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Beware unregulated secured loans, expert urges

Beware unregulated secured loans, expert urges

Category: Credit cards

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Consumers have been advised to beware of potential pitfalls when looking for finance sources in the economic downturn.

According to personal finance site, many firms will be seeking to take advantage of vulnerable people.

Ways of doing this include offering secured loans that require ownership of the borrower's car to be transferred to the lender, with the vehicle being sold at auction if the debt is not repaid.

And the portal noted that credit card cheques can also be expensive, with transaction fees typically amounting to three per cent of the cheque's value.

Financial expert at Ed Bowsher urged consumers to be careful, adding: "If you are struggling to make payments talk to your lender and if you do use a store card or credit card cheque - ensure you pay the amount off in full each month."

The site recently suggested that borrowers should use the 2.5 per cent reduction in value added tax to help pay off secured loans more quickly.

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