Those Struggling With Loans Should Not Add To Their Debt July 29th, 2011
Personal debt in the UK is a growing problem and many individuals are struggling to stay on top of their personal loan and credit card repayments, particularly when they are faced with high inflation and rapid increases in their monthly food and fuel bills.
The Office for Budget Responsibility (OBR) has predicted that the level of personal unsecured loan and credit card debt is likely to increase significantly over the course of the next couple of years or so, as many people take on additional loans and use their credit cards on a regular basis to pay for everyday items and bills.
Many people who are already finding difficulties in paying their loans and other debts are not able to make it through to their next pay day with just their salary alone and a growing number of people are taking out personal loans and in some cases, expensive doorstep loans or pay day loans in order to simply pay their outstanding bills.
This is clearly the worst thing to do if someone is already unable to manage their existing loan repayments, as the repayments on their new loan will only add to their monthly debt repayment burden.
By taking on additional loans and debt, particularly on high interest loans, borrowers are setting themselves on track for a down hill spiral of debt, which is likely to end in loan arrears, defaults and a damaged credit rating.
A debt consolidation loan can be an extremely useful tool for those with multiple debts, as a good cheap loan deal can often save a small fortune in interest payments over a term, as well as increasing monthly disposable income for the borrower.
However, someone taking on a debt consolidation loan must remember that their debt has only been transferred to a cheaper option and they should not take any additional loans on, or run up their credit card bills again.