If your credit rating could use a little TLC, your available options are very likely to be limited as most high street lenders will not lend.
So to help you to not get burnt, we look at the three worst types of loan we have found in the UK – the ones to avoid!
Whilst many people would not automatically make this type of association, basically it is, and you are simply offering a personal possession as security if you do not pay the loan back.
So if you do not make your scheduled repayments, you will lose the item used.
Plus depending on the pawn shop you have used, borrowing this money could be very expensive, especially if you lose the item you pawned.
This industry has received a lot of press in the UK to the extremely high interest rates charged.
The Guardian reported in March 2013 one lender charging an interest rate of 16,734,509.4%!!!!!
So whilst this extremely high rate is unusual and most payday lenders charge between 2,000% and 5,000% APR, these charges are still extremely high and this is a very expensive form of borrowing.
Always approach this type of finance with extreme caution as they are very expensive. If you are prepared to look beyond the warnings, please make sure you know exactly how much the charges are before you borrow and make sure you pay you back on time, otherwise this is when the costs really start racking up.
A loan shark is someone who lends money without the appropriate license issued by the Financial Conduct Authority.
Typically they charge very high interest rates, do not issue paperwork, and will use illegal action such as intimidation and violence to collect the money they have lent.
AVOID THEM AT ALL COSTS!!!!
If you think a money lender is operating without the correct FCA authorisation you can speak to the Illegal Money Lending Hotline on 0300 555 2222.
Rates from 12.9% APR to 1625.5% APR. The minimum Loan Term is 1 month. The maximum Loan Term is 36 months.
Representative Example: £1,000 borrowed for 18 months. Repayment of 17 Months at £87.22 and final repayment of £87.70 The total amount repayable is £1570.44. Interest amounts to £570.44, an annual interest rate of 59.97%
IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY