| RedSofa launches THINK campaign.
Property investment company RedSofa have launched their latest marketing campaign - THINK. This campaign has been designed to highlight the growing trend of homeowners taking out further debt in order to prevent themselves falling into arrears with their existing monthly financial commitments.
[UKPRwire, Sat Mar 17 2007] Taking out further debt, which is usually secured against their home, is not a solution which is recommended, as this can cause further problems, as homeowners struggle to afford the increased monthly payments. By increasing the debt, homeowners just increase their risk of defaulting, and ultimately are more exposed to potentially having their home repossessed.
Research from Moneysupermarket.com has revealed that 28% of UK consumers have consolidated their debt by taking out a personal loan, 8.5 million of the 13 million consumers who consolidated in this way actually continued to borrow further through either their overdraft or additional loans.
6 Million Brits Consolidating Their Loans
The preferred method of debt consolidation in the UK is where unsecured personal loans are combined into one loan with a lower monthly payment. While this is a positive move in the short term, it can be fiscally devastating over the long-term if done in the wrong way. Unsecured personal loans are the preferred method of consolidating loans. The interest rate is normally lower than interest being charged on credit cards and store cards. Research from uSwitch.com revealed that a number of Brits who consolidate their loans continue to use their credit cards and store cards to create further debt. The number of UK consumers who apply for personal loans that are higher than the amount they need to consolidate their loans are using the extra money, not for wealth generating, but to maintain a higher lifestyle.
Avoid interest rate 'roulette'
Consumers are being urged to take measures to ensure they are able to cope with any further rises in the Bank of England base rate.New research from Legal & General shows that in the last 30 years the bank's interest rate has increased 58 times, on each occasion putting homeowners and borrowers under pressure.The rising cost of borrowing makes expensive forms of debt, such as credit cards, an even less attractive personal finance option."Borrowers will be waiting to see if they are going to be in the red or the black in the base rate roulette next week," said Stephen Smith from Legal & General."Rates are still at a relatively low level compared to 70s and 80s, and many people would struggle with today's debts at yesterday's prices. Whilst the boom and bust has flattened out since the turn of the millennium, borrowers are still facing a probable hike in rates in the near future," he added.Consumers who are feeling the strain from the three successive rate rises – and who are worried about the likely prospect of further rises – can use a secured loan or homeowner loan to help cut their monthly outgoings.© Adfero Ltd .
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