Trading Checks

Where from? Trading check companies.

How they work A trading check is a document with a value normally between £4 and £60 which can be exchanged for goods in specified shops. Each purchase is deducted from the value of the check. `Vouchers' are similar to trading checks but may be valued up to £1000 and can usually be used only to make specific, more expensive purchases in specified shops.

Trading checks are delivered to the borrower by an agent who then calls each week to collect repayments. These are fixed at the outset and are usually spread over a period of 20 or 21 weeks. With vouchers, the repayments are usually over a period of two or three years. APRs are quite high - 60 per cent up to several hundred per cent.

Points to note The shops you can use checks and vouchers in may not be the cheapest for the goods you're buying. Check traders issuing checks only up to £60 don't have to be licensed.

Verdict Avoid.

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Where from? Bona fide ones: mainly through newspaper advertisements.

How they work They specialise in high-risk lending and charge dearly as a result. Loans may be secured or unsecured. Interest rates may be fixed or variable. They may lend to you even if you've been unable to borrow elsewhere. Repayments are often collected door-to-door.

Points to watch At the time of writing, moneylenders who lend sums in excess of £60 have, by law, to be licensed. (And there are proposals that even those lending smaller sums should, in future, need a licence.) But some moneylenders make... see: Moneylenders

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