Barbara Keeley MP

LABOUR MEMBER OF PARLIAMENT FOR WORSLEY AND ECCLES SOUTH

Barbara speaks out on the advertising of secured loans

news71Barbara is co-sponsoring a Commons Motion expressing concern at the way that banks advertise their secured loans as a way of paying off other debts.

The commons motion criticises those banks and finance companies that use celebrities to advertise secured loans on television and in newspapers.

The loans are targeted at people struggling to pay off a range of existing debts, such as credit cards, store cards or car finance. Under such an arrangement, the borrowers’ existing debts are converted into a single loan, with a single repayment each month.

Although this can seem attractive at the beginning, borrowers can end up paying significantly more in the long-run with these loans as they run for much longer terms. More importantly, the loans are secured against property, usually the borrower’s home. There is a real risk of the borrower losing their home if they cannot keep up the repayments.

Barbara believes that people should think carefully and get advice before taking out such a loan. Anyone who finds themselves unable to pay off debts should always seek advice from an agency such as Citizens Advice Bureau before taking on another loan. They can also contact the companies to whom the money is owed to see if they can come to an arrangement to reduce repayments.

Barbara said:

“I am keen to ensure that people are not led into thinking that by taking out a secured loan which covers all their debts they are getting a good deal, when in fact it could turn out that they are paying much more in interest over the period of the loan”

“If you default on a loan which is secured on your home you are at risk of losing your home, so these loans are much riskier than the store cards, credit cards and car loans they replace.”

“MPs who support the Commons motion are asking lenders to think very carefully before marketing these loans in a way that makes them seem attractive, but without informing potential borrowers either of the risks of the loan or of alternatives which could be cheaper.”

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