Charity Describes Loan Industry As “Morally Bankrupt” December 30th, 2011
There are many different types of loan and credit agreement across the UK, with different costs and charges, depending on the type of loan and the status of the borrower. However, it is often the poorer families in the UK who often end up paying a much higher price for their loans and credit than better off individuals.
A new report from the charity Barnado’s has found that many poorer families across the country end up spending around 30 per cent of their weekly income on repaying their personal loans and other debts.
The charity has described the loan industry as a whole as “morally bankrupt” and has accused lenders of exploiting vulnerable borrowers with expensive forms of loans and other credit, which they are realistically unable to afford.
Due to the fact that many lower income families are unable to access more traditional forms of lending such as bank loans, or other cheap loan options, many are forced to take out expensive pay day loans, or use rent to own schemes from companies such as BrightHouse in order to purchase the things they require.
The charity found that someone could buy a fridge freezer on a rent to own scheme for which they would end up paying £1,074 over a three year loan term. However, the same item is on sale on the high street for just £430.
Barnado’s has called on the government to do more to help low income families gain access to better cheap loan products, so that they may avoid pay day loans and other expensive credit and force rent to own schemes to show a clearer overall price which someone would pay for goods.
Anne Marie Carrie of Barnado’s said “The most vulnerable families in society are being lured into an unaffordable debt trap by a morally bankrupt lending industry.”