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Personal loans and debt problems

Sharon McDougall - Updated - 2nd August 2023 - 3 minutes to read

Personal loans are perhaps one of the most straightforward ways of borrowing money but they can nonetheless be a source of serious financial complication and concern.

If you are worried about your ability to pay back personal loans on any scale then you are not alone as there are thousands of people in that same position across Scotland.

Secured Vs unsecured personal loans

A personal loan can generally be categorised either as being a secured or unsecured lending arrangement. The distinction hinges on whether or not a loan is secured by a borrower’s assets, typically a property holding of some sort.

The most common form of personal loans that are offered to borrowers around Britain are unsecured, which means they are not secured by any assets beyond the terms of the loan contract. Unsecured loans though do require a borrower to pay back a pre-agreed amount of interest in return for being able to take out the loan.

In isolation, a personal loan can be a perfectly sensible and useful way for an individual borrower to access credit that they can use to make a major purchase or, under certain circumstances to consolidate their debts. However, if your debts are already mounting up and you’re finding it tough to keep up with repayments and interest rates then a personal loan can add to these problems.

Taking action

If you have a personal loan in place but you’re struggling to sustain and service your debts then it is well worth shopping around to see if you can find a better deal elsewhere. It could be that other providers of personal loans might be able to offer you a package that costs less than is the case with your current deal.

If you feel as if interest is accumulating more rapidly and more worryingly than you’d expected in relation to a personal loan then you should be able to pay it off early. Usually there will be scope within the terms of your personal loan to repay the amounts you owe sooner than necessary. Although this may not always be possible if you’re in a tricky financial position.

Avoiding further problems

Personal loans can become a significant financial burden for individual borrowers to bear but they do not generally lead to the kind of serious debt management difficulties associated with large-scale credit card, store card or payday loan debts. So if servicing the interest being accumulated by your personal loans is the worst of your debt worries you are certainly in the realms of having ‘debt problems’ rather than being in the midst of a full blown ‘debt crisis’.

That being said, it can be a big help and a huge relief in many cases for indebted individuals to speak to an expert on the issues they’re facing. Scotland Debt Solutions has five offices in Scotland and they each are staffed with teams of specialist personal finance consultants. Whatever your debt problems are, we can help and we can map out a plan of action to support you in becoming debt free or finding a much healthier financial position.

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Sharon McDougall


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