Money, Credit & Debt
- What is credit?
- Where is the catch?
- Loan Sharks
- Debt Advice
- Debt Management Companies
- Are you entitled to welfare payments that you are not claiming?
To put it simply, credit means 'buy now, pay later'. The idea behind credit is that you get the goods (or money, if it is a loan) that you want straight away and you pay for them in installments over a period of time.
Because credit is such an attractive and easy option, it can be really easy to get carried away and over-commit yourself. Don't forget that credit comes at a price. You will almost certainly have to pay interest on credit deals, so the goods will actually cost you more in the long run.
Sadly, there are many disreputable businesses who will lend you money, no questions asked, at a very high rate of interest. If you're desperate, this can often be a very tempting thing to do.
Typically a Loan Shark
- Won't have a consumer credit licence. These are required by law. Check here to see if a lender has a licence.
- Won't give you a written credit agreement. Written agreements are also required by law. They must be signed by borrower and the lender and must contain certain important information such as the rate of interest, the amount of each repayment and how many repayments must be made
- Will charge you a very high rate of interest
- Will be involved in other criminal behaviour
Examples of Loan Sharks include
- Local money lenders who prey on low income families and individuals who often take out small loans frequently, but end up being charged very high rates of interest.
- Car dealers who sell loans as part of their business but don't have a licence
- Employers who provide their employees with loans and/or advances on salaries or wages and require the employee to pay back the money with interest and/or in more than four payments.
If you fall in to debt and your repayments become more than you can afford you should get advice quickly. Sources of advice include;
- County Debtline on 08442 480 040 or by email at firstname.lastname@example.org.
- National Debtline on 0808 808 4000
- Citizens Advice consumer service on 08454040506
- Advice Guide a web based information resource from Citizens Advice
- MoneyAdviceService Web site has information and guidance from the Financial Services Authority
Many people who fall in to debt find that they are contacted by debt management companies, who offer to wipe out debt or to reduce the payments. Some will also offer advice on bankruptcy or other individual insolvency options.
It is important to remember that these companies are businesses and usually take a fee for negotiating a debt management plan on your behalf with lenders. Some charities and advice organisations such as your local citizens advice bureau may be able to offer you a similar service free of charge. Debt management companies and charities must have a consumer credit licence. For more information on debt management plans see here
Page Last Updated: 18 February 2013