Debt Management The Only Way Out Of Debt As Credit Crunch Bites

The cost of borrowing and number of rejected loans and credit applications is on the rise, while the number of companies willing to lend money is on the decline.   

Cost Of Borrowing Rises 
The cost of borrowing has risen in the past 3 month despite the Bank of England keeping the base rate steady at 5.75%. Credit card interest rates and fees have also seem an increase. The average interest rate on a 3 year, £5,000 loan taken out in August 2007 was 9.11%. This has risen to 9.76% by November 2007.

Lenders On The Decline
Many money lenders have stopped approving new loans. The number of unsecured loan providers fell by 10% in November. Eskimo Loans, which is funded by ailing mortgage lender Northern Rock, has decided to withdraw its products with immediate effect. Also GE Money, Leeds Building Society and LV had already stopped offering unsecured personal loans in the past few weeks.

Credit Rejections On The Rise.
Financial and Utility Comparison website Uswitch found 38% of people who had applied for a new credit card in the past three months were turned down, while 19% had applications for a new personal loan rejected. It also said that 6% of its customers had had credit limits cut.

Not the time to borrow your way out of debt
With conventional credit avenues becoming blocked, more people than ever with debt problems are seeing that only a Debt Management solution, which can be an informal arrangement or a formal IVA is the only way they can afford and begin to repay their debts.

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