Those who have recently left university should find they are still able to obtain cheap loans despite the difficulties experienced in the wider financial markets of late, an industry expert has claimed.
According to Samantha Owens, head of credit cards and loans for Moneyfacts, there is no need for recent graduates to be concerned that, should they look to borrow money, they will have to take out expensive products. Such consumers, she stated, should be able to find they can access low-cost loans which offer an attractive rate of interest as money lenders will view their application differently in comparison to other demographics. "They're not going to be judged the same as a 35-year-old who has tonnes of debt," she reported.
It was pointed out that loans targeted specifically towards university leavers have a rate of interest attached which is only just above the base rate of interest. Consequently, Ms Owens asserted that graduates are unlikely to develop problems in attaining personal loans and other types of credit or see themselves coming under pressure from "ridiculously high rates".
Her announcement comes at a time when difficulties in the wider economic sector have seen the availability of competitively-priced loans and other borrowing products diminish.
She said: "[Graduate loans] aren't like the standard market... [There are] different risk factors that [money lenders are] looking at, because they're trying to get the graduates in, they're tying to attract them with rates that are slightly more preferential than they're going to give to other people.
"Whereas in the standard loans market we've seen rates increasing and loan companies tightening up who they're going to offer loans to, [with graduates] they've already got their select market and believe that they're a good prospect in the long run. So we wouldn't expect to see the student and graduate current accounts, say, cutting back on overdrafts or that kind of thing. They're going to be quite static."
Ms Owens' comments come after research carried out by financial charity Credit Action revealed that the typical British graduate who left university in 2007 was in the red by an average of 12,363 pounds. While this may represent a significant sum for many, it is the first time that the amount of money students owe has fallen. The figure indicates a decrease of 889 pounds, or six per cent, from statistics recorded in 2006. In addition, it was revealed that more than half (54 per cent) of those finishing higher education have debts of at least 10,000 pounds.
Further research by Credit Action showed that at the end of January Britons were in total debt of 1,412 billion pounds, an increase of 9.1 per cent - 113 billion pounds - from the same period in 2006. Meanwhile, the typical household is shown to owe 9,052 pounds, a figure which does not include the impact of mortgages. Consumer borrowing, which may include the likes of personal loans and credit cards, has also increased during this period of time. In the 12 months leading up to January 2008, such lending has gone up by 5.9 per cent to stand at 225 billion pounds.
Whether or not a person is a recent graduate, those looking to supplement their spending as 2008 progresses may wish to consider selecting a low-cost loan. By taking out this type of loan it is possible that borrowers can make a major purchase such as a car, pay for repairs to property or, by using it as a means of debt consolidation, meet a number of financial demands at once. Such a loan may prove to be of assistance to a significant number of consumers after a recent MoneyExpert study showed that some 3.04 million Britons are currently concerned about their capacity to manage their money.