Martin Lewis advised people to not enter into unregulated loan agreements without knowing exactly what they're signing up for.
During a phone-in on This Morning, Martin Lewis was left concerned about the predicament one viewer found herself in. The caller said: "I'm a guarantor for my daughter and now I'm in debt. My daughter had an unregulated loan of £260,000 from NationWide Finance Ltd.
"I was the guarantor but we didn't know the APR was almost double the normal amount and now, because of our age, we can't take out a loan to pay it off. What can we do?"
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The Money Saving Expert was visibly concerned as soon as he heard about the problem and was initially hesitant in his response.
He said: "I need to be straight. I don't focus on business finance. As soon as I heard the words 'unregulated loan' my heart sank. The clue is in the title, it's not regulated. To be a guarantor on a £260,000 loan that you don't understand... there's a duty on the lender to make sure you understand it but there's also a duty on you or consequences like this will happen.
He added: "You've entered into this agreement willingly, as far as I can tell, and so it kind of does fall on your shoulders as difficult as that may be. Let this be a warning to everybody else but in your case go and speak to Citizens Advice or you may need to speak to a solicitor. I'm not a business expert I'm a financial advisor so sadly, this is out of my area of expertise I cannot help you."
Once the call wrapped, Martin said it is "extremely sad" that people are entering agreements that may be, at times, predatory and dangerous to those who do not know exactly what they are signing up for. He warned to stay away from unregulated loan agreements entirely as the payback may be crippling.
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