Should I Take Out A Loan During The Cost of Living Crisis

In recent weeks and months, the cost of living crisis has become more prevalent and it’s something that’s starting to affect everyone in some way. As with everything, everyone has different circumstances, so although they might be putting more petrol in their car or spending more on their shopping it might not be affecting them, however others it is impacting more. It’s the ones that are starting to struggle that are now considering turning to loans and other forms of credit to help with the cost of living crisis.

With increases in costs relating to goods and services, some individuals and families are starting to see their outgoings rising without their income growing at the same rate. With the gap between earnings and bills continuing to grow, it’s important to understand why some people are now turning to loans or other forms of credit. Most people already live wage to wage in the UK, so with costs rising, it’s easy to find that little pot of extra money shrinking.

And as that pot of money shrinks, more people are starting to look at ways to top up that pot to ensure they have money for their family or for unexpected expenses. Keep reading below to find out more about loans and taking out a loan during the cost of living crisis and whether it’s the right option for you.

Is It Safe To Lend During The Cost of Living Crisis?

As with any type of loan, it’s important to ensure that it is affordable and that you can meet the repayments. Borrowing rates are currently at their highest levels in the UK, with more people taking on both short and long term debt. However, it’s whether you are borrowing for the right reasons. Some people have extra money left over after they pay out their bills every month, but this might not be enough to cover the cost of things such as repairing a car or buying a replacement computer for one that breaks and this is where loans can help people to manage during the cost of living crisis.

However, if you find yourself in a position where you feel you need a loan to help put food on the table or even pay your energy bills, then it’s likely a loan isn’t the right option for you, as you’ll likely struggle to meet the repayments without putting additional financial burden on yourself. Should you find yourself in this position, then we urge you not to take out a loan, but seek the help of your local council. Councils can put you in touch with food banks and many energy companies have trusts which can help with clearing energy debts that have reached unpayable levels.

The Cost of Living Crisis and Responsible Lending

As with any type of lending, loan companies need to act as responsible lenders and that’s why we carry out affordability checks to ensure our customers can afford to repay their loans on time and in full. Whilst, we’ll do everything we can to help you when it comes to loans, it’s important to ensure you disclose everything. Many people lend money from family and friends and this is something they never disclose and borrowing more money with a loan on top of this, could lead to you becoming increasingly overwhelmed.

Before considering a loan, you need to make sure it is the right option for you and your current financial situation. Setting out a budget and understanding your outgoings could help you to reduce spending in other areas, which could give you the money you need without the need for a loan. If you do decide to take out a loan, whether it’s through ourselves or someone else, then make sure you understand the interest involved and the repayment terms you’ve agreed to. The last thing you want to do is fall behind on a loan, if your finances are already stretched.