Getting a loan in the UK could require taking a test

Wednesday, June 5th, 2013 By

Pencil

If you intend on getting a loan in the UK, you might have to sharpen your #2 pencils. Image from Flickr.

In the United Kingdom, new rules are being considered that would make loans for anyone that may need extra cash a little more difficult. After the Learning and Skills Council discovered that 9 out of 10 customers couldn’t calculate basic financial numbers, ministers took note. Now, new regulations may require customers that need loans to take a test.

Concern about lack of financial knowledge

As a response to the global financial crisis, the United Kingdom formed a Consumer Financial Education Body. Figures that were recently released by that group found that almost three-quarters — 74 percent — of all Britons with mortgages could not answer basic questions. For example, most did not know how a 1 percent rise in the bank rate would affect their loans, payday or bills. This lack of knowledge about the basics of the best personal loan can have huge impacts on the financial health of the entire country.

A testing solution?

One potential solution that has been proposed by government agencies in the UK is a required test. Any customer that wants to get any type of loan — mortgage, online personal loan, or auto loan — will have to take a test. This test would cover the basic features of the loan and financial products. Example questions might include the interest rate of the loan or the term of the loan. One alternative that has been suggested to the test is a simple declaration that the borrower has read and understood the terms of the loan.

Reviewing the way loans are sold

The Treasury and Business departments of the government are co-running the review of loan practices in the United Kingdom. This review is also going to be considering new regulations that require lenders to reveal the full amount of interest the loan would accrue over time. There is also a possibility that bankruptcy regulations would be shifted, allowing those that are truly without the ability to pay to really “start over.”

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