The Real Loan Sharks in The UK
I want you to imagine for a moment the potential impact of this following thought. Let’s say that this year you earn £1,000 a month in salary after tax. The problem is that after you have sat down and paid off the rent (or mortgage), bills (gas, water, electricity, Council Tax, TV licence, phone), shopping, clothes and other every day expenses, you discover that your outgoings, that is your expenses are £1500 a month.
Later that month you find that unexpected expenses need to paid, for example a parking fine or an unexpected death in the family. When your finances are so tight, how can you cope?
The obvious answer would be to go to a major high street bank. The rates seem reasonable, and you can trust them. Right?
Well, not quite. Two things that you need to be aware of:
1. Most major banks in the UK will decline your loan application if you have a poor credit rating. If you have a County Court Judgement (CCJ) or anything similar your chances of getting any finance through this method are highly unlikely.
2. Many banks or financial institutions will require you to make loan repayments by Direct Debit. This is fine in many cases, but what if by chance you don’t have enough cash in your bank account?
When you open a bank account, you enter into an agreement or contract with that bank, which includes certain charges that the bank may choose to apply. Under UK law, the bank is then allowed to charge the amount that they will lose in specific situations. In practise, this means that banks can charge you if you borrow money without their agreement. Examples of this include, exceeding your overdraft limit, or a returned cheque or Direct Debit; then the bank can charge for the associated cost for this process. Additionally, the bank is allowed to charge for administration costs, that is, letting you know that payments have been missed.
Banks are more than happy to talk about their special offers and latest deals, but very reluctant to disclose their administrative charges. Here’s what a bank can typically charge if you exceed your overdraft limit by £20.00:
A letter informing you of this fact – costing you £35.00.
An unauthorised overdraft fee – costing you approx. £28.00.
Interest on the unauthorised balance – costing you approx. 30 per cent APR.
As you can see, these costs soon spiral. Now, if the true cost of sending a computer generated letter with a franked stamp is approx. £2.50 to £5.00, then some researchers have estimated that banks make profits exceeding 417% above the actual cost of recovering the money that they are owed.
With this sort of profit margin, the bank charges are just plain unfair. This is why more and more consumers are complaining about what they see as nothing more than daylight robbery. Recent research has also shown that more than 9 million people in the UK, that’s 65 per cent of all British current bank account holders have disputed the charges on their accounts. And, more importantly 48% of them have received refunds.
Now who are the real loan sharks in the UK?
Avoid the hassle of banks and find a legal lender in the UK.