Christmas could plunge some into debt
Christmas could plunge some into debt
Wednesday 10th December 2008
According to price comparison site uSwitch.com, the costly festive period is prime time for companies offering pay-day loans - which when repaid quickly can be a godsend but when left unpaid can lead to a swell of debt.
According to the uSwitch research, taking out a £750 pay-day loan in December and deferring payments for just five months could lead to a total repayment of £1687.50 - a massive two and a quarter times what was originally borrowed.
Personal finance manager Louise Bond works for uSwitch and warned that while a pay-day loan may be the answer for some, those who find themselves behind on payments may have to seek the services of a debt management company.
"Both the APR and the amount of interest charged by pay-day loan providers is extortionate however you cut it," she explained.
"As with all loans the problems occur when people cannot meet the monthly repayments and, in some cases, end up taking a second loan from another provider to repay the debt.
"Some companies will allow consumers to defer repayment for several months which, although it's better than selling the debt onto a third party, it can rack up a phenomenal amount of interest."
According to Debt Nation the average UK adult owes £4,144 in unsecured debt while 2.5 million adults have unsecured debts of £10,000 or more.
News article brought to you by SimpleIVA – UK IVA specialists.
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