Real cost of TV's slick loan offers

WEST Ham MP Lyn Brown discusses loans and advertising this week in her exclusive Recorder column. She writes: I GET to see a bit more telly over the summer and it has struck me, once again, just how insidious are those endless adverts which offer seeming

WEST Ham MP Lyn Brown discusses loans and advertising this week in her exclusive Recorder column.

She writes:

I GET to see a bit more telly over the summer and it has struck me, once again, just how insidious are those endless adverts which offer seemingly easy access to endless loans.

It often looks like free money to buy those expensive yachts or foreign holidays.

These adverts stress just how easy and convenient it is to get a loan - generous sums are just a phone call away.

But apart from the very small print along the bottom of the screen, the adverts don't give viewers the vital facts about the loan, such as the total sum you will repay over the course of the loan, which can be astronomical.

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When you look at the fine print, these loans and other forms of easy credit can turn out to be very expensive and turn a molehill of a loan into a mountain of debt.

We all need to be able to understand the real cost of any loans or credit that we apply for, and any implications they might have on our finances.

Whilst buying on the never-never might be the only option for a family on a low income to be able to afford a necessity, the interest rates applied often add a massive amount to the overall cost of the loan.

It is really important to shop around for the best deal and not simply be seduced by slick advertising campaigns.

The Government have set out a Financial Capability Action Plan to try to help people find out the basic facts about interest rates for credit cards and loans, payment protection insurance, sale and rent-back schemes and pensions and benefits.

Given the current economic climate, people may well find themselves having to make important financial decisions, making truly independent advice all the more crucial. Impartial information can be found at the money madeclear website - www.moneymadeclear.fsa.gov.uk

Equally important in the long-term is ensuring that our children are taught from an early age about how to manage money. It's not just a question of learning sums, but knowing about budgeting and how interest on loans is calculated.

The "My Money" programme is being introduced in schools to help future generations manage their cash. Children will learn through games, puzzles and other practical activities about how to open and operate a bank account, how to budget, calculating the real cost of a loan, and, rather prematurely, about retirement pensions.

The Government have already taken action to help individuals, families and businesses in need, with extra mortgage protection to help families stay in their homes, cutting VAT, increasing Child Benefit and Child Tax Credit, increasing statutory redundancy pay and extra cash to encourage employers to recruit people without jobs.

But the Government also understand that apart from the big stuff to get the economy moving again and protect jobs, homes and families, they can also help people to help themselves.

With the right information, people can protect themselves from the glib advertising campaigns which obscure financial realities, aiming only to maximise the profits of their organisation who care little about the impact they have upon those who succumb to their messages.

Are you concerned about the advertising of financial products on television or in our community? If you have any comments on this column, write to me at Lyn Brown MP, House of Commons, London, SW1A 0AA or e-mail me at brownl@parliament.uk

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