There has been a great deal of growing concern in recent months regarding the costs and interest charged by some lenders on their personal loan products, particularly when it comes to payday loan providers, who are renowned for charging extremely high rates for their short term unsecured loan products.

However, one pay day loan company has recently announced that they are introducing interest free payday loans for a limited period for new and existing customers.

Instant LoansDirect.com have launched a pay day loan product which allows anyone who earns more than £750 per month to takeout an interest free loan of up to £300 for a period of not more than eight days. The product was launched on the 23rd of November and will run for a period of five months.

For those who may be thinking that this loan offer is too good to be true, you could be right! If the loan is not repaid in full within the eight day period, the company will start charging interest on the loan at a rate of 50p per day for every £100 outstanding on the loan.

This works out at an Annualised Percentage Rate of 448.3 per cent. If someone a loan of £300 and had not repaid it a month later, they would have been charged £33 and their loan debt would be increasing by £1.50 every day.

Una Farrell of the Consumer Credit Counselling Service said the scheme could prove disastrous for borrowers who were looking for a cheap loan. She said “It’s just a way to snare people into paying sky high loan rates.”

“I am very concerned that many people are going to get a nasty shock and find themselves lumbered with huge loan debts after taking out what they though was cheap credit.”

Ever since the credit crunch hit the UK housing and home owner loan market a few years ago, one of the biggest sectors of the market to be affected has been that of first time buyers, with numbers or people applying for new loans dropping significantly.

The latest figures from the National Association of Estate Agents (NAEA) have revealed that the number of first time buyers buying a house and applying for a home owner loan has fallen to its lowest level for three years.

The figures show that only around 16 per cent of all the properties sold in the UK over the course of the last month were bought by first time buyers, compared with 22 per cent for the month of September.

One of the biggest hurdles facing potential first time buyers is that of being able to raise a large enough deposit to meet lenders strict lending criteria on maximum loan to values, as well as being accepted for a loan on affordability grounds.

Last week, the government announce plans to introduce a mortgage indemnity guarantee scheme for first time buyers, whereby a potential borrower will be able to borrow up to 95 per cent loan to value, but only on a new build property.

At the same time however, the current stamp duty holiday for first time buyers for properties valued up to £250,000 is also to finish at the end of March next year, thereby increasing the cost of buying a house and taking out a home owner loan.

A spokesman for the NAEA said “While mortgage lending has reportedly improved over the course of the year, these figures suggest that there is still a lending barrier facing those entering the housing market for the first time and that banks may require stronger incentives from the government to offer loans to first time buyers.”

The cost of living has been increasing dramatically in recent months, largely due to the high rate of inflation in the UK at the moment. This has been placing additional financial pressure on many families, who are already struggling to stay on top of their regular bills, personal loans and other commitments.

A new survey from the Skipton Building Society has found that the average family in the UK requires somewhere in the region of £25,000 a year, just to cover the cost of living on a day to day basis as well as their personal loan and home owner loan commitments.

The figure of £25,000 is based on the typical cost of rent or home owner loan and mortgage repayments, standard utility bills, insurance, food, mobile phone and travelling expenses. The figure does not include the cost of luxuries such as eating out or going on holiday.

The average family spends around £4,730 per year on home owner loan or mortgage repayments, £4,457 on food shopping and £3,131 per year on their personal loan and credit card repayments. Typical costs of owing a car comes to £3396 per year, utility bills cost £1,282 a year, the average council tax bill is £1,217 and TV and phone bills work out at £844.

To cover these costs, without dipping into the red, or taking out additional loans or credit to bridge the gap, someone needs to earn £32,702 per annum before tax and national insurance contributions, just to break even.

Andrew Barker of the Skipton said “It’s frightening how everything add up. The cost of living is astronomical and now more than ever people have to be on the ball with their expenditure and to keep on top of things.”

A large number of consumers in the UK are currently burdened with high level of personal debt on things like credit cards, store cards and personal loans, many of which are charging particularly high levels of interest on the balances, making it much harder to clear these debts.

In order to try and save costs, many individuals have taken advantage of one of the may interest free balance transfer credit card deals, or a cheap loan to consolidate their more expensive loan and card debts.

The only problem with this option, is that such credit card deals only tend to last for a relatively short period and many individuals will not have cleared their balance by the time the deal ends. Once this happens the reversionary interest rate on the loan or card often more than makes up for the previously cheap loan or card rate.

According to figures from Sainsbury’s Finance, one of the UK’s leading providers of cheap loan and credit card deals, somewhere in the region of three million people in the UK will look at taking out a new credit card or cheap loan within the next twelve months, due to the fact that their existing interest free card deal will have expired.

There are a wide range of interest free balance transfer credit cards available on the market at the moment, as well as some attractive cheap loan rates on debt consolidation loans, although the majority of these are only available to those with a good credit history.

If you are considering switching your credit card or looking for a new cheap loan, it is important to shop around for the best deal to suit your needs and also to ensure that you keep up to date with all the monthly repayments on your existing loan and credit card debts.

A stark warning has been issued by a leading loan debt charity to households in the UK, telling people to get themselves some kind of financial plan in place if they are to avoid serious personal loan and credit card debt over the course of the next twelve months.

The Consumer Credit Counselling Service (CCCS) has issued the warning following the publication of a report from the Institute of Financial Planning, which highlighted the fact that somewhere in the region of 25 per cent of the adult population of the UK are not planning and sticking to a financial budget on a monthly basis.

The survey proved what many people already know, that a large percentage the population are currently depending on credit cards and personal loans to help them with their regular household bills and expenses and bridge the gap between their income and expenditure.

Clearly, depending on loans and credit cards for everyday bills is not a good idea and such a situation is unsustainable in the long term. As a result of this, the CCCS has warned consumers that unless they set themselves a clear and workable budget and stick to it, many people are likely to be facing unmanageable loan and credit card debt in the coming twelve months.

In a recent Debt and household incomes report, 6.2 million households in the UK were identified as being “financially vulnerable” to serious personal loans and credit card debt, leading to loan arrears and bad credit.

Delroy Corianldi of the CCCS said “It’s never too late to put your finances in order. Setting a clear budget now is the best way to withstand the financial headwinds of 2012 and beyond- and will leave you in a far better position to cope with any difficulties you may face in the future.”