Loans should not rule your life
Borrowing demands great caution - never more so than when faced with the present easily obtainable loans. Avoid over committing.
Further interest rate increases are likely in the weeks ahead, and these should put something of a curb on the number of people looking for loans. The number paying off existing loans is however still very high and the level of debt which some borrowers have taken on gives cause for concern. They are the victims of the recent forceful marketing of low cost loans - they are however willing victims.
The situation is brought into sharp focus when a telephone call to your bank asking for a replacement debit card is dealt with and then a loan is offered. The time was when getting a loan from your bank meant a visit to the manager with a well rehearsed reason for needing the money. Now the wheel has turned full circle and it is the customers who are turning down the banks offers, although unfortunately not often enough.
That this situation cannot continue is self evident, and there is a small but growing possibility of interest rates climbing to heights which have been unheard of for a long time. This would put a lot of individuals and families into very difficult situations, with loan repayments becoming the major expenditure item in their budgets.
Such is the current situation that 20% in the age group from 18 to 29 are overdrawn permanently according to online account switching service uSwitch. They also report that 33% of these are using their overdraft to fund other debts. The historically prudent older folk who are well versed in knowing how to 'make ends meet' are not immune to this debt situation. Those over 60 with little chance of employment and who are thus caught in the trap of existing on small fixed incomes are the country's biggest debtors. They are visiting debt services in increasing numbers, and advisers NancollasGreer say that their older clients have an average debt of £52,000, and are in part pushed into this situation by their refusing to ask for help from family.
A major part in the relatively sudden availability of money was caused by the rocketing increases in house prices which almost overnight got everyone used to the idea of large loans, and made debt, if not desirable at least respectable. It did not take long for the banks to realise the potential in this new mindset, and loans at remarkably low interest rates suddenly became available; not merely available in fact, but sold aggressively. Television advertising seduced us with pictures of the easy life on low cost loans with easy repayments, and almost every post brought unsolicited offers of loans, credit cards and 'pay nothing for 12 months' offers.