Surviving in today’s world can be a frustrating and stressful business and very few of us are immune from those stresses. I am sure that most of us will have been there at one time in our lives or another. We think we have everything organised – we have budgeted our income and expenditure so that everything is covered and then something unexpected happens: The boiler breaks down in the middle of winter, something goes wrong with the car or heaven forbid a member of our family is unwell and requires some special treatment, not provided by the NHS!
Surely our banks can help?
Well the obvious place to start would be to ask your bank for a short term overdraft to cover you for this unexpected event. Unfortunately, however, our high street banks are no longer in the business of providing such loans unless they have collateral from the borrower and even then it is a costly and time consuming process with no guarantee of success.
Perhaps approaching your mortgage company?
Sadly this is perhaps even more challenging. Nowadays banks and building societies are increasingly making it harder and harder to get a mortgage to begin with, let alone an extension or increase or a second charge mortgage. And anyway this route is not applicable to a great many people who do not have a mortgage to begin with. Even for those lucky enough to be in that position, once again the process is tortuous and lengthy – you can’t really wait three months in the middle of winter to get the boiler fixed!
What about the plethora of short term loan sites?
Well of course there are any number of short term loan sites out there that are advertised on the TV everyday which say they can help in these situations. But are these sites merely opportunistic, preying on the unfortunate? It is a sad fact that the majority of people in this country, when faced with an unexpected event, do not have a supportive bank or a mortgage to fall back on and so are left at the mercy of such sites
The theory is good but the reality is very different!
In theory the short term lending sites have spotted a gap in the market and again in theory they do provide a necessary service. Unfortunately the reality can be very different. The desperate consumer will go to these sites and assume that the list of lenders are ranked in order of their appropriateness to the borrower. But the truth is that in a lot of cases, ranking can take place according to the commission or kick back the site is being paid by the lender.
And what about the punitive and inequitable cost of these short term or pay day loans?
It is a sad fact that when we are desperate and have nowhere else to turn, these sites are maybe the only option left open to us. And it is for this reason that the cost of these loans is truly punitive and can often lead to a downward spiral for the borrower that leaves them in a far worse place than when they started.
So what is the answer to getting a fair loan?
It has become increasingly obvious that the established routes to money, through the banks and building societies, may not be fit for purpose when it comes to short term emergencies for people who quite possibly also have a checkered credit history! So the answer has to lie with the short term loan and pay day sites but they have to be properly regulated and policed so that they offer fair loans at fair interest rates that are ranked honestly and are targeted appropriately to the needs of the individual borrower. Only in this way can a fair market be achieved!
I am a serial entrepreneur who has spent much of his life in the financial sector and in doing so I have become very knowledgeable about the sector. This experience has enabled me to become the founder of the Campaign for Fair Finance™ and my current venture, Fairmoney.com.
In my career I have started several lending companies and indeed I was instrumental in founding the non-prime motor finance sector, allowing people to afford to purchase a car who might otherwise been unable to do so.
My experience within the finance, and more particularly lending space, has afforded me the opportunity to advise the Bank of England, The Law Commission and the Treasury on various aspects of asset finance policy. Indeed I am currently assisting the regulators and some leading parliamentary figures to reform the UK credit and lending industries to create a fairer and more transparent environment.
At the same time, I also advise several charities and social enterprises on their financial and media strategies and help a number of exciting businesses across a spectrum of sectors and industries.
My experience within this industry sector has allowed me to become a media pundit and commentator on many consumer and particularly consumer finance issues and to become an ethical advisor to the emerging crypto currency and blockchain markets.