The borrowing has become the integral part of common man’s life; everyone needs to borrow for one reason or other. The world’s best standard of private lending industry in the UK makes the way of easy living for the British households easier. The private lenders offer the variety of credits tailored to diverse needs but at different interest rate and terms and conditions. The borrower is more concerned for the cost and on the time cash help, while the lender is more concerned for the return of money and profit. The borrowing cost depends not only upon the offered interest rate but also upon other factors like how you use the borrowed money and how much you gain from the usage.
Govt. Welfare Reform Forces More People To Borrow:
Most of the problems start when the borrower fails in paying the monthly installment due to different circumstances. Some borrowers find it difficult paying their loan dues because of having other debts also while some face the problems because of medical emergency or job loss.
|Source: The Guardian|
The recent UK government’s welfare scheme designed to motivate the people for working instead of being economically inactive is leaving more households with mounting debts and pushing more youngsters to loan to shape up their plans. Two-thirds of households are heavily affected by the new govt.’s benefit cap. As per new policy, housing benefit is reduced for the families requiring more bedroom house. The cap for the unemployed is introduced £23,000 in London. SMI benefit has been closed since; instead, a SMI loan is introduced. Similarly, Personal Independence Payment (PIP) has been replaced by Disability Living Allowance (DLA). No doubt private borrowing is a great facility to manage the finance shortage because of any reason but it has advantages and disadvantages also.
Advantages of Loan:
- You can get loan for any need; may it be car buying for home buying. Short-term loans are available even for special celebrations like for marriage, Christmas, New Year, holiday tour and more. You will find online loan just for any requirement.
- Borrowing helps the person afford expensive purchases that he can’t do otherwise. Whatsoever you need to buy, you can buy right now without waiting for years to have sufficient amount in your saving account. Have you ever thought for a loan for home buying or improvement, car buying, international holiday tour etc?
- Most of loans are structured according to the repayment capability of borrowers; therefore, repaying in installments is easy. Even a loan for £1000 can be had for 36 months; just think that how much small will be the monthly installment. The facility to repay the debt gradually encourages the British to go their way with plans without worrying much for repayment.
- The loan amount is decided according to the borrower’s credibility, earning stability, usage plans, credit score etc. The most of loans put no limitations to usage; therefore, borrowing gives you unlimited freedom to grow with borrowed money. For example, if you want to start your business, business loan is available even for five years term.
Disadvantages of Loan:
- The long-term debt keeps you under psychological pressure of repaying the debt because the heavy late payment penalty makes the whole affair too costly.
- Even the single installment miss reflects at your credit report. If you fail to repay the debt, serious consequences like foreclosure and repossession of mortgaged property are likely to occur.
- Few lenders offer no fee- early repayment facility while some don’t offer it. Each loan pulls down the credit score even if you pay it on the time.
No doubt, loans are helpful, provided, these are used for the justified purpose. Loan is good if you can repay it on the time. Loan is good if you choose the genuine FCA registered lender. Loan is good, if you get it at the lowest possible interest rate and APR. You can’t get the required money help from the regular bank because of low credit score, as numbers of the youths and adults in the UK have, but the private direct lenders welcome you for unemployed loan, unsecured loan, payday loan, business loan, 24 months installment loan, same day secured loan etc.