Personal Loans - Lent Without Checking Income

By: Gill Critchley

Last year UK banks lent a total of ?20.9 billion on personal loans without checking people's income.

Research by a leading comparison site found that 70 per cent of loan applicants were not questioned on how much money they earned. A further 45 per cent of people borrowed loans from banks which weren't their own, meaning that the bank had even less information on their client. A shocking 15 per cent were not even asked about their incomes on application forms.

This level of lending personal loanswithout questioning people has been partly the reason why the UK's banks are facing over ?17 billion worth of debt write-offs.

An expert at the comparison site has said that there are 7,716 loan repayments that are being missed each day and record write-offs, showing that the possible profits have obviously proved too tempting for the lenders.

The new Banking Code does attempt to get lenders to be more responsible with customers by looking at information from credit reference agencies, however; experts are still worried that this is not enough and that people may still be encouraged to borrow beyond their means.

A suggestion that could help the current loanssituation is by there being further credit checks. However; this would be more costly for the lenders and this extra cost would no doubt be passed on to the borrower, although; this could be a small price to pay if it was to help stop the rise in debt.

It cannot be forgotten that it is the responsibility of the customer to borrow sensibly, but the lenders also need to be more responsible when it comes to lending suitable loansto people.

Debt, Loans & Business Cashflow
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