May 28, 2008
Personal loans issued without proper financial checks
Recent research has shown that financial institutions have handed out up to £20 billion worth of loans without ensuring that consumers have sufficient income to keep up with repayments. It is estimated that over 60% of unsecured loans were issued without the correct checks being in place.
In effect, this means that lenders records do not accurately reflect the financial details of their borrowers. Although many lenders write-off a significant number of personal loans, this type of relaxed approach to issuing financial products can only lead to a rise in the number of people defaulting on their payments and being pursued by credit agencies as the economic downturn shows no sign of abating.
Industry analysts have criticized this type of practice within the financial sector. The credit crunch is currently affecting large swathes of the UK’s population and some financial agencies are failing to impose the correct measures to control the flow of unsecured loans. This does nothing to assist consumers as borrowers will only experience the short-term benefits of obtaining a loan that ,ultimately,they cannot afford.