It can be tough enough for someone to be accepted for a personal loan in the current economic conditions in the UK, as lenders restrict their loan criteria and are very way of who they are prepared to offer loans to.

Even a potential borrower with a good credit history can struggle to find a good cheap loan deal at the moment, but for many individuals who require credit, but have a bad credit history through previous loan arrears and defaults, for example, it may seem impossible to get the loan they need and many don’t even bother applying for a loan in the first place.

But one or two specialist loan companies are now starting to return to the market and offer secured loans on a bad credit loan basis.
One such company is First European, who have just completed the largest secured loan in their history, via the loan broker Loans Warehouse.

Although the secured loan was only for a total amount of £33,000, Loans Warehouse are claiming this amount as a significant step in the bad credit loans market, given the current economic conditions in the UK and the reluctance of traditional lenders to offer loans to even credit worthy borrowers.

The loans are available from £5,000 to 30,000 and will allow unlimited home owner loan arrears, along with ignoring any County Court Judgements (CCJ’s) or loan defaults in the past. The bad credit loans are available to employed and self employed individuals up to a loan to value of 65 per cent.

Loans Warehouse has been dealing with First European for around 19 months now and in that time, they have completed more than 100 bad credit loans for borrowers, for a total value of almost £2 million.

Across the UK as a whole, the personal debt situation on unsecured loans and credit cards I steadily getting worse, as people continue to borrow and take out loans to help fund their lifestyle, in many cases, simply out of necessity.

However, a new report has highlighted that the situation in the London area is far worse than in any other area of the country, with some individuals living in the capital facing some of the most complex debt problems with their personal loans and other unsecured debts.

The news comes from the debt charity the Consumer Credit Counselling Service (CCCS), who have reported that he average person in the capital who approaches them for help has unsecured loan and credit card debts of around £17,031, significantly higher than in other areas of the UK and around 42 per cent of those with debts were faced with monthly loan repayments of more than half their regular income.

The figures from the CCCS show that across the UK as a whole, people who approach the charity have an average of £44 surplus income per month, whereas in London tis average figure is a shortfall in income of £47 per month.

One in eight Londoners who approach the CCCS are already behind with their rent of home owner loan, with some of the highest levels of loan arrears in the country.

Delroy Corinaldi of the CCCS said “When it comes to financial difficulty, London is a divided city, with even neighbouring boroughs having highly varied and complex personal loan debt problems.”

“We are extremely concerned that the financial squeeze and high cost of living in the capital is making it increasingly difficult to repay existing loan debts. Hundreds of thousands of households may be about o fall, or may have already fallen, into difficulty as a result.”

The insolvency service in the UK has recently released its quarterly figures to give a snap shot of the personal loan and credit card debt situation amongst consumers in the UK and although there has been an overall decline in the number of people declaring themselves insolvent in one form or another, there has been a shift in the type of insolvency.

The overall figures have revealed that here has been a slight decline in the level of bad loan debts which have become unmanageable for individuals, a the overall level of insolvencies fell by around 4.7 per cent up to the tax year end this year, compared with the position twelve months ago.

However, there has been a significant increase in the number of Debt Relief Orders (DRO’s) and Individual Voluntary Arrangements (IVA’s) over this same period, with an increase of 16.3 per cent and 8.1 per cent respectively.

DRO’s and IVA’s are both designed to help people avoid being declared bankrupt and are the last stop before this particularly serious option for getting out of loan debt. However, they are both still extremely serious forms of loan debt management and have a huge impact on an individual’s credit rating and ability to get a loan in the future.

Kevin Still of Atlantic Debt Management said “With the UK now in a double dip recession, rents rising, interest rates on home owner loans increasing and the cost of living continuing to climb, loan debts that were manageable in the past are likely to become more daunting and could easily spiral out of control.”

“It is crucial that those in loan debt seek help before their situation worsens and don’t become complacent where statistics outwardly indicate that the trend in personal insolvency is reducing.”

Recent figures for the UK economy have shown that Britain has now entered a recession for the second time, which is hitting many consumers hard just when they were beginning to think that their financial situation and loan debts were getting better.

New research from the insurance company Legal & General have shown that somewhere in the region of an extra 1.2 million people across the country are now struggling to stay on top of their loan repayments and other household bills on a monthly basis as a result of the downturn, with many missing loan repayments and building up loan arrears.

The increase in numbers has been calculated up to the end of April this year and this means that there are now around 3.3 million consumers in the UK who have more money going out in bills and loan repayments each month, than they have coming in in the form of regular income.

The survey found that only around four in ten households in the UK are in the position where they have some level of disposable income left over at the end of the month, thereby allowing them to build up some savings, or overpay on their personal loans and credit cards in order to reduce their overall debt levels.

The figures show that, for those who are seeing a shortfall between their income and expenditure, the average shortfall is around £74 per month, although many consumers are in a far worse position than this.

Those individuals who find themselves in this position should take action before it is too late and they have high levels of loan arrears. Firstly they should contact their loan providers and other creditors to see if they can offer any alternative repayment plans to restructure their loan.

A debt consolidation loan could be a possible solution to reduce monthly outgoings, as well as shopping around for the best deals on other household bills, such as utilities and insurance products.

Although many individuals across the UK are still facing financial difficulty with their personal loans, credit cards and other debts, there was a slight drop in the number of people entering into an insolvency agreement over the course of the first three months of this year.

The news comes from the credit reference agency Experian, who say that their latest figures show that there were 4.7 per cent fewer insolvencies through bad loan debts in the UK during the first three months of the year, compared with the same period twelve months earlier.

The best improvement in the figures was amongst young professional people and those who have bought a house recently. However, there was an increase in bad loan debs and insolvencies amongst wealthier individual and retired people with a reasonable pension income, where bad loan debs and insolvencies increased by 25 per cent, compared with the same period last year, although these groups only accounted for 2.70 per cent and 3.35 per cent respectively of bad loan debts overall.

The largest group for insolvencies and bad loan debts is still those individuals who are dependent on state benefits, with many ex council house tenants who previously took a loan out to buy their council house, now facing insolvency proceedings through their bad loan debts.

This sector accounts for around 9.26 per cent of the overall population, however insolvencies and bad loan debts in the same sector account for 14.6 per cent of the national total and has seen an increase of 23 per cent this year, above the same time twelve months ago.

Simon Waller of Experian said “By using data and analytics to identify the specific needs and characteristics of customers, lenders can better identify those that are genuinely struggling with their household bills and loan and credit commitments so they can treat them sensitively and according to their individual circumstances.”