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

Is the First Plus special offer a good deal? is a post from: Glitec Loans