The majority of people in the UK will either go to their local bank, or use the services of a loan broker or financial adviser, when they are looking for a new personal loan. As well as helping them to find the best loan deal for their needs, this also allows them to ask questions and take professional advice on the loan before signing up for it.
But now, one secured loans broker has launched a new “self service” loan brand, whereby customers are able to input their details and see accurate interest rates and loan charges and make their own decision on which loan is the best for them.
Central Loans Ltd is the company which has launched the online service, via their website Selfservloans.co.uk, which will carry out a credit score on the customer, once they have input all their personal details and requirements and give them an accurate list of loan products for which they qualify.
Once the customer sees the list of available loan products, they are able to alter their requirements as necessary, depending on the loan rates and terms which they have been offered. Once they click the button to accept their loan quote, the relevant paperwork will be immediately posted out to them by Central Loans.
There are already several lenders whose loan products are available on the system and Central Loans are hoping that more will join soon, thereby increasing the choice for borrowers.
Ryan McGrath of Central Loans said “Before Selfserveloans.co.uk, our customers had to complete an application over the telephone and had the inconvenience of discussing their personal details with a stranger in order to find out which secured loans they qualified for. Now we can achieve the same result with no telephone calls and much less hassle for the customer.”
Increasing levels of personal debt on things like personal loans and credit cards, coupled with the slow down in the UK economy, has left many consumers falling behind with their loan repayments and needing to seek professional advice with regard to their debts.
This has led to a significant increase in the number of debt management companies who charge fees for helping borrowers sort out their personal loan debts through a debt management plan, despite the fact that free debt advice is available through charities such as the Citizens Advice Bureau (CAB) and the Consumer Credit Counselling Service (CCCS).
Although the majority of these firms provide a good and professional service to loan customers, there have been an increasing number of cases where borrowers have not received the advice they needed and even ended up in a worse situation with their loan debts than they were before they sought advice.
As a result of this, the Office of Fair Trading (OFT) has conducted an investigation into the practices of these debt management firms and uncovered several instances where bad, or misleading advice has been given to loan customers, or where excessive fees have been charged, cancelling out any benefit of taking out a debt management plan.
Following investigations, last September, the OFT issued warnings to 129 separate firms who advised consumers with regard to their personal loans and other debts
Over the course of the past twelve months, at least 62 debt management firms have had their consumer credit licences revoked by the OFT, due to the high level of fees charged, or incompetent or misleading advice.
A spokesman for the OFT said “We’ve taken the decision to cancel the licences of 62 debt advice firms because the companies had a lack of integrity and were unfit to run the business. We’ll continue to take tough enforcement action against companies that don’t follow the guidelines we lay out.”
For a few years now, someone who has had any form of bad credit, either currently or in the past, has found it almost impossible to be accepted for a loan, due to lenders reluctance to lend to anyone who has fallen into difficulty with a previous loan.
The secured loans packager, V Loans, has just announced that it now has access to a new bad credit loan deal, which is specifically designed to help those individuals who are struggling with their existing loans and other debts and may have loan arrears and bad credit.
The loans may also be used by individuals who want to take out a secured loan, or second charge loan, on a buy to let property which they own, for a maximum loan to value of 65 per cent. The funds may be used to repay loan arrears of up to six months, or an unlimited number of County Court Judgements (CCJ’s) or loan defaults.
The loan product is only available to those borrowers who use the services of an independent financial adviser or loan broker, who will be able to give them specific advice regarding their needs and the loan product itself.
The main restrictions on the loan product are a maximum loan to value of 65 per cent and a maximum loan amount of £30,000.
Marie Grundy of V loans said “Many people who are now in a position to pay a loan to alleviate their problems, have found that getting credit when they need it almost impossible.”
“The new loan product fills a critical gap in the market, particularly for those clients who have suffered as a direct result of the down turn and find most doors closed to them because they have experienced financial difficulties, often as a direct result of the effects of the recession.”
The current state of the economy in the UK has made banks and building societies, as well as borrowers extremely cautious about offering or taking out any new personal loans, with many people choosing to repay their existing loans early, rather than borrow more.
Despite this caution within the loans market, the number of new secured loans, or second charge loans, being taken out has increased over the course of the past twelve months, whilst unsecured loans and other areas of borrowing have all seen a decline.
The news comes from the loan and credit finance industry trade body, the Finance and Leasing Association (FLA), who have seen an increase of 8 per cent in the number of secured loans being offered to UK consumers by its members, over the course of the past twelve months to July this year.
Although secured loan numbers have seen a significant increase over the last year, other areas of lending have suffered. Spending on store cards has fallen by around 13 per cent and credit card and unsecured loan borrowing have both fallen by around 2 per cent over the same period. Consumer credit lending as a whole fell by 1 per cent.
Fiona Hoyle of the FLA said “Consumers are cautious about spending on the high street. When they do decide to borrow, they focus on essential expenditure like buying a car, carrying out home improvements, or a debt consolidation loan.”
“In considering a new regulatory regime for consumer credit, the Government needs to be careful to avoid shrinking the market further, for example by applying rules more suited to the deposits markets.”
With the Bank of England base rate of interest for loans and savings remaining at an all time low level of just 0.5 per cent and with very few signs of this rate increasing in the foreseeable future, many lenders are offering some particularly cheap loan deals on their fixed rate products at the moment.
Despite these low rate fixed loan deals on offer, it seems that those individuals who have a home owner loan secured on their property are still choosing to remain on their existing lenders standard variable rate loan deal, rather than look for a cheap loan deal on a fixed rate elsewhere.
The news comes from Unbiased.co.uk, who have found that 37 per cent of those borrowers with a home owner loan or mortgage are now paying a standard variable rate, up from 35 per cent at the beginning of the year.
However, the comparison site has warned that many of these borrowers could be missing out on some particularly cheap loan deals at the moment, as the average rate for a fixed rate loan deal has now fallen below 5 per cent, even for a five year fixed rate loan.
Unbiased have warned that many borrowers have been lulled into a false sense of security on their variable rate loan, due to particularly cheap loan rates at the moment, but when rates do eventually rise, they may miss out on the current range of good fixed rate deals, as they will be withdrawn by lenders.
Karen Barrett of Unbiased.co.uk said “Once rates begin to rise so will the cost of fixed rate mortgages, meaning that now could well be the perfect time to review their mortgage finances and move to guard against the potential of increased payments in the future.”