Is the First Plus special offer a good deal?
Over recent weeks the secured lender, First Plus, which uses the television star Carol Vorderman to advertise its loan products, has been advertising a new loan product, which offers consumers the chance to enjoy a low starting rate of interest on a secured loan. However, the company and the advertisement have come under fire from officials that state the loan is a debt trap, and borrowers could soon find themselves paying a fortune when the interest rate rockets following the initial period.
The loan offers a starting rate from 4.9% for the first ninety days, and with credit conditions so tight and borrowing so expensive at present this could attract the attention of many homeowners looking to raise finance. However, after the initial period the loan rate rockets to an average 8.5% typical, and for certain consumers, such as those with damaged credit, the loan rate could be even higher after the introductory period is over.
One official described the loan as a debt trap, stating: ‘The initial rate is low enough to attract borrowers desperate for credit and who may be struggling to find it elsewhere. Yet 90 days offers negligible benefits and many people may not understand fully that the rate will soar in a very short time. This is a debt trap.’
However, a spokesperson from First Plus stated: ‘Consumers don’t have many options at the moment and we are responding to this.’
Many consumers are now struggling when it comes to getting finance, as most lenders have really scaled back on their lending since the onset of the global credit crunch last summer.
Recent additions:
- Bank decides to leave base rate static
- What’s in store for the UK economy?
- Start of year sees insolvency levels rise
- Credit crunch leads to increase fraud on finance applications
- Lenders need to be more cautious
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