The Debt Advice Online Blog

Many people have questions about loans and borrowing procedures. Asking the right questions to the bank will give you a better idea of what you are getting into when you want to borrow money. Lenders should always welcome your questions so you will have a good understanding of your loan.

Some of the most common questions are often left unasked because of embarrassment or misunderstanding. Having an open dialogue with your lender will open your eyes to the process of securing a loan from the bank.

The first question you will need to ask your lender is how much money you can borrow. Depending on what you want to use the loan for, the bank can give you their specifics on how much money they can lend for that type of loan. For example, a personal loan will most likely be on average a lot less money than a home loan. Based on that, you should also only borrow the amount that you need. If you borrow too much more, then you will get stuck with more interest than if you had only borrowed the amount you need. You should also ask your lender how small of a loan you can borrow as well.

Another question you will need to ask is about the availability of the loan. If you are in a hurry to get your hands on the money, you may be in for a surprise. Some lenders will take longer than others. If you have worked with that bank before, you may have a quicker turnaround that a new customer coming to borrow money. Try to work with people that you have worked with before, if at all possible.

You will also want to discuss the interest rate and types of loans that you want. The lender will be able to explain these options thoroughly to you, but if you still have any questions about the rates or types of loans, do not hesitate to ask. The lender is there to make sure that you understand what the loan is asking of you.

If you are worried that you may get into a situation sometime within the duration of the loan where you will not be able to make payments, it would be a good idea to look into a payment protection insurance. This will protect your loan repayments in case of a job loss, illness, or other type of financial difficulty. The payment protection plan is most cases will also cover you in death so that your family will not have to worry about that particular matter.

Remember that the lender is there to answer any questions that you may have, especially with the loan application. The written application is an important process in acquiring you loan. Making sure that everything is filled in correctly is important. You can get help with you application from any lender. It is better to feel like you are asking too many questions rather than not understanding something that will impact you financial future.

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Car finance refers to the money borrowed from an institution to purchase a car. Normally it becomes a form of loan which you have to pay back over an agreed period of time. Depending on your financial position, you can finance a new car or the used one.

You can get your car financed simply by applying for a loan. Loan can be applied either with a specialized lending institution or with a car yard for itself. Car financing is simple in the sense that cars are collateral so the risk to the lender is low. If you default on payment, they can simply repossess the car.

How can you get your car financed?

It is important to check your credit up front before going for financing a car. The better your credit, the lower your financing rate will be. Make sure you have a credit report free of mistake or omission. Make comparison of all the sources and go for the one where you can apply soon and can be delivered a check as early as the next day.

Through Local Banks or Credit Unions

Try to go for a local bank or credit union in order to finance a car. Local bank facilitates the possibility of relationship with your banker but rates may be uncompetitive. In case of credit union you are facilitated much because your car payments are deducted from your pay.

Through Home Equity Loans

It has become the most popular way to finance a car in recent year. The possible tax deductibility of the interest paid on such loans is the biggest advantage of such loans. But it is always recommended that not to borrow in excess of your home’s value.

Through Dealer financing

Dealer financing may or may not be the best option for you to go for car finance. The only advantage of dealer financing is that you buy and finance at the same place. Variation of the interest rates makes it a non favorable method of financing the car as dealer sells the car for his profit not for yours.

Through Leasing

Check out that leasing can be advantageous for you or not. It suits to some of the customers. For the others, it can be a complete disaster.

Important Factors

• Always look at the deal you are getting before applying for car finance. Consider the interest rate and try to get as low as possible.
• For the people with bad credit history, it is harder to get a good deal but your credit rating will be improved if you keep up with your payments.
• Some companies will charge a penalty if you pay off the loan early. Try to find out what penalties are occurred if you miss the payment or want to pay off early.
• Try to get help from loan calculators which are tools to make good choice while going for car finance. These calculators tell you the total cost of your loan and how much you have to pay monthly.

• If you keep cars for longer period, it is ok but if you trend to trade frequently, it is problematic and can become a night mare. You can prevent this situation through following ways

- Over extension of your finance terms can be harmful for you. For example, 72 or 48 months reduce your payments but locks you into the care for at lest 3 to 5 years.

- Buy payment protection insurance only in case you can really buy it, because otherwise it can cost you much more.

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Self employed are the people who work at their own place, setting up their own work schedule. People who fall under this category include solicitor or proprietor. Self employed loans are the ones required by the self employed people because they find it difficult to obtain financing as they do not have any income to show to the lender.

When self employed people go for self employed loans, their request is not usually entertained by the lender because they don’t consider the self employed worthy enough to qualify for their loans. But these days a large number of loan provider have come up with special loan deals for the self employed people because they are aware of the high paying potential of the self employed people. Loan providers usually hit upon the flexible method of payment by which self employed borrower can make payments towards the self employed loans more comfortably. Borrower pays as much as he can against the loan taken. For example, over payments and under payments are allowed. Moreover, the borrower himself can decide the payment according to his state of financial affairs. Through self employed loans, borrowers can convert the excess of equity in their home. Lenders make the self employed loans more flexible by not interrupting in the borrower decision of usage.

Types of Self Employed Loans

1: Secured self Employed loans

If you are self employed and own a property which is worth more than the mortgage, secured loans are available against the equity. These loans offer larger financial amount and a longer period of repayment which ranges up to 25 years.

2: Unsecured Self Employed Loans

Self employed people even the ones with no proof of income can avail these loans. Without certification, you as a borrower are considered as risk and lender may quote a higher rate of interest.

3: Self Certification Loans

Help is now at hand for uncertified people with self certification loan. You can borrow up to 90% of the value of your property on earned income shown on a self certified basis. This applies for the incomes which are up to £50, 000 per annum.

4: Self employment loan protection

There are also protection methods that insure you from illness, accident or other situations when you are unable to make payments on loans. It is to be noted that self employed people have slight more restriction while going for any protection plan than the ones who are paid employees.

Advantages

• Self employed loans can be obtained with or without security
• Like other loans, they can be used for any purpose
• They come up with the same rates of interest and benefits as the other loans do
• They can be acquired with or without income account
• Self certification is also permitted in order to get these loans

Disadvantages

• Self employed loan can be a tricky thing if the person has not been employed for two years or so.
• Income tax returns are required from self employed people to get self employed loans.
• Rate of interest are higher as borrower is risky being self employed.

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Introduction

An unsecured loan is provided to the borrower without demanding any security to use as collateral for the loan. Amounts offered by unsecured loans may vary from £250 to £25,000 and it can be used for various purposes including debt consolidation. An unsecured loan usually has a fixed term with a fixed rate of interest and is supposed to be repaid monthly.

Criteria

Lender’s decision to provide you with an unsecured loan depends upon your personal credit history which is verified by a credit check to determine your credit rating. For this purpose the lender will use an approved credit reference agency to reach your credit rating. Every time when a credit check is requested by the lender, it gets noted on your credit rating by the credit reference agency and in the future credit checks also. A lender should always inform you when a credit reference check is being carried out and also if a credit account information is being stored with a credit reference agency.

Unsecured Bad Credit Loans

Such loans are offered for the people who have bad credit history. Although the lender has no claim on any of your assets but he definitely resorts to other legal cures to claim his money. A person going for unsecured loan with a bad credit history must understand that the interest rate offered to him differs from the other ones. The interest rate in your particular case is determined by loan amount, income, credit score, and above all your financial conditions. The amounts of bad credit unsecured loans vary from £500 to £25,000.

Unsecured Loans for Tenants and Homeowners

Tenants living with parents, council tenants and homeowners can also get these loans easily. These loans are available for any purpose depending upon the status and affordability. Homeowners are also opting for unsecured loans these days. This is because of the rising number of repossession incidences caused by the missing repayments on secured loans.

Unsecured Business Loans

In these loans, the entrepreneur pledges no assets as repossession if the repayments are missing or defaulted. Under these loans, there are prime customer groups who do not attach business asset to any obligation. Business person with bad credit history also make use of this category of loan. The terms and conditions of unsecured business loan are a result of consultation and mutual cooperation of borrower and the loan provider. Although the amount received through these loans can be used for various business purposes but the expenses and the interest rates charged on these loans are comparatively higher. However, the organization where finance is needed or urgent basis, these loans can be the best option to choose.

Advantages of unsecured loans

• Unsecured loan do not demand any property to use as collateral for the loan.
• These loans promise a sum of money in a short period of time.
• When it comes to finance for poor people’ health, these loan come in fore front with a debt status reduced to 40-60%.
• Those who want to borrow up to around £15,000, and the ones having good credit history with the ability of making repayments, unsecured loan is a good option to choose.
• These loans are quicker to arrange and funds are available within 24-48 hours of accepting the loan.

Disadvantages

• Since these loans offer reduced security to the lender, they are difficult to arrange.
• The people with bad credit history are less likely to achieve this loan.
• They offer much higher interest rates.

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Payday loan is a very short term loan ranging over 1-2 weeks. Cash Advance, Pay Check Loan, Check Loans and Payroll Advance Loans are other names of payday loans. Payday loan aims to meet the needs of people’s day to day expenses. As it is a need for day to day expenses, delays are inevitable. That’s why payday loans are available for a short period of time. The amount you can avail with payday loans ranges from £80 to £100. It is better to repay these loans earlier because they can bundle you up with the increasing load of interest rates.

Criteria

Before you go for a pay day loan, you must have a current valid bank account that can support your goodwill in the loan market. If supplemented by all necessary document application for a payday loan does not take time to get approved. Once your loan is approved, the money will be transferred on the same day and on the following day you are able to get hold of the cash. Your pay date decides the due date for the repayment of payday loans. Payment period ranges from 14 to 18 days. You can change your due date or extend it by negotiating the matter with your loan company.

Necessity of payday loan

• A payday loan is needed when you fail to manage your budget properly.
• When unexpected expenses often hit you at the most inconvenient times
• You are unable to maintain your urgent family expenses like paying of your medical bills, phone bills, house rent or some other utility bills.

Bad credit cash payday loan

This type of loan can be availed by the people having bad credit history. These cash loans provide a relief to the people having bad credit rating. If they find themselves in the condition of money shortage and the payday still very far, through these loans they can borrow money till their next payday. To get this loan there are some simple conditions to be followed

• You must be UK resident adult
• You should be a regular employed worker since the last six months
• You must have regular residence since the last three months

These loans can be approved with in 24 hours or so after application is submitted. The approval amount for this loan ranges from £100 -£1500 and can be borrowed for 14-31 days. Due amount is automatically deducted by the lender on the next salary day of the borrower. Through bad credit cash payment loans the needs of the borrowers are fulfilled easily with out being affected for the bad credit rating.

Advantages

• Payday loans are instant loans so they can meet urgent financial needs.
• With these loans lenders do not take any security while offering the loan.
• Lenders in case of payday loans do not check the credit histories allowing bad credit borrower to avail these loans as well.
• These loans are accessible to twenty four hour a day to provide timely financial assistance to the borrower.
• These loans make you able to extend the repayment duration by paying an extra fee to the lender.
• Disadvantages

• These loans usually have high rate of interest and are bound to be availed by UK residents only.
• These loan require a full repayment, otherwise your credit rating can be affected negatively.
• The credit cards and loans available for bad credit history people have lower limit and higher interest rates.

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If you do not own your own home then your options are cut down when it comes to borrowing money because you cannot obtain a secured loan. You need to own your own home in order to be granted secured debt, but what if your credit is poor or could be better? If this is the case then you are likely to get turned down for unsecured loans and credit cards, despite the fact that you are struggling financially and a loan would be a welcome cash boost. However, the financial market is not as rigid as it once was in that where there is demand, you can guarantee that there are products on offer to fulfil it. In more simple terms, if you have a financial need then you can guarantee that there is a product out there for you. This is where the tenant loan comes in!

The tenant loan is a product on offer to private and council tenants alike. You can obtain a tenants loan even if you are living with your parents or lodging with a friend and need something, such as a car. The whole point of a tenant loan is to offer a financial solution to those individuals that do not own their own home or indeed any property to secure a loan against. As such, they are unsecured and can indeed offer you the amount you need. However, before you look any further into the possibility of a tenant loan, there are some things that you need to know about them and the lending companies that offer them:

• Interest rates are higher for tenant loans than secured loans, but the rates tend to depend on the nature of the loan and your credit rating. In general, the worse your credit rating, the more interest you are likely to be charged as a result. Those offered to individuals with excellent or good credit scoring can dip below 10%, but loans for those with poor credit ratings are usually nearer the 17% to 25% mark.
• Some companies offering tenant loans do tend to have strict eligibility criteria, meaning that you have to fit into a specific group in order to benefit. For example, the lenders that are not prepared to take a chance on those individuals with bad credit will not allow a scoring of any less than good in terms of eligibility. Others require that you have been in your current employment for more than two years. Then there are those that actually require a certain level of income before they will loan money to ensure that you can meet your financial obligations and repay the debt.
• Tenant loans are available to the self-employed. Some companies will loan to those individuals that own their own business and can prove their income from the last tax year. They may ask to see your account and other documentation that can back up your income estimates, but they will take a chance if everything checks out.
• If you have CCJs and defaults against your name, there are companies that will offer you a tenant loan, but you do have to look for specialist companies if this applies to you because many high street banks and lenders will not consider those with such things against their name. It is considered too much of a risk for most.

Finally, tenant loans come in many forms, although the most popular is the any purpose loan. This is obviously available for any purpose, such as a holiday, car or debt consolidation for example. Some are more short terms loans that are designed to cover a period of time rather than a more ongoing item/period. For example, lending for Christmas comes into this category.