Consumer need to exercise forward thinking with loans

The UK has become a nation that is reliant on finance in some way or another, and this obsession with borrowing and finance, from personal loans and secured finance to credit cards and hire purchase, has put the UK in huge levels of consumer debt.

Yet, consumers still continue to apply for finance despite record levels of bad debt and consumers debt hitting worrying levels. Experts are now saying that consumers need to exercise far more cautions before they make applications to take out finance of any sort, particularly long term loans that are secured on assets such as homeowner loans and secured loans.

A spokesperson from the Debt Advice Bureau stated that he advises consumers to think carefully about what the future might bring before saddling themselves with a long term financial commitment that could result in the loss of their home if they are unable to keep up with repayments on it. He added that consumers should sit down and work out whether they can actually afford to make the repayments for a long period of time.

'You're the one that's using it so you've got to make sure that you know what you're getting into. And if you're happy with that and you're confident that you can repay it, then do so.'

He also added that many people took on large levels of secured debt based upon their current circumstances and on the assumption that their income would be rising over time, but failed to take into consideration the potential negative occurrences that could make the loan impossible to repay.

He said: 'If people made slightly more allowance for things going wrong, for the unforeseen happening, then they'd be better insulated, so when it does happen it doesn’t hurt so much."

Tom Smith
22.05.07

 

External Links:

• Payplan - a not for profit debt advice agency
• National Debtline - a charity helping visitors who are in debt