Bad credit loan 'preferable to borrowing from friends'

A bad credit loan or other financial product could be an alternative to the problems borrowing money from friends and family can create.

Stephen Rose, director of the Debt Advice Bureau, said that often friends and relatives loan money that they themselves have borrowed - which can lead to disaster.

"That magnifies the problem. Because if … the repayments they were expecting from their family member aren't coming forward, then there's almost a domino effect there," he said.

When considering whether to take out bad credit loans or ask a pal for help, Mr Rose said that both sides should think about what would happen if they were unable to repay the money.

"Think about how much damage it might do, particularly in the case of a friendship, if they couldn't afford to pay you back for whatever reason," he advised.

A survey by DebtSmart.com revealed that of the 70 per cent of people who had lent money to friends or family, just 58 per cent had been repaid, which indicates that a bad credit loan or other product could be preferable.

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