences with loans. By introducing a slightly higher borrowing rate, the lender is managing the heightened risk level. On the other hand, payday loan provides are (in most cases) fully legal lenders and won’t use any of the strategies utilized by loan sharks. To be sure, it is great news to an individual who is short of cash, that they could take a loan of up to 1,000 pounds and get the money fast. But if they have lots of existing debts, then it might be unwise to borrow more money.