Tuesday 24th of November 2009
Low-income households in the UK are often tempted by doorstep lenders because of the perceived quick and easy access to much-needed cash, a report says.
Speaking to the BBC, Barry Richardson, who lives in the West Midlands on Wood End estate, Coventry, says obtaining money this way can be hard to resist.
However, rather than rely on such doorstep loans to help cover unsecured debts such as store card bills, low-income families with little disposable income to meet financial commitments may be best using an individual voluntary arrangement (IVA).
An IVA can freeze the interest rates of unsecured debt, meaning that households who have so far struggled to keep their heads above the water with interest repayments may find alternative sources of income - such as doorstep loans - are no longer necessary.
"Ultimately, taking money out of this estate in high-cost interest payments is just going to degenerate its economy, its local economy, further," asserts Damon Gibbons, from the think tank the Centre for Economic and Social Inclusion.
High-cost interest repayments can be tackled with an IVA - indeed, it is often the interest rates that cause the biggest problems for British borrowers.
By Ashley Littley
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- IVAs could help young Brits break the habit of credit cards
