People risk debt by 'missing loan payments'
Published On 22 June 2007
Nearly 250,000 people are missing repayments on personal loans every month, a new report suggests.Consumer website MoneyExpert found that rising interest rates have meant that 1,389,000 repayments on personal loans have been missed in the last six months, meaning that people risk getting into serious debt and considering options like IVAs.
Furthermore, the site revealed that the most recent interest rate increases may not have filtered through to households yet, so more loan repayments could be missed in the future.
Any more interest rate increases from the Bank of England would only add to the problem.
"This is yet another warning of real financial distress and a sign that finances are being stretched to the limit by recent interest rate rises," explained the website's chief executive, Sam Gardner.
"The concern has to be that people are missing repayments on unsecured loans because they believe there's not as much at stake as missing a mortgage repayment.
"Missing repayments is not a way to manage your finances. People doing that are risking damage to their credit rating and, potentially, court action. Burying your head in the sand is not the way to deal with financial problems."
In total, the website's research shows that three per cent of all loan repayments have been missed in the last six months - compared to two per cent in 2006.
