So, You made it through Christmas

December 27th, 2007

So Christmas is over. Santa has been and gone, the mountains of food have disappeared and soon the decorations will be coming down again. The festivities may be over, however, the paying for them is definitely not. More people than ever took out short term loans in December this year and loan providers in the UK are expecting a large upsurge in demand in January as people try to consolidate their debts.

Neil Munroe, external affairs director of Equifax, said: ‘There’s a common trend that people do borrow short-term over Christmas and try to consolidate that in the New Year, so there’s always an increase in loan applications and mortgage applications. At the moment the general view is that if they are in the marginal area, so if their credit score is only marginally acceptable for lenders, they may find it more difficult.’

More difficult, of course, means more expensive. Although there is no doubt that attempts to clear those debts are the best possible move consumers can make. Sensible consolidation can lower the cost of borrowing which is a wise move if short term, high interest loans have been used to make it through December. Attempts to ignore the issue until later in the year will mean debts building up and quite possibly becoming insurmountable.

The present situation in the UK financial markets may make it difficult for those who have a less than acceptable credit score. The strict loan conditions set by mainstream lenders may almost drive out entirely the borrowers with an extremely bad credit rating. However, as I have been detailing on this blog for the past months there are always acceptable options to be explored before high interest niche lenders need be approached.

Independent debt counsellors are a particularly good idea at this time of year, especially if consumers feel that their debts are becoming unmanageable. They can also be used by those whose debts, although not out of control, could do with more efficient supervision. I shall repeat what I have said before that ‘loan sharks,’ the unofficial lenders that use very high rates, should never be used no matter what the circumstances.

There are always those who are willing to offer good advice after the event. But since it is good advice I will include it here. Susan Hannums, savings manager for AWD Chase de Vere said that interest rates on debt will be higher than the annual interest rates on people’s savings. Hannums said: ‘If you can afford to put a little bit aside like, say, for forward planning for Christmas, it doesn’t hurt – even if it’s just ten, twenty pounds. It all helps for next year, and obviously it will stop you from needing to get into debt next year.’

This entry was posted on Thursday, December 27th, 2007 at 8:33 am and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

So, You made it through Christmas

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