Loans and Debt

Lenders will review your finances and agree upon an amount you can borrow on a credit card. This can be used to withdraw cash or buy goods; you must pay this back in an agreed amount each month or it could negatively affect your credit score.

An overdraft can be arranged through your bank allowing you to go overdrawn, meaning you are spending more money than you have available and therefore then owe the bank that money. However, some banks will charge you a fee per day you are in your overdraft.

This is a short term loan designed to keep you going until your next payday. However, these usually have a high APR and commonly create more debt as you are paying back a considerable amount more than you borrowed.

These are usually for smaller amounts of money in which the lender will come to your house to lend the money but will also come to your house to collect what is owed. Doorstep lenders also tend to have a high APR.

Loans sharks are illegal money lenders who do not have a licence to lend people money. Often people trust the lenders and view them as friends, however this is not the case and such agreements can commonly become an unsafe situation for the individual.

You can report a loan shark in confidence by calling 0300 555 2222.

A Credit Union operates similarly to a bank and offers safer, more affordable loans.

An example of this is Leeds Credit Union.

Your credit file will hold information on your previous lending agreements and re-payments. As well as details such as; your electoral roll information, public records, and the details of people you are financially connected to.

This is an option whereby you can buy goods with a ‘store credit loan’ and pay them back in instalments or at a later date. The goods may range from clothes and toys, to furniture and appliances. However, it is important to read any terms and conditions carefully, as some arrangements may have late fees and high interest rates, meaning that you could end up paying back a lot more than the value of the goods you originally purchased.