Voices in Finance » Loans

How to Find the Best Loan

Mike — Fri, 19 Aug 2011 12:23:55 +0000

There will come a time in your life when you will need, or want, to take out a loan. Loans are available and often necessary for a myriad of purchases: college education, home, automobile, investments, etc.

If you want to get the best possible loan, it’s necessary that you do your research and compare the pros and cons of not only the loan, but also the lender.

The first step in determining in the loan process starts with you. Figure what you will use the loan towards. Are you purchasing a car? Paying for college? Buying a house?

Lenders offer a variety of loans that can meet your financial needs.

After you’ve determined what kind of loan you need, you should determine how much money you will need to actually borrow. Calculate how much money you can afford to put down, if any.

The more money you put towards the down payment of your purchase, the less money you will need to borrow from a lender.

Ask trusted family members, friends and colleagues for a referral to a secure and reputable lender. Chances are, if they’ve had a good experience, or a bad one, they’ll be happy to share this information with you.

If you do not want to do the research about a lender yourself, find a loan broker. Loan brokers do the research and shopping around for you. Brokers usually work for a commission or a small fee.

A good loan broker may be able to secure you the best possible loans through their trusted network of contacts, a network to which you may not otherwise have access.

Before you submit your loan application, review your credit report. You can obtain a free copy of your credit report from any of the big three credit bureaus: Equifax, TransUnion, or Experian.

It is important to note that the higher your credit score, the higher your chances for obtaining a low interest rate. If there are any errors on your credit report, be sure to straighten them out with the credit bureau before you apply for your loan.

Lenders view a high credit score as a low risk and a low credit score as a high risk. The higher the risk for the lender, the higher the interest rate they will offer on their loans.

Also, a high credit score will open up your choice of lender. You will find that more lenders want your business, which of course, offers you a greater advantage in choosing your loan.

Once you decide on a lender, be certain that you understand the terms and details of your loan. Before you sign on the dotted line, ask all the questions you need until you fully understand your loan completely.

You should educate yourself about your loan so that you know when your repayments are scheduled to begin, how much they will cost you per month and how much your total loan cost, including interest, will be.

Is Securing a Personal Loan on Your Pension a Good Move?

J. Hamilton Fraser — Mon, 25 Jul 2011 09:56:04 +0000

Securing debt by using your pension as collateral has become more popular in recent years – in particular for people who are approaching their retirement.

Older people often find that their pension is their largest asset. So if you anticipate receiving an ample pension in just a few years time, but you need some money now for home improvement or some other unexpected cost, taking a loan can seem like a good move.

Some lenders will allow you to borrow up to 50% the net value of your existing pension account, which could be a substantial amount and might serve a very important purpose.

Before you take out such a loan though, think carefully about the pros and cons:

Pros:

One obvious advatage is that this type of loan will be relatively easy and therefore perhaps faster to get – and it is likely to come with a lower interest rate too.

In fact, you may not even need to provide a credit check, so long as you can prove the value of your pension assets…

Cons:

The first thing to do is think about your own financial situation and whether you really need this loan. If you can reduce the principal at all, then so much the better.

This loan will effectively reduce your pension income when you do retire, so you should carefully consider what you need to live on and where you can save money in order to boost your own finances.

Remember that once you retire you will have fewer expenses to account for and it should be possible to save money in other places if have the time to look around for special offers and freebies. They all help.

How to apply

If you decide that you do need to take out such a loan, you should first check that you qualify. Many lenders will only offer such a loan if you are within 5 years of retirement.

Even at this age, some lenders may be wary of allowing this type of loan, so it is worth shopping around and asking questions. You might also need to take out life insurance to cover the term of the loan.

Tips to Settling Cash Loans Debts on Your Own

Mike — Wed, 20 Jul 2011 10:41:59 +0000

It will not be long before a debt collection agency contacts you after you have started defaulting on any form of unsecured loan. Cash loans that are secured with your own assets are much easier for them to get the money back by forcing you to sell your assets. In most cases, loans that are secured are related to home and car loans. Cash loans bring about a very different set of circumstances. Here is a look at settling these debts yourself.

Debt Transfers. In most cases when you have problems with bank or other cash loans, and you are being contacted by a debt collection agency, the debt collection agency has taken on the debt themselves. This means the original provider has written you off from their books. There are a couple of advantages for them doing this. They will get some money from the debt you have with them, and they will get a tax break from the government. In most cases this will total to about 70% of what you originally owed them.
When You Are Contacted. If you are sure the debt is yours, it is important you state to the debt collection agency that you are unable to make payment at this time. You should state that you understand they want you to make payment, but it is just not possible at this time. You should then ask them to send you a letter in writing on how much they will be willing to accept.
Cease and Desist. There will be those debt collection agencies that will continually call you to try and force you into making payment. If you are being constantly contacted by a debt collection agency, you should send them a letter directly. This letter is a called a ‘Cease and Desist’ letter. This letter is a very formal document and has the legal power to force them to stop contacting you.
Hardship. Once you get the letter from the debt collection agency, you will probably find the amount is much higher than what you want to settle. At this point, you need to send a letter of ‘hardship’. All information that you can provide in your letter of hardship will help you in your case. Do not hold back on any information to communicate the difficulties you are having. You will probably find yourself in two situations after this process.
Settlement. By showing you only have a certain amount of available money to make repayments each month, the debt collection agency will probably have to accept that. You could enter into a monthly payment program. This type of agreement normally continues for an extremely long time. It is important you be careful about the agreement you are entering into. Debt collections agencies will often add many fees and interest to the amount you are actually agreeing on and this can lead to you paying back debts for many years to come. The other type of settlement is by single payment in full. If this is possible, this is the best type of offer you can make. You should send this letter to the debt collections company and wait for their response. You should make this offer as low as possible, and wait for an acceptance or counter-offer from the debt collection agency.

If you are trying to get a settlement with a debt collection agency, you should expect that the process will take some time. If you are too eager to settle the issue, the debt collection company will be aware of that, and you will not be able to reduce the amount. It is important you minimise phone call conversation and keep all the documentation that is exchanged between you and the collections agency.

Personal Loans Are Getting Cheaper

Mike — Fri, 15 Jul 2011 15:51:02 +0000

The shakedown in the economic climate over the last 2 years has changed the way loans are being financed and their respective interest rates. Finding the cheapest loans possible has become a really important pastime when looking for that extra finance, whatever the reason.

In fact, now it seems as though the small borrower is starting to pay more for the privilege of taking a loan out. Is that really the case or just a case of isolated instances?

From the research and current cheapest loans on the table at banks and financial brokers, this fact seems to stand up. Reports show that the rates for borrowing less than £7,000 have started to creep up over recent months.

In fact some institutions are no longer allowing personal loans below those sorts of levels. This is a real change of approach from the previously perceived practices.

The cheapest loans currently can be found within the band stretching from £7,000 to approximately £10,000 to £15,000 at the top end. Here, interest rates move around the average of 6-8%, depending on personal circumstances.

The way more financial lenders are processing loans has also changed. Gone are the days of the initial estimate, followed by credit check and then adjustment the borrower can see before proceeding.

The current trend is for the bank or lender to actual carry out a full financial credit check as soon as they can in the application. Usually, this happens as soon as you submit the application. In fact if your installments increase, you may not know until the paperwork arrives.

Of course potential customers hardly ever turn down the higher installments once they have the money almost in their hands. Slightly cunning or just the new way of thinking? The jury is still out.

But the practice has to be noted, because this is one of the things that may happen to you. The rates advertised are only headline rates, which may be changed to suit individual circumstances as the bank or Building Society sees fit.

By carrying out a hard check, you will be left with a search on your record whether you take the loan or not. This is something you should note.

So what is the best way to approach applying for a loan these days? For a start, you really need to have an exemplary credit record. Obviously the usual credit agencies are used, but there may also be other system checks as well.

Secondly, you need to carry out a value check for your own purposes. This is really to see if you are borrowing the right amount of money for your budget.

One thing you must avoid at all costs is the illusion that by borrowing more, you will pay less interest and ultimately save money. This is something you should not do without professional advice.

Borrowing £1,000 up front to try and get a lower interest rate is so deceptive. Not only do most applicants fail to see the danger, but also forget they will also be paying extra on that capital in interest for the full term of the loan.

So what is the best approach for finding a loan in today’s market? Well the rules and advice are still the same overall, no matter how much you are borrowing. Shop around for the cheapest loans, check for hard or soft credit checks and be realistic in your budget.

If you are looking at borrowing in the mid range of capital, your time is here and you need to make the most of it whilst you can. The position may shift without warning.

An Excellent Credit Range Yields Wider Ranges Of Lifestyle Options

J. Hamilton Fraser — Tue, 14 Jun 2011 21:54:10 +0000

Consumers who fall outside the excellent credit score range often find life much more difficult than others. Obtaining many luxuries and even basic necessities of life is much harder. Having good credit carries major impact upon your lifestyle, as it reflects your overall financial habits in a major way. Raising your credit score requires prompt bill payment and prudent financial planning. If you fail to take these steps, your credit score will steadily decline until you are unable to obtain new credit on any terms. In addition to being disqualified for many credit cards and loans, you will also be barred from certain employment and housing.

A harsh reality in today’s economy is that employers are increasingly seeking applicants who have good money management histories and sound fiscal habits. Consequently, they conduct pre-hiring credit checks.

Your credit score will remain low as long as you have delinquent debts and slow repayment habits. Lack of adequate financial resources can make it very hard to meet regular budgetary obligations, however. It is for precisely this reason that many consumers are finding out the benefits of and seeking out payday loans. A growing number of retailers, lenders, and similar businesses are extended payday loans. Most of the time, these providers do not require an excellent credit score range to be considered for these loans. Typically, employment verification and repayment of the entire loan by your next pay day is all they require. Hence, the “payday loan” moniker.

If, after careful consideration, you believe that a payday loan can best suit your needs, apply for one. If you are not already aware of a provider in your area, conduct an online search engine query for easy online payday loans. You may complete your entire loan application online and make payment on your immediately following payday. Such easy access to additional funds in emergencies or short-term financial crises is a fast, effective tool to help raise your credit score dramatically by avoiding delinquencies. This is a primary reason for the recent rise in the popularity of payday loans.

Have You Ever Been Mis-sold PPI?

Mike — Mon, 06 Jun 2011 05:52:29 +0000

Despite the spate of bad publicity given to it, Payment Protection Insurance does have benefits for some customers.

The UK’s Financial Services Authority investigated how PPI was sold and it found evidence of widespread mis-selling. Five companies received fines.

Yet for some people who take out loans, PPI can provide a vital lifeline in the eventuality that they cannot make their repayments if they lose their job or fall sick.

PPI is sold in conjunction with a range of loans, such as mortgages, credit and store cards and other products such as car finance. Whether or not it would be a good idea for a customer to take it depends very much on their individual circumstances.

If there are two earners within the household, it may be possible to cover repayments on the loan even if one person lost their job or became unable to work because of ill health.

Or perhaps savings could be used to continue making repayments until the situation improves. In both these cases, PPI may not be considered necessary.

Yet, even in dual income households, PPI could offer real peace of mind, especially when it’s unlikely that one pay check would be enough to cover monthly outgoings.

Not everyone is eligible to take out PPI. For example, you have to be in permanent employment which rules out many people such as students, home-makers or those who have already retired from work. The self-employed won’t be covered by most policies.

There are tight rules on how and when a PPI policy will pay out. Most will not cover claims made when an individual takes time off work for stress or back ache. Also, most policies will not pay out for the first 30 days of illness or job loss.

It’s important to note that you do not have to buy PPI from the same company that is making the loan to you. In fact, you may get a much better deal by shopping around, much in the same way that you would shop around with a company like moneysupermarket when looking for the best deal on other financial products.

Obviously the company making the loan to you would very much like you to buy a PPI policy from them, but you are completely at liberty to go elsewhere.

Furthermore, there is no legal requirement for you to have PPI at all. In the past, some companies implied that it was a condition of being offered a loan, but this was never the case and this situation has contributed to the bad publicity surrounding PPI.

If you take out PPI and subsequently have second thoughts after signing, you are legally entitled to cancel it, providing you do so within either 14 or 30 days, depending on the terms of your particular policy. This is known as the ‘cooling off’ period.

But if you took out the policy some time ago it is likely that you will have to pay a penalty charge if you want to cancel it. You won’t get back any of your premiums, unless you can show that you were mis-sold the insurance in the first place.

If the provider didn’t fully explain all the terms and conditions of the insurance to you when you bought it, you may have the right to a refund. You should have been given details of any exclusions on the policy.

If you feel that you were mis-sold PPI, write to your provider in the first instance setting out your reasons and asking for a refund of the cost of the insurance plus interest. If the company does not reply within eight weeks, or you are unhappy with their reply, you can complain to the Financial Ombudsman Service.

Despite the scare stories that persist around PPI, it can provide extremely worthwhile cover for people who experience unexpected changes in their circumstances such as losing their job, or being unable to work because of illness or accident.

New Auto Finance For Self Employed

Mike — Sat, 28 May 2011 08:26:55 +0000

If you’re a self employed individual, you likely have some of the same needs as someone who has an employer. This may include the needs to get a mortgage or auto loan. You may be worry about your ability to get an auto loan if you are self employed, but luckily, there are ways in which you can get the auto loan that you need. Just because you don’t have a traditional income record does not mean that you can’t take advantage of the same opportunities as the rest of the people in the world.

To get started, you will need to gather some of your own financial records. This includes current and past bank statements as well as past tax returns. It’s a good idea to collect two tax past returns, if possible. This will be used to show your proof of income as a self employed individual. With your tax returns and bank statements, a lender will be able to see how much money you have been bringing in over the years. This will help to show that you’re able to get a car loan and pay off your debts.

In order to get new auto finance for self employed, it’s a good idea to discuss your individual needs with lenders ahead of time. This will allow you to see if a certain lender is willing to give a loan to someone who is self employed. It can also properly prepare you so that you have the right documents in place when you try to go get your new automobile. Call around ahead of time to get as much information as possible. If possible, try to work with a lender who specializes in lending to self employed individuals. These lenders exists, just like lenders who specialize in lending money to with little or no credit history.

It’s also a good idea to go into the loan process with little debt and good credit history. If you’re able to wait a few months until you begin to pay more of your debts off, try to do so. You will look more attractive to a lender if you are very responsible with your financial affairs. You may want to bring proof of your own credit reports to make it more possible for you to get a loan.

Just because you’re self employed does not mean that you won’t be able to get a new car loan. It’s possible to get a new auto finance if you follow the right steps!

Loans for Self Employed – The Best Alternative to Traditional Banking and Lending Institutions

J. Hamilton Fraser — Thu, 26 May 2011 14:25:06 +0000

Being able to escape the rat race and having the opportunity to establish a business of your own can be one of your greatest achievements. After years of struggling to defeat the possibility of failure, independent workers and contractors now find themselves unable to avail of loans for self employed individuals because they are perceived to be high credit risks.

While they should be treated like workers who hold 9 to 5 jobs, small business owners and independent contractors are usually denied home loans for the self employed individuals by traditional banking and lending institutions because of their high risk status.

Due to the growing number of people who decided to go on business by themselves, a new breed of enterprising brokers and lending companies have thought of a way to increase their customer base. They have come up with the best home loans for self employed workers without the stringent criteria imposed by conventional banks and lending companies.

There are also payday loans for self employed people which can help them during a temporary or sudden financial crisis. These payday lenders can provide loans without collateral for as long as a self-employed borrower can repay it when their next payment check arrives. These lenders won’t bother with credit checking and will even grant loans for self employed individuals with bad credit history.

Payday lenders electronically send the approved amount into the borrower’s bank or checking account and, in the same manner, withdraws the principal amount and other fees on the loan’s maturity date. Borrowers must allow the lender to access their bank account in order to withdraw the repayment.

The biggest drawback of obtaining loans for self employed workers is the high interest charge it carries. This is because they are easy to obtain and don’t require credit checks or any form of collateral. However, repeat borrowers can avail of lower interests in the future if they prove to pay consistently on time.

How to Use Your Tax Return

Mike — Sun, 15 May 2011 14:33:24 +0000

You have your tax rebate in your hand and all you need to do now is decide how to spend it.

It may be more beneficial to use the money to improve your financial situation for the long term, rather than making a big purchase in the short term.

A good way to use your tax return effectively is to put it towards savings and debt payment or start an emergency fund.

There are lots of savings accounts and investments worthy of your tax rebate, depending on how you want to save. Setting up a regular savings account with the tax rebate and adding money to it each month is a smart financial decision.

Easy access and online accounts are great ways of keeping tabs on your savings from the comfort of your computer. Money can be withdrawn at any time and you can search for a wider range of accounts as you will only need a computer.

Fixed rate and notice accounts offer higher rates of interest and will make your money work harder, although you will be unable to access it for a set time period.

Using the money to set up a children’s savings account is a great way to encourage children to save from an early age. Invest each month and add in money from birthdays, for example, to gradually increase the pot. This can then be used for the future for university, a wedding or a first car.

Investing the money for the long term is the greatest risk with your tax rebate, but could gain the most in return. Depending on the amount of tax rebate, contemplate investing in more long term accounts and options to gain a good return.

If you have debts, then use the tax rebate to pay down debt in the first instance before opening savings accounts. Look at all your credit cards or loans and work out which debt has the highest interest charge and final balance and pay this off first.

Pay off debts, particularly if you get late notices and incur late payment charges and your credit score will be grateful. Once bad debt is paid off, you can put together a financial plan to ensure future money can be saved.

A good way to ease debts from multiple lenders could be to take out a debt consolidation loan and it may be worthwhile to look for the cheapest loans at moneysupermarket or another comparison website.

Starting an emergency fund is a good and wise use of a tax rebate, to save money for a rainy day. This way, when unexpected or financial emergencies arise, you gain some protection from debt.

Credit card and loan debt often arise from these unexpected bills, such as the car needing to be fixed or a vet bill.

If you already have a good financial plan in place, use the tax rebate to over pay on your mortgage. Most mortgage lenders allow small overpayments and this can make an overall impact on reducing the timescale.

Use your tax rebate to improve finances rather than going out straight to the mall to spend and you will gain much more than a one off purchase you probably don’t need.

Top 5 Incredibly Stupid Things Not To Do When Taking Out a Loan

Mike — Mon, 28 Mar 2011 05:45:26 +0000

What’s fragile, easy to damage, extremely hard to repair, and can cost you a fortune? Answer- Your credit rating. Despite all the education and consumer groups trying to wise people up to their credit rating risks, people continue to do unbelievably dumb things when taking out loans. The usual result is a trashed credit rating, getting to spend a lot of time talking to debt collectors, and in some cases sabotaging their own futures.

For some reason, credit scams are considered clever by some people. These “clever” tricks could best be described as “credit suicide”. It’s not a great idea, any way you look at it. It only takes one stupid scam to totally destroy your credit rating.

Credit can do wonders for those who know how to use it. Some of the world’s richest people have quite literally built their fortunes on credit. They did it with excellent credit ratings. Some businesses know how to thrive on credit, managing their loans very efficiently, and building up their capital. They did it because they were seen as good credit risks.

The dumbest of the dumb things

Fake IDs- Identity theft is getting very old. ID checks can be very efficient. When taking out a loan, it can be an extremely stupid thing to try to do. Imagine stealing the identity of someone who can easily prove that it wasn’t them who applied for the loan. There’s also a possibility of poetic justice- Stealing the ID of someone with a truly lousy credit rating.
Lying to credit providers- This is perhaps the oldest, and still one of the stupidest, things to do when getting a loan. It’s extremely easy to check information about borrowers these days, and trying to trick the credit providers tends to produce a lot of very bad credit rating information.
Fake assets- This one is sometimes in a league of its own for over-achieving dumbness. Try claiming to have a few million in assets like real estate with all your cash tied up, and going for a short term loan of $10,000. Is it likely? Do multimillionaires go begging for small change? It’s good for a laugh from the debt recovery guys, but not for a loan, or a good credit rating.
Repayment blunders- Some people take out perfectly good loans legitimately, and then go out of focus. They spend or gamble their loan money, and then, unsurprisingly, have trouble repaying. This is common enough, and it’s also the major reason for a truly lousy credit rating.
“Loan shuffling”- This is the process of borrowing to pay for other borrowings. This isn’t “debt consolidation”, it’s financial lunacy. Loan shuffling never works, because it can’t work. This particular dodge can annihilate personal credit like a nuclear strike. There are many things which can be written on a credit rating, but this particular mistake gets entries which basically mean “This person is an idiot who can’t even do basic arithmetic”, and it’s the literal, documented truth.

If you want to take out a loan, do it properly, pay it off properly, and you’ll never have a problem getting another loan.

How much easier could it get?