Abacus Daily Debt News

Loans should be ‘emergency-only’

Those considering taking out a loan may benefit from asking themselves if the reason for this is a necessity.

This is the opinion of Jed Anderson of the Merritt Herald, who said that these applications should be made only in emergencies, or in circumstances that would yield "higher economic return", such as a mortgage.

"A small loan can snowball into a crushing debt that can create a prison out of our lives," he remarked, adding that student loans are also "a risky endeavour".

Mr Anderson noted that young people lack the ability to ascertain whether asking for a loan is prudent, stating that a lot of graduates often find themselves on low incomes and can struggle to repay large debts at the start of their working lives.

His comments follow a recent survey conducted by Sainsbury’s Finance, which found that debt worries may not be curbing spending, with the amount of money withdrawn from cash machines in December reaching an estimated record amount of £10.6 billion.

By Sarah Adie