Focus on: Effectiveness of Regulations on Interest Charges in UK
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Present economic environment has negatively affected all parts of the world. Low economic situation and high living cost have tapped several individuals into debt like situation. High street UK banks and building societies consider it as risk to provide unsecured cash or borrower with bad credit score. Consequences of this, people are moving towards high cost short term private loan options to meet with essential needs. But strict restrictions have badly affected the business transaction for small and medium size business. These things are eventually going to make UK economy worse than ever before. Keeping these things highlight, UK government is looking at ways to regulate interest rate and its relations with credit card and loan companies.
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Earlier also, UK government has made efforts towards this direction but it doesn’t meet with any conclusion. High interest rates and tough loan terms are major reason behind the financial difficulties of UK individuals. People are unable to cover interest rate charges and hence struggling to pay off their payments. Millions of people are dependent upon the small number of lenders due to such terms on the loans like logbook loans. People are unable to refinance their borrowings due to bad credit rating and financial risk.
If UK government implements its plans to regulate credit card interest rates and other financial facilities then it can change the economic status of state in long term. UK economy is one of the strongest economies of the world which can hold into the grip of regulators. Regulating companies who are charging high interest rate on loans in current economic climate can affected if government impose regulations. It looks pretty in theory to make such regulations just to improve transactions but in reality world this would change the financial environment in UK forever. UK consumers will also be at the beck and call of UK government.
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