Payday loans soar due to credit crunch

Payday loans have been at the centre of controversy for some time, and this is largely due to the high rate of interest charged by these lenders on an annual basis. However, some have argues that these lenders receive unnecessary bad press, because the interest charged is not that much providing the loan is paid back in time, and some officials argue that these loans can be very useful for those that desperately need short term financial help.

It has now been reported that the level of payday loans being taken out has soared partly as a result of the global credit crunch, which has left many people short of cash and in financial dire straits. In the space of four years the number of people taking out these payday loans is said to have quadrupled, as more and more people find themselves desperate for cash for a short term period.

The APRs that some of these payday lenders charge has caused a lot of concern over recent years, but for those that only borrow for a short period and repay the loan on time rather than rolling it over the cost of borrowing is not as bad as it sounds. Some charity officials have said that it is preferable for consumers to go to payday loan companies for short term loans to tide them over rather than unscrupulous loan sharks.

Whilst there have been calls for these loans to be banned officials from Consumer Focus said: ‘These products are controversial, but we don’t agree with calls for them to be banned. Outlawing payday loans could leave some borrowers vulnerable to illegal loan sharks. Instead we need sensible safeguards now to stop borrowers becoming dependent on this high cost credit and prevent even more stringent controls being needed in the future.’

Tags: borrowing, loan, credit, rate, help, concern, debt, Payday loan

Offspring claim financial independence whilst taking cash from parents

A recent study has found that there are many young adults in the UK who class themselves as being financially independent, yet they are still taking money from their parents to help fund a wide variety of things. Read more

Tags: financial independence, class, financial future, help, way, cash, Parent

How does your future retirement look?

Most of us look forward to a comfortable retirement when we eventually reach out golden years, and we all want to be able to spend time travelling and seeing the world, spend quality time with loved ones, and do the things that you simply cannot do when you have work related commitments. However, many of us tend not to bother thinking about how we will fund our retirement when we are in our twenties and thirties – after all, retirement seems such a long way off at that stage. But the years soon catch up with you, and many people may find that they are suddenly thundering towards retirement age with no real plan in place to fund a comfortable retirement. Read more

Tags: older people, pensions, retirement, Generations and Age Groups, help, ability, savings, long way

Parents can help children buy property

First-time buyers can receive financial help from their parents when paying for a property without any inheritance tax implications, one mortgage expert claimed.

Bestinvest said that if a child’s funding for purchasing a house is assisted by their parents, then they are “party” to the mortgage.

Because of this, parents would rather give them some money and ensure the mortgage is in the child’s name, stated the firm.

Peter O’Donovan, mortgage manager for Bestinvest, said there would be no inheritance tax implications if a property is in a child’s name.

“Even when the parent uses their income to assist [with mortgage payments], the mortgage might be in three names but the property will just be in the child’s name,” he added.

Research released by Abbey earlier this month found that first born children are more likely to receive financial help for a home purchase than their siblings.

Up to 17 per cent of first-borns are given money towards their first home compared with 12 per cent of second-born children.

Tags: mortgage expert, mortgage, help, siblings, personal finance, income

Numbers threatened by identity fraud rises

Direct Line has responded to the latest Home Office figures on identity theft by adding Identity Fraud Assistance to its home insurance policy.

The latest figures from the government indicate that identity fraud is the UK’s fastest growing crime and it currently costs the economy up to £1.7 billion per year.

Andrew Lowe, head of home insurance for Direct Line, said the numbers threatened has increased over the last eight years.

“Victims of identity fraud could encounter debt collectors, court actions and difficulties getting a mortgage, credit card or bank account if their credit report is not corrected,” he warned.

Meanwhile, figures from Cifas, the UK’s fraud prevention service, show that 136,966 incidents were reported in the period between January and September 2007, almost a ten per cent increase on the findings for the same period in 2006.

In some cases of identity fraud, without expert help and advice, it may take the victim as long as 400 hours and cost up to £8000 before things are put right.

Tags: Victims, help, service, fraud, identity theft

Five-figure debts as young homebuyers load up credit cards

Young homebuyers are piling on debts onto their credit cards as they struggle to pay their mortgages, a debt charity said yesterday.

Figures from the Consumer Credit Counselling Service (CCCS) show that those who have bought homes under the age of 25 have over two-thirds more debt than their counterparts who rent, quite separate from mortgage payments.

The charity’s quarterly Debt Dashboard study, which surveyed 73,000 of the CCCS’ client records, shows that people who use their helplines who rent owe on average £12,113.

This figure soars to £20,290 among homebuyers.

CCCS chairman Malcolm Hurlston said: “There is a danger in young people getting on the housing ladder before they are ready financially.

“Before taking out a mortgage the under 25s should make sure they can still afford to live and not rely on credit to plug the gaps.”

The charity also revealed that unsecured personal loans accounted for more than half of the total debt recorded by young people who have come to them for help.

Tags: help, soars, client, helplines, Social Issues, half, Unsecured Personal Loans, young homebuyers load