Bad Credit Loans Help Ease Pressure on Consumers
As the global downturn continues to bite, cash strapped consumers are turning to bad credit loans to help ease the pain, explains Andy Hygate from http://www.loansbadcredit.org.uk.
London (PRWEB) June 26, 2009 -- As the global downturn continues to bite, cash strapped consumers are turning to bad credit loans to help ease the pain, explains Andy Hygate from http://www.loansbadcredit.org.uk.
With higher unemployment and lower wages, Brits are struggling just to pay their basic bills each month. Many of them borrowed emergency funds at the beginning of the recession, but then found that they were not able to make payments on those loans on time. Of course that only makes the matter worse. Once a payment is late or missed, the borrower's credit rating and FICO score is damaged and they lose the ability to borrow from any conventional bank or mortgage lender. But while this is happening, redundancies are growing at a frightening pace across the UK, adding more demands and stressors to consumers and homeowners throughout Britain. Although unemployment has been steadily rising, government intervention has not yet solved the problem and stemmed the tide of layoffs, company closings, bankruptcies, and repossessions.
As reported in the Telegraph, the Guardian, and other papers:
| | - 1,660 more jobs were suddenly made redundant at Lloyd's Banking Group as it continued to close branches and cut workers across the company and the nation. BAE Systems, one of Europe's largest companies, also plans to cut at least 500 job and close down three of its factories. Similar downsizing is underway at businesses throughout the UK.
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| | - The Office for National Statistics reports that the total number of people out of work rose more than 230,000 this year, and now exceeds 2.2 million. Many of the 600,000 young people who leave school, college or university this summer will not find any job openings waiting for them, either. That's because more than half of UK companies say they have no plans to hire them.
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| | - The Trades Union Congress (TUC) explains that most businesses are slow to rehire people, even when they see signs of economic hope. After the last recession it took a year and a half for employment to pick up, but the TUC said this recession is much worse than the 1990s recession.
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| | - British Airways is even asking its workers to work for free, in a new strategy that is calls a fight for survival. Although workers have already agreed to many pay cuts and other concessions, many are now showing up to work without pay - just to help preserve their jobs and the future of the airline.
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But as redundancies multiply, putting more pressure on consumers to borrow money to help them get through the recession, credit and cash loans are scarce - and getting harder to get because of rising interest rates. During the past few weeks lenders raised rates for mortgages, remortgages, credit cards, and auto and bank loans. More trouble seems to be on the way as interest rates have soared, both in the USA and the UK, due to unexpected fluctuations in the bond market. According to the Telegraph swap rates - which govern the cost of fixed-rate mortgages - rose dramatically in May and early June. If the trend continues, there will be higher costs associated with safe, predictable, fixed-rate mortgages. That will make monthly payments on those loans higher, which will automatically disqualify many homeowners and leave them without a traditional home loan or remortgage option.
In the meantime many borrowers have discovered an alternative, and are turning to loans for bad credit. These non-traditional lenders were relatively unknown before the recession, but because they specialise in loans made to people with damaged credit, they are quickly gaining popularity. They design bespoke loans that are more favorable toward borrowers with poor credit or a low credit score. Bad credit loans are in big demand now because the economic outlook is not getting any better.
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