If you have bad credit and need to pay an urgent cost, one heavily advertised way of doing so is to go to a “loan shop” – a lender who doesn’t require a good credit record, and will usually give secured or unsecured loans at high interest rates. These include payday loans and pawn shops.

In June 2015, the Government introduced the Responsible Lending Code – which requires lenders to make copies of their contracts and costs available on their websites, and inform you about the full cost of the loan when you sign. That means there are fewer hidden costs if you borrow from high interest lenders, but doing so is still a risky proposition.

The fees on small loans could end up outweighing the loan itself, and the already high interest rates often increase during the life of the loan – especially if you are unable to pay the debt on time.

Instead of turning to high interest lenders, peer-to-peer lending usually gives a better interest rate and charges lower fees.

Talk to us about non-bank lenders who won’t charge you usurious interest rates – we can help you figure out how to borrow, and whether you should be borrowing.