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Loans for people with bad credit

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Personal loans are suitable for people regardless of their credit rating and may be applied for online today. They are normally secured against your home and are thus at a reduced interest rate when compared with unsecured personal loans.

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Making matters worse: Shock scheme makes financial situations harder for those already with bad credit

Recessionary Britain is becoming an opportunity for profit for ruthless investors, as some mortgage brokers have been understood to be selling mortgages off their books and into the hands of business people looking to make a quick profit.

One mortgage broker revealed that sometimes two firms a month offer to buy a proportion of mortgages off his books. He spoke more about the system that was beginning to ruin the lives of people who were already struggling as it is. This is one of the difficulties faced when opting for loans for people with bad credit.

“I am approached by one or two firms a month offering to buy our personal loans. These funds are after £50 million to £200 million of loans for 50 per cent to 60 per cent less than the original cost of the debt. The objective is to get the borrower out of the property as soon as possible so it can be sold on for a profit.”

When a consumer’s mortgage is in the hands of such an investor, an increasing amount of pressure is applied to try and get the consumer to remortgage somewhere else, which can be a challenge as lenders tighten the net due to people experiencing bad credit ratings. Those who don’t remortgage usually have to put up with higher interest rates that are not regulated and some simply can’t afford to repay, with homes being repossessed once someone defaults.

Dominic Lindley, of consumer champion company Which? said that the transferral of a loan to such an investor could be dire: “Big banks that have a long-term relationship with a customer are going to be more interested in treating someone fairly than an investor who wants to maximise profits.”

There is solace for consumers though, in the form that they can make a complaint should this situation arise.

Government legislation has always indicated that it is necessary for a lender to have tried all other options before opting for a home repossession. It has always been referred to as a last resort when it comes to arrears.

Jon Pain of the FSA said this: “This is an area of the marketplace where we have particular problems. Firms cannot take advantage of a customer because they are in arrears, and the charges that are levied on customers must be a reflection of the administration costs.”

The FSA have revealed that fines are being issued to investors which are becoming involved in such illegitimate practices. Fines of more than £1 million are to be levied to offending companies in the next year alone.

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