The current credit-crunch isn't confined to the US and across the Atlantic Great Britain has been trying to solve their own credit crisis. In what some have called "one of the most irresponsible loans ever," British bank NatWest lent 18-year-old Roma Shears £5,000 for a nose job. Roma is a single mom living on state benefits and admits that she doesn't have any savings. When she approached the bank for £4,000 to cover a £3,600 nose job, the bank responded by giving her a loan for £5,000. Feeling nosy? Just
The £5,000 loan came with a five year repayment period and an interest rate of 10.8 percent, while the interest rate for a £4,000 loan would have been more than 15 percent. She bought hair extensions and Christmas presents with the remaining £1,400, and when she failed to make payments on her loan the bank gave her an additional £1,000. If she paid £172 a month over five years on the total £6,000 loan, taking interest into account she would owe a total of £10,320.
NatWest says they'll encourage Roma to contact a credit counselor for advice on how to repay the loan, but debt experts have criticized the bank for making a nonessential loan to someone who could have difficulties affording repayment. Do you think the bank had the obligation to say no to this type of loan when it's obvious that Roma may have defaulted? Does it matter how the loan will be used when considering whether to lend money or not?