Beware secured loan

Border_collie_3

Hello all,

I've only just joined MSE, so am a complete newbie.

In a nutshell, I'm posting on this site to issue a warning to anyone with a poor credit rating who is considering taking out a loan.

I recently applied to my bank for a smallish loan (£7,500) to consolidate credit card debts (I know, I know, sigh!).

After being turned down by my own bank, I was referred to FF (I won't post the actual name as I'm not entirely sure of forum rules/etiquette). Well, what can I say.

They tried the hard sell on me, wanting me to agree to a much higher loan (£14,000) over a much longer period (13 years). Worst of all, the loan would be secured against my property AND would have a variable interest rate of 17.8%.

I was told, quite aggressively, that because I am self-employed and have a few outstanding debts, lenders wouldn't be willing to offer me a small unsecured loan and that this was "THE ONLY PRODUCT AVAILABLE TO YOU. MANY PEOPLE HAVE TAKEN OUT THIS TYPE OF LOAN."

I felt extremely pressured by the aggressive tone of the "consultants". They didn't seem to listen to me, and spoke very fast. They also mumbled, making it almost impossible to understand them.

Last but not least, I am surprised that my own bank, which refers to itself as an "ethical bank", would recommend these people.

Unless you're absolutely desperate for cash, I wouldn't recommend a secured loan. It's a nightmare waiting to happen.

I've since been able to get an "agreement in principle" for an unsecured fixed loan over 2 years. The faster debts are repaid, the better - I hope 2 years isn't too long...but at least it's not 13 years.

Thanks for reading and for bearing with me :-)

Border collie

pvt

17.8% is a ridiculous rate for a secured loan.

Apples2

Accepted in principle is a long way from accepted.

Good dodge on the horrific secured route though.

poppasmurf_bewdley

pvt wrote: »

17.8% is a ridiculous rate for a secured loan.

But variable makes it even worse.

And over 13 years makes it .....

Border_collie_3

....almost criminal ;-)

This is basically a warning about secured loans and the companies that try to push them (aggressively).

antrobus

pvt wrote: »

17.8% is a ridiculous rate for a secured loan.

Depends on the borrower and what credit risk you think they represent.

JuicyJesus

antrobus wrote: »

Depends on the borrower and what credit risk you think they represent.

If you're even considering a secured loan you are probably at the stage where it's either one of them or Wonga.

pvt

antrobus wrote: »

Depends on the borrower and what credit risk you think they represent.

Not if the loan is secured on land with sufficient equity to back it up. Unless it's a 2nd or 3rd mortgage with no equity visible above the precedent charges, then the risk is pretty much all with the borrower.

antrobus

pvt wrote: »

Not if the loan is secured on land with sufficient equity to back it up. Unless it's a 2nd or 3rd mortgage with no equity visible above the precedent charges, then the risk is pretty much all with the borrower.

So you think that companies that lend on a secured basis never incur bad debts?

pvt

antrobus wrote: »

So you think that companies that lend on a secured basis never incur bad debts?

Where did I say that?

There is far less risk of loss, and any loss is likely to be far lower, for a lender with a secured loan than with an unsecured one.

Mara69

I bet FF is Freedom Finance.

Personally, I think anyone with half a brain will see that the deal on the table is ridiculously bad. Just say a polite no thanks and hang up. No need to listen to the hard sell at all.