What seems to be an inexorable rise in the number of short term loans or short term loans companies coming into operation shows no sign of levelling off, despite the noises that have been heard recently which indicate a hardening of official regulation against these services.
According to Steve Rees, who is the managing director of Vincent Bond and Co. the number of people resorting to using instant cash loans services at present is at least three times the number before the financial crisis hit in 2006 according to research carried out by his company in a recent survey.
He says that too many people who get into debt seem to try and solve their problems by taking on more debt far too quickly rather than searching for another way out. He said further that taking out short term loans under the present high interest rates for too long would be “fraught with problems”.
He said that the term “loan shark” was well deserved and served to warn people of what could happen if they were unable to repay their instant cash loan in time. “The shark’s teeth would bite down hard”, he said and the long term effects on the borrower would extend further than just affecting one’s credit rating.
Research has shown that a large majority of those in serious debt have incurred it during the last few years.
The most effective solution, it appears, to serious debt problems was bankruptcy. Over 90% of those people who had been surveyed said that it was an effective end to their debt problem. IVA’s and DMP’s were also considered very useful ways of solving debt problems. The survey showed that the majority of people who tried to solve their debt problems by themselves, usually by applying to one or more short term loans companies for a series of short tem loans, suffered the worst.
Rees said that declaring bankruptcy should be a last resort for most people as getting a bank account afterwards would be quite difficult and one’s credit rating would be seriously dented for at least five or six years. He said that it was better to pay a debt consultant to help manage debt or, if that can be done, seek out a free debt consultant.