Loan Infomation Hub
Tuesday 1 April 2014
Student Loans
You can find lots of information about student loans on http://topics.bloomberg.com/student-loans/
Monday 31 March 2014
There is rescue for the drowning person after all
It happens that even consolidation loans
cannot fix your financial life, or rather financial troubles. Most likely such
a situation is the result of the lack of restraint, seriously bad luck or
fortune, inability to find a lender for the consolidation loan or simple
inability to cope with the burden in general. Once you feel unable to get your
predicament under control, it is about time that you find someone to help you
bring your life in order. Such wondrous places do exist and furthermore, most
of them are even free of charge. The function of such fabulous entities is debt
management.
While there are commercial debt
management companies, which will charge you for doing your bidding and
organising your payments and creditors; there are plenty of charitable
organisations that will gladly do the same job, but will not charge you for it.
The governmental website www.gov.uk or www.dmo.gov.uk has a list of such
charitable organisations listed under debt management plans, but you can very
easily find them through any search engine. One of the first hits will be, for
instance, Citizens Advice.
Make an appointment to see an officer
from the debt management service, bring all your documentation and paperwork
with you. You can not only receive advice there, but get them to organise the
whole process of consolidating your debt and managing your payments until you
have repaid all your debts, thereby repairing your credit rating and also
learning how to successfully make monthly payments without getting into
arrears. There is always a good way out, keep that in mind. All you need is
patience, a clear head and the pointer in the right direction.
Monday 24 March 2014
Consolidation loans
Getting stuck with a bunch of small
loans is surprisingly easy. In fact, not getting stuck with small loans, store
card debts, credit card debts and even payday loans requires significant
restraint and self-discipline. In real life, most of us cannot spare the time
or the effort to always calculate every expense and its consequences, so we are
not quite aware of how much we are spending. Also, during everyday life, we are
regularly confronted with the need or desire to spend more than we should
and/or have at our disposal. We rationalise this notion with different phrases:
“just this one time”… “this is the last time”… “this is really necessary” …
“it’s such a bargain”… We all have a Shopaholic sleeping within us, it just happens
that our defences fail sometimes in the face of temptation or necessity.
The problem is that those small debts
can add up to astronomical monthly payments. In that case, it is best to
consolidate loans, spread the payment plan over a longer period of time, and
lower the interest rate. And even if you are not having financial problems, you
might consider consolidating your loans, since that this move may significantly
reduce your expenditures.
What is a consolidation loan? In
essence, a loaning agent takes all your loans, pays them off, and then gives
you a longer period of time to pay it all back.
Most people will benefit from having a
single, smaller monthly payment obligation. Such payments are much easier to
keep track of, and paying them on time is beneficial to credit record. In case
of consolidation loans, interest rates are usually much smaller than with
payday loans and store cards, so in the long run, they make much more sense. If
you consolidate your loans, your payment plans will be longer in duration, but
much more affordable.
A slight problem might be that most
lenders give consolidation loans only to those who have means and assets for
securing such a loan. There are unsecured consolidation loans available, but
their interest rates are also quite steep, and their only benefit might be
turning all the payments into one.
In case of consolidation loans, secured
or unsecured, the risks are quite the same as for the other secured and
unsecured loans. Failing to pay the loan might result in repossession of any property
you may own or any future earnings you may score.
The biggest mistake that consolidation
loan customers make is to fall back into the same pattern of difficulties,
which led them to taking a consolidation loan in the first place. New store
credits build up, new pay day loans are taken, and with the addition of
consolidation loan payments, a person just cannot cope with all the payments
that are due. In the end, it is still a matter of your personal powers of
restraint and self-control.
Monday 17 March 2014
Unsecured loan risks: Is it worth it?
While writing about the difference
between secured and unsecured loans, I have mentioned that the difference is in
the collateral. This may lead some people to believe that, while there is the
possibility for the bank to reclaim their property as the result of delayed
payments of secured loans, there is no danger of that happening in case of
unsecured loans. This is as far from truth as it could be.
The fact is that by signing the loan
contract you are committing yourself to paying out the loan in full and on
time. Depending on the terms of the contract, you can get financially quite
badly hurt, if you do not pay off your loan.
If you take out a secured loan, and then
fail to pay your instalments, the bank can easily take the assets you have put
up as means of securing the loan, sell them, and use the money to cover its
loses. In the case of an unsecured loan, the bank cannot easily and
automatically take your assets, but in can (and will) take you to court and try
in any way possible to replace the incurred losses. The consequences are not as
immediate as in the case of secured loans, but they will come, you can be sure
of that.
If you fail to pay off your unsecured
loan, the bank will firstlypursue any co-signer that has maybe co-signed the
loan on your behalf. If a person is that good of a friend or that good of a
relative to co-sign a loan for you, you shouldn’t repay that kindness and trust
by putting that person in such an unenviable predicament.
If no one has co-signed your loan, the
lender will go after your future earnings and even your assets, if you have any
(your home, your car, any shares you might have or any other valuables). The
fact that they cannot take them immediately and easily, does not mean that they
cannot take them at all.
Bearing in mind the fact that it is
quite easy to take short term unsecured loans, and that sometimes they have
very high interest rates, people tend to get stuck with those kind of loans,
eventually taking more and more, just stuck into trying to pay off the debts
and most of the time never succeeding.
If you get stuck with a number of short
term, unsecured loans, it might be the time to stop getting deeper and deeper
into trouble, and try taking out a consolidation loan.
Monday 10 March 2014
Should I take out an unsecured loan?
This matter will be largely defined by
the amount of money you need to borrow and by the fact if you have any assets
that you can secure your loan with.
Banks will not give large loans if they
cannot secure them in some way. Unsecured loans can go up to £25.000, but even
that figure is hard to reach, as it is reserved for those with impeccable
credit scores.
On the other hand, if the bank can take
some collateral, it will be willing to loan much larger sums of money even to
individuals with bad credit scores, because they cannot end up short.
However, if you need a smaller amount of
money and you do not have an asset to secure the loan, or you do not wish to
use it for that purpose, an unsecured loan might be just the thing for you.
Cost
effectiveness of unsecured loans
Unsecured loans are not cost effective.
They tend to have much higher interest rates than secured loans. Of course,
different banks provide different deals, but still, for unsecured loans,
interest rates tend to be pretty steep. I advise utmost caution in taking out
loans of this kind. Usually, the easier the procedure - the steeper the
interest rate. Luckily, the law in the UK says that the money lender needs to
clearly show and advertise the APR (annual percentage rate), so that is the
first number you should look at. For some loans, like payday loans, interest
rates can come up to 5800%! That’s legalised loansharking if you ask me!
Such loans are advertised everywhere (no
wonder, since they have such phenomenal profits), they are easy to get, and
seem like an obvious first choice. Banks that have much more reasonable
interest rates are generally not interested in small amounts or short term
loans, therefore you either cannot get them at a bank, or the procedure is
disproportionately long.
Payday money landers have protested
against the law that forces them to advertise their APR’s, saying that those
are short term loans and that no one pays them for a year, so the rule of
showing annual percentage should not apply to them. But this is not exactly
true, right?
If you cannot wait for your next payday,
if you have spent your money in advance, then the chances are that it will
happen to you again and again, since you are at least one payment in arrears.
So you end up taking out payday loans from month to month, and the money lender
gets his annual profit, as it is shown in the advertisement.
If you really need to take out a short
term loan for a smaller amount of money, please make an effort to take out a
loan with a reasonable APR.
Saturday 1 March 2014
Payday loans and log book loans and why you should not even consider them
There is no reasonable explanation why
someone would go to a loan shark and take out a loan that is not only
insufficient to cover your purpose, but comes with a horrendous fee and APR
rate attached to it. Payday loans and log book loans are partially legalised
loan shark operations that are very much in the grey area of the loan business
legality and were seriously considered by pertinent legislative bodies to be
outlawed for good. While lenders of such types of loans would not break your
legs and beat you up for being late with payments, similarly borderline
activities have been reported to have occurred.
As I stated above, which would be the
reason why I am now deviating from my regular loan-related blogging, such loans
come with horrendous APR rates that go way beyond anything which is considered
decent. Furthermore, while log book loans do appear to have mellowed a bit with
APR rates, or rather you can find lenders that will not force you to sell your
kidney in order to repay the loan, the payday loans are just as bad as they
were when they started appearing on every corner in so-called money stores.
If you have a car that is not under any
financial burden and is worth a decent quid, instead of putting it up as
collateral for a terrible loan, you should sell it, purchase a drivable vehicle
of inferior capacities for a lesser amount and keep the change. You do not owe
anybody money and you still have cash in your hand, probably about the same
amount a log book lender would have given you. Swallow your pride and do it!
Log book loans are not the solution, such a loan will just push you deeper into
trouble.
A payday loan is similarly deceiving,
making you believe that you just get an advance on your paycheck. The problem
is that you are getting significantly less money than you would get come
payday, furthermore, until the next payday is even a larger time period that
you are used to managing. Chances are good that you will take out another
payday loan, because you could not make ends meet, due to the prolonged dry
period. Don’t you see it, it is a trap! You will wind up giving away your
paycheck just to cover the interest and barely ever scratch the principal debt.
Many have made that mistake,do not make
it as well. If you are in financial trouble, even have bad credit and cannot
get a regular loan, then you should consolidate your debt. There are means,
organisations, loans that exist just for that purpose, utilize them! Do not
play into the mouth of the legitimate loan shark businesses, take back your own
financial capacities and return to a regular life. I will return to this topic
later, because I feel very strongly about this and bad credit, but my next blog
will be about something normal.
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