In the current financial climate, with the banks in turmoil and lending highly restricted, most are under the impressions that getting any form of finance with a bad credit rating is nigh on impossible. However, a recent report has suggested otherwise, claiming that some consumers with bad credit are actually being targeted by lenders who want to try and make them take out loans with extremely high rates of interest attached.
Under new rules and regulations, which came into force in January, lenders are required to ‘undertake proper and appropriate checks on the potential borrower’s creditworthiness and ability to repay the loan and to meet the terms of the agreement‘.
However, despite these requirements it seems that some lenders are still targeting bad credit consumers in the hope that they will take out high interest loans through desperation, simply because that it all they can get.
Some lenders are even advertising their no credit check loans on popular sites such as Facebook, which is used by many younger people. One such loan is Logbook Loans, which secured the loan against the car, and charges huge sums of interest.
Its advertisement stated: ‘If you’re looking for a loan with no credit check, you’ve come to the right place. That’s what makes Logbook Loans ideal for those with bad credit history, CCJs, arrears or defaults. Come to us and there’s no credit check to let you down - so you can get your hands on extra cash quickly and easily.’
An official from the credit reference agency, Equifax, said: ‘We are starting to see a vicious downward spiral. Now legitimate sub-prime lenders have been driven out of the market, borrowers are being forced to use less responsible subprime lenders.’
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