Difficult for Individuals to borrow large amounts of money – IELTS essay

Many people are using credit cards or loans to run up huge personal debts that they may be unable to repay. It should therefore be made more difficult for individuals to borrow large amounts of money.

IELTS essay – writing task 2 model answer.

Long term loans and credit card debt can ruin any individuals life. Banks often lend huge sums of money which is not repaid in full by the borrowers. The reasons are many but it is mostly a result of not accurately verifying the creditworthiness of the people who borrow, there should be reasonable limits set on the amount of money people could borrow. Credit card debt is very difficult to pay off by individuals due to the higher interests than other forms of debt. Government and regulatory authorities should make it difficult for individuals to borrow large amounts of money. The focus should also be on the bank’s or lenders policies. It is clear that in order to profit from loans banks often overlook the creditworthiness of their clients.

Many people find it very difficult to repay the loans or credit card debt because of very high interest rates and also the amount of money that they were lent. Generally, banks lend a certain amount which may be a few times an individual’s annual income, but if the loan is long term like mortgages and very high credit limits on credit cards, it is essential that banks make it easier for the individuals to repay by charging less interest. Regulators must make sure that banks do not lend an amount equivalent to more than one year’s income.In the US there was a major financial crisis in 2011 caused due to irresponsible lending by banks and resulting bad debts. This was called the sub-prime crisis. The effects of this crisis were so significant that some banks went bankrupt. People all over the world suffered as the US economic crisis impacted their economies.

For all these reasons, it is necessary that people should not be able to borrow huge amounts of money easily. The simple principle of lending only what can be comfortably repaid should become the law. Banks and individuals should not be allowed to go around this principle and create trouble for themselves and others.

Vocabulary:

Credit card debt – the amount of money that needs to be paid to the credit card issuer by the user.

Creditworthiness – The ability of an individual to repay a loan which determines how much he could borrow.

Ruin – destroy

Regulators – government authorities that control any industry. In this case “banking regulators”

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