21 September 2006
A financial market insider has said that many consumers do not understand or deliberately ignore the realities of secured loans.
Robin Amlot, the senior editor of personal finance website Moneyextra.com, said that more than one in ten people do not realise the serious risks involved with not maintaining payments when they secure borrowings against their property.
“It’s important that people understand exactly what they’re taking on,” he explained.
“A recent survey by Citizens Advice underlines the lack of knowledge among consumers, with more than one in ten thinking they can miss payments on secured loans but that ‘their home will always be safe’ – this just isn’t the case.”
Repeatedly skipping repayments on secured loans can result in the collateral for borrowing, usually a person’s home, being repossessed.
Mr Amlot called upon financial institutions to make it the precise dangers of secured loans clearer, saying that ‘health warnings’ should be attached or made more obvious to consumers who were at risk.
Similarly, consumers should be fully aware of the hazards involved.
To read more about loans that are secured against your home, click here.