Equifinance see more clients wanting out of DMPs

09 February 2016

Equifinance, the specialist secured loan lender, have seen a rise in clients wanting to exit their Debt Management Plan (DMP) as financial circumstances improve.

For many clients exiting a DMP by using a secured loan has resulted in a reduction in their monthly payments, allowed access to mortgage products and delivered a more credit-worthy profile.

Entering into a Debt Management Plan (DMP) can be a useful step in getting a client’s finances reorganised so as to avoid more serious difficulties later. However, a DMP is a facility that needs to be carefully monitored to ensure it doesn’t exacerbate the problems in the longer term.

Part of a DMP agreement should result in a cessation of interest and charges on the debt. However, despite the best endeavours of the industry there are many examples where interest is still charged and as such the balance is not necessarily reducing by 100% of the monthly payment.

Additionally, from a credit profile perspective, remaining in a DMP for the long term might also restrict the customer’s options from taking further finance such as a mortgage if they want to move house and could reduce access to more competitive products.

There are some clear benefits when a secured loan is used correctly which may improve the customer’s long term prospects. Although consolidation is not always the right answer, a secured loan is often a suitable option given the lower rate charged when compared to unsecured finance.

Equifinance prides itself on having the expertise, flexible underwriting, products and understanding to deal with complex cases. Each application is treated individually, on its own merits and is manually underwritten by people who have many years’ experience in niche lending.

Tony Marshall, Managing Director of Equifinance commented: “As the general economy improves and optimism increases, we are being approached by more and more brokers whose clients’ circumstances have changed and now want to review their DMP. What was right for them a few years ago may not be right now.

“We welcome working with brokers who understand our straightforward and simple approach to underwriting, where each case is assessed to ensure suitability for the client both now and in the future.”