Debt warning for loans shoppers

Wed, 08 Mar 2006

Those looking to take out personal loans should avoid doorstep credit, a debt expert has warned.

Doorstep credit, or home credit as it is also called, is "clearly very, very bad", according to Stephen Rose of the Debt Advice Bureau.

This form of loan involves the provision of small cash amounts at your door. These loans are usually repaid in weekly instalments to debt collectors calling at the loan holder's home.

However, Mr Rose warns that this form of personal loan could charge exorbitant interest rates.

He notes that weekly interest payments of between two and 2.5 per cent could be required on these loans.

This could equate to more than 100 per cent annual percentage rate, Mr Rose points out.

"If you need credit start looking at the cheapest forms first," he advises.

Credit experts and debt advisers agree that those who would like to take out a personal loan need to shop around for the best deal before committing to credit.

They should also carefully study the small print of personal loan advertisements and agreements and not simply base their decision on the interest rate on offer.

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