Picture Financial: Secured lending and interest rate rises

The interest rate rise announced yesterday and PwC estimates that as much as a fifth of all UK household disposable income now goes to pay interest on borrowings and that levels of debt are rising faster than the growth in earnings.

Julia Dallimore, Marketing Director at Picture Financial comments: “These figures show that debt repayments are having a significant impact on UK households, this builds on our recent research highlighting that 15 million of the UK population (42 per cent) worry that they are not getting the best deal on interest rates and charges. With interest rates looking set to increase further, people who have high levels of existing credit are going to continue to feel the squeeze on their monthly disposable income.

“These growing levels of borrowing alongside the increasing interest rates mean that it’s more important than ever that people review their finances to make sure they are getting a good deal and that their borrowing is structured in the best way for them. By consolidating existing credit into a secured loan people can often reduce their monthly credit repayments by more than half.

“Borrowers should however, ensure that they use a responsible lender. A reputable company will take the time to get a comprehensive picture of an individuals’ overall financial situation and ascertain what level of borrowing is suitable for their needs. Any lender should also ensure that its customer fully understands the commitment they are taking on and that they are comfortable with the level of repayment each month. Although interest rates on secured loans are usually lower than on credit cards, if you choose to spread your repayments over a longer period you may end up paying more interest so it’s important that you fully understand the choices you are making.”