cheap loans News - Customers turn to high interest loans as credit dries up
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CUSTOMERS TURN TO HIGH INTEREST LOANS AS CREDIT DRIES UP
Article date: 12/11/2008 : 10:08:50
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With the banking crisis cutting off the flow of consumer credit, experts have warned that customers are increasingly turning to high interest forms of borrowing in order to get by.
Francis Walker, spokesperson for the debt relief charity Credit Action, said that as cheap loans are no longer available, the public is increasingly turning to payday loans or pawnbrokers for credit.
Ms Walker said the trend was worrying, especially for those on modest incomes because "the poorer you are, the harder it is to get credit".
She said that while a needy person turning to high interest forms of borrowing was understandable, it could have severe consequences.
"People have got to understand that it is very expensive and if they are doing it they must only do it as a one off", she added.
Credit Action statistics put the average household debt in the UK at £59,715 including mortgages.
But the charity advises those who turn to payday loans or pawnbrokers for their credit needs to be careful, as Ms Walker warns that interest on these loans can reach over 3,000 per cent.
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