Case Study 1: A mum with a secured loan £10,000 more expensive than she thought!
“When you see Carol Vorderman you think ‘she's really good with figures so it must be good'. And because you're so eager to get the money and pay the debt off, you just sign it.”
Sue Chapman* took out a Firstplus secured loan after seeing an advert fronted by Carol Vorderman.
Sue, who lives with her husband and three boys in Selby,
Two years later, when she tried to pay to pay off a chunk of the debt with a lump sum, she was surprised to discover the balance of the account including the insurance cost, stood at over £51,000 – even though she'd already been repaying the debts over that time.
Social worker Sue says she chose Firstplus because the adverts were fronted by a celebrity. “When you see Carol Vorderman you think ‘she's really good with figures so it must be good'. And because you're so eager to get the money and pay the debt off you just sign it.”
Yet when Firstplus calculated the final settlement figure it included a charge of around £10,000 for payment protection insurance (PPI), “you take out the insurance because you think you're being sensible. When we came to settle we thought we'd stop paying it but we couldn't,” says Sue.
“Instead of just seeing her on the telly and ringing them up, I wish I'd gone to get advice off someone else first,” she adds.
“It's our own fault for not managing our money properly, but it's a struggle; we've both got really good jobs so we should be OK.”
Sue hopes own her kids will grow up to be financially savvy. “With my three boys, the eldest tends to spend his money when he gets it and I try to explain this situation to him. We encourage them to save and not spend.”
NOTES
* Sue Chapman is not her real name. She is happy to speak to the press but would prefer not to be named for personal reasons. Please treat this with respect
Case Study 2: The Debt Counsellor's View
“Sometimes selling the house is the only way out because they have so much secured lending, that it can leave them with no money for food.”
Jayne Bellis, debt counsellor for the UK's biggest debt help charity the Consumer Credit Counselling Service, works first hand with people in debt crisis.
Celebrity fronted secured loan adverts should come with a health warning, says Jayne Bellis, a managing counsellor for the Consumer Credit Counselling Service (CCCS).
“One of the things the CCCS would almost never advise is converting unsecured debt to secured,” she says.
Yet celebrity endorsements help to make the loans look like an everyday solution. “People have said that they have respect for the celebrities who advertising loans, especially Carol Vorderman. They think she's she good with maths and she gives the company a seal of approval.”
“I would like to see a disclaimer on adverts fronted by celebrities: something along the lines of ‘They are a celebrity, they have a familiar face, but they don't come with a ten year guarantee.”
Bellis adds people often respond to secured loan ads before seeking help from debt counselling agencies. “It's very easy for people to pick up the phone to these companies that seem very approachable and very friendly in the adverts.”
The number of her clients resorting to secured debt has increased. “We are seeing more people with secured loans in the last year or so. They think their house is like a piggy bank and it's not really: they have to live in it,” she says
And in extreme cases families who take out the loans end up losing their homes or declaring themselves bankrupt. “We have seen some very severe cases with a variety of lenders, where people have just completely over borrowed. Sometimes selling the house is the only way out because they have so much secured lending, that it can leave them with no money for food.”
NOTES
CCCS Helpline: 0800 138 1111
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