Money talks

Is Your Loan Company Ripping You Off

Is Your Loan Company Ripping You Off?

The companies that loan people money then add on sky high interest rates might claim to be doing people a favour by offering them the chance to have instant cash.

Instead, they are crippling the poor with debt. So says the Competition Commission which will quickly and clearly point out that what these outfits are doing is plain wrong.

What these companies have become, the commission is likely to tell you, is sharks - predators which prey on the most vulnerable in society because they earn the least and have no other way of gaining credit.

It is a sad fact that time and time again these outfits are reportedly charging up to 1000% interests per year for loans. That’s what the Competition Commission is telling us, despite how unbelievable it might sound. Let us for a minute put this into context. The more reputable firms charge 177% and that figure in itself is unbelievably high.

The worst part is there are supposedly 2m Britons buying into these sorts of arrangements. This is for the sole reason that they have little money and the outfits who lend cash on your average high street would never dream of letting them through the front door.

But finally the commission is saying enough is enough and taking a stand. What it is doing is making it clear and publicly known that there is no way that interest rates of 177% let alone 1000% can be justified.

It is looking to force these rogue outfits to spell out how much the loan will cost one of its customers. The hope of doing this is that customer might just do a double take when they realise if they borrow Ј100 the pay back amount will be Ј200.

Next on the to do list when it comes to tackling rogue money lenders is threatening them with a maximum legal interest limit if they do not back off with the unfair tactics. What this means is that if they then go and rake up the interest rates to extremes, they will be committing a criminal offence.

There are about five main players in the UK who work the home credit industry – one of them has half of the market share – and there’s another 500 which have a smaller amount of the business.

Their customers? Usually single parents, who live in areas of high deprivation. Debt collectors turn up at their front door for the payments – usually once a week or fortnight.

You might be thinking to yourself that those who have little money are a high risk and that the debt collectors are within their rights to charge the high interest rates.

But rates as high as 1000%? Or even 177%? One could argue that nothing justifies rates that high.

One of the money lenders in the market, Provident Financial, says they offer credit cards with interest rates of 70%. But right from the start the customer knows exactly what they are getting into.

With the agreement comes the statement “customers are not being overcharged for their home credit loans, nor is the home credit sector making excessive profits.”

But take this back to the Competition Commission and ask them whether they agree with this statement and they’ll tell you they don’t agree.

What the Commission wants, and plans to get, is for rules to be in place to bring down the interest of these loans and force these ‘loan sharks’ to spell it out in full what is the cost – the real cost – of the loan. Right at the end when it’s all paid off so at least the customer knows what they are entering into.

New rules released by the commission are supposed to be due out in summer.

And when the new rules are out, the Competition Commission hopes that people will wake up to how much they are forking out to pay for this cash up front and they’ll start to shun these types of loan companies like the plague. And the only ones left standing are the ones prepared to play fair.

Let Your Dreams Fly With Adverse Credit Secured Loan

Let Your Dreams Fly With Adverse Credit Secured Loan

For people who may not understand what adverse credit is, it is a type of a profile of a person who took a loan but failed to make timely and prompt payments or did not make any repayments at all. The result of which is a poor credit score which depicts the financial credit worthiness of any individual. People who generally fall under the category of adverse credit history are the defaulters, in arrears, people who made late payments or people who have filed for bankruptcy.

The main problem with having an adverse credit history is that a loan requirement may come again, and with such a profile, any lender would have second thoughts about giving his money to the person with that profile. However, that can change now with adverse credit secured loan.

Adverse credit secured loan is a loan which is offered to people with poor or adverse credit history. The loan, as the name suggests, is a secured loan and requires the borrowers to offer collateral to the lender of the loan. The security can be any asset of the borrower which fits the bill, like it can be a car, business premise or a home

What the borrowers can expect with the adverse credit secured loan is the same that they would get of any other loan. This includes the services, interest rates and the option to choose their repayment time period as well. The only difference that the borrowers may notice will be in the interest rates which may be a little on the higher side, but that is to be expected as the lender will try to compensate for his risk of providing a loan to a person with adverse credit history. In turn, what the borrower will get is an opportunity where he can over turn his status of a person with adverse credit history by earning a credit score, which would be above 600. This would enable the borrower to earn better loan deals next time of loan borrowing.

Applying for the adverse credit secured loan is a little different as the borrower is required to provide a few other documents apart from the regular ones. These other documents relate to the credit score of a borrower which has to be presented in order for the loan to be sanctioned. If some one does not have the latest score they can get it calculated by any of the credit rating organizations of the UK. Once the document part is complete the borrower can apply for the loan to any lender he wants to and avail the loan for his purpose.