Vincent & Bond reflect on the rise and rise of the instant cash loan company, what’s caused the necessity for people to seek financing along this avenue, what can be done to stem the tide and ponder if there’ll ever be a time when the UK public will be able to dispense with the no credit check loan culture.
Steve Rees, the managing director of the debt management specialists, explained in a recent interview how the number of individuals seeking short term loans has risen dramatically since the global economy started to nosedive in 2009. For those who are experiencing financial difficulties, seeking short term loans can sometimes seem like the only option available to them.
People who turn to online loans often see them as a last resort as they have been refused credit on the high street and elsewhere and, although nothing like a loan-shark agreement as Rees alludes, he correctly points out that short term loans are not a solution for long term debt resolution.
The interview itself was in conjunction with a recent report that suggests record numbers will be flocking to the Internet over the next six months to help secure a quick cash advance to tide them over until the next payday. As a comparison, people in the UK took out 1.2M loans of this nature in 2009. The results of recent research suggests that 3.5M will do the same in the first half of this year.
Dealing with your finances can be a headache for some people, in as much as facing up to the fact that they’ve got a cash flow problem is an admission many of the UK’s proud individuals do not want to make in the first instance. However, if used correctly, short term loans can get you out of a tight spot when most urgently needed. It is the people who become reliant upon the service and end up spiralling into debt, some times through no fault of their own but more often through bad debt management, that are the cause of concern for industry watchdogs. However, any sort of finance can leave a nasty taste in your mouth if you find that you are suddenly out of work or overtime (remember that?) is cut, not just short term loans.
Unlike IVAs and DMPs, short term loans can actually have a positive effect on your credit rating. Once you have taken out one of the former two options, you have more or less burnt your bridges as far as securing any type of credit in the future goes. If you’re yet to get your foot on the property ladder, that is one ‘credit scar’ you could do without.