Over the past decade having damaged credit did create problems for those that were looking to take out finance. However, in the days of easy credit even those with damaged credit were able to get finance at a relatively affordable rate. However, these days are now gone and now those with bad credit will find it very difficult or even impossible to get the finance that they need. This situation, coupled with the various living cost hikes that households have had to cope with, has made things very difficult for those that do not have good credit.

Whilst it is generally thought that those with damaged credit will now face real difficulties when it comes to getting bad credit loans due to lenders being far stricter about who they lend to, it has also been suggested that some lenders that specialise in high interest finance may actually be targeting those with damaged credit and younger consumers who may not be able to get loans through more traditional means.

There is concern that desperation amongst these consumer groups could result in an increase in the number of people being lumbered with high interest, expensive loans.

One recent report has shown how one lender, called Logbook Loans, which offers loans secured on the borrower’s vehicle, has been advertising loans of up to £50,000 on the world’s largest social networking site, Facebook, which is used by many younger people. The advertisement claims that no credit checks will be carried out by the lender, and the APR on the loan is an astonishing 437.4 percent.

The advertisement by the company reads: ‘If you’re looking for a loan with no credit check, you’ve come to the right place. That’s what makes Logbook Loans ideal for those with bad credit history, CCJs, arrears or defaults. Come to us and there’s no credit check to let you down – so you can get your hands on extra cash quickly and easily.’

Some industry professionals are concerned that with the choice of reputable sub-prime lenders having fallen over the past year due to the global credit crunch some desperate borrowers may start looking at less reputable sub-prime lenders.

One official from the credit referencing agency Equifax said: ‘We are starting to see a vicious downward spiral. Now legitimate sub-prime lenders have been driven out of the market, borrowers are being forced to use less responsible subprime lenders.’

A debt charity official added: ‘How can a firm be lending responsibly if they don’t require a credit rating?’

A spokesperson from Logbook Loans has stated: ‘Logbook loans operates at all times as a responsible lender. An affordability check is always conducted. This includes a requirement for the customer to provide proof of income, and the completion of an income and expenditure form, to ensure that the customer can afford the finance they are considering. All customers are advised against signing any credit agreement they may not be able to afford to maintain, and a statement is signed to this effect.’

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