Debt Charities warn borrowers on bad loans

Several debt charities, such as Debt on Our Doorstep, are warning about an increase in bad loan deals for people who are struggling with their finances.

As the UK's banks and building societies start to reduce their lending and make their criteria tougher, it is becoming apparent that many people who need to borrow money are finding it increasingly difficult to find places willing to lend.

In actual fact the Financial Services Authority (FSA) have found that about 7 million people are unable to get money from usual mainstream resources as they would have done in the past. The past few months has experienced many changes, such as existing credit cards being cancelled, an increase in interest rates on loans and tighter rules on mortgage lending.

The only people that seem to be gaining from all this are doorstep lenders and loan sharks. Debt charities and helplines are worried about the increase in these type of loans, as many people are finding they have nowhere else to turn. Doorstep loans are small loans, but interest rates of 100% plus can create more problems for borrowers.

The competition in this industry is always high, but now a path seems to have been cleared for these unauthorised lenders who offer expensive loans, who unfortunately will get people borrowing from them as they have no other way of raising finance when it's needed.

Debt Consolidation Loans, Debt Management Plans and IVA's are all other options to help you get out of debt. If you need any advice on your financial problems, Credit Action are always on hand to help.