Loans Blog

Most people make resolutions out of habit or tradition, but nearly a third genuinely hope to change their behaviour. Sadly, however, over half falter in less than three months. With many resolutions for 2009 targeted at sorting out financial problems this is worrying.

A survey by Gocompare. com indicates that, of the 43 per cent of people now making New Year resolutions, most have pledged to sort out their finances and pay off their debts, including credit cards and personal loans.

Nearly half plan to reduce loan and credit-card costs; 42 per cent want to save money on outgoings; 41 per cent intend to invest in the stock market; 15 per cent plan to save more in a deposit account; and 10 per cent to invest in a pension.

It’s not surprising that sorting out financial problems is the top priority for many people, given the economic climate, but a very special effort will be needed this year to avoid being amongst the majority who fail to achieve their goals. The good news is that it is do-able so go for it and have A Very Happy New Year!

1. Previous occupants of my address affect my credit rating - Nope, as long as you didn’t share a financial connection

2. Credit reference agencies help make lending decisions - Nope (and yep), they only hold your credit report but this info is used by lenders to help them make the decision

3. Past debts don’t count (some people do believe this) - Nope, they do, and some stay on your record for at least six years. Even a missed payment stays on for at least 3 years.

4. If you’ve never borrowed, you’ll get the best deals - Nope, lenders prefer to see that you can manage debt and make regular, full repayment of all your personal loans.

5. I could be on a credit blacklist - Nope, they don’t exist. Credit reports do not take account of race, religion, gender or where you live. But they obviously do indicate your creditworthiness but each case is individual and there is no blacklist.

6. Friends and family living at my home affect my credit rating - Nope, unless you share a financial connection with them

7. Repaying your credit cards in full depresses your credit score - Nope, quite the opposite. Late and missed payments do the damage.

8. It doesn’t matter how many credit accounts you have - Nope, it does. If it looks as if you’re trying to borrow a lot in a short period of time, lenders may think you’re desperate for money or even suspect fraud.

9. You only have one credit score - Nope , each lender uses a different system for judging your creditworthiness.

10. Items in your credit history stay on file forever - Nope, most information about your credit history is held for between three and six years.

A pay-day loan does what it says; it lends you money till your next pay-day. A godsend you might think if you are in dire need. But interest charges can be crazy – an annual rate of up to 2000% is possible.

Of course these are short term loans so the annual rate does not really apply, unless of course you end up borrowing every month. According to the British Cheque Cashers Association, a typical pay-day loan is £88 for 28 days with a £12 charge. So you pay back £100 – an interest payment of 12%. That doesn’t sound unreasonable until you discover that it would amount to around 430% APR.

But there is another way of looking at pay-day loans. If you are running up an overdraft which would cost you £30 at the end of the month, paying £12 to borrow enough to avoid it seems like a good idea. The key to it all though is never to miss paying back the pay-day loan on time. Some can charge you a very high flat fee (up to 60% of your loan). Also, don’t get so reliant on these loans that you are taking one out every month. If you have got into this situation you would probably be better off with a personal loan or consolidation loan.

Bringing together all your debts into a single consolidation loan can be the answer to affording your regular monthly repayments which over time have become unmanageable. But you need to take some care when choosing your consolidation loan provider.

In a difficult financial climate there is a growing number of organisations appearing in the media to offer solutions. Often the ones spending the most on advertising are the ones charging the highest interest rates. Although you do need to be sure you find a reputable provider, it is worth investing time into shopping around to find lesser-known lenders who may offer better rates. Smaller companies will have to work harder to find customers which is why they may have to set lower interest rates.

So remember, although you may have found yourself in financial difficulties, you are still a valuable customer.

According to research from Alliance and Leicester almost 14 million of us failed to save anything in 2008 and one in seven say they aren't concerned about it.

Perhaps more surprisingly 31 million Britons (around 64% of respondents) did manage to put at least some money away during this very difficult year and one in five of these people said they had been shaken by the financial situation.

Ten percent of Britons plan to start saving for the first time in the new year to build some reserves against the future and cutting down on spending is the third most popular new year’s resolution – behind exercising and dieting.

Chances are that most incomes will go towards meeting existing commitments such as mortgage repayments, utility bills, personal loan payments and so on, leaving little to save.

According to Jonathon Loynes, chief European economist at Capital Economics, the Bank of England’s monetary policy committee could reduce the interest rate to 0% in the near future. He claims there are no insurmountable technical obstacles to this.

The government has set 2% as the target inflation rate and it reached 4.1% last month so there is some incentive to keep dropping the interest rate.

Sadly the continued drops in the interest rate have not been reflected in the rate for personal loans which has tended to rise as loans become scarcer.

I don’t want to worry you but, as a nation, we owe £1,500,000,000,000. If you want to speak it, its one and a half trillion pounds – try it, it’s very scary.

What’s worse, it doesn’t look as though we can pay it back based on growing repossessions and missed mortgage payments. The average household in the UK with personal, unsecured debt, such as personal loans or credit cards, owes £22,190. If you include mortgages, the average household debt is £59,715.

Just focusing on Gordon Brown’s bail outs, which amount to some £500,000,000,000, reveals that we are paying about £8,000 each to rescue the banking system. You can’t help asking yourself, ‘Would they have done that for me?’

£20,000,000,000 of the bail-out money has gone directly to the Royal Bank of Scotland – which made a net profit of £7.5 billion in 2007. Mmmm. You know that advice about not getting yourself into debt beyond your means to repay and also the sound principle of putting money away in the good times against possible adversity?...

If all this depresses you, look at it another way. That personal loan you took out to buy yourself a nice new car is only a pittance compared to the debt mess Gordon Brown is in, and he’s an experienced chancellor of the exchequer and a very, very prudent man. What chance have you got if he can’t manage his finances?

The Times Online has published the 10 most expensive streets in England and Wales. Whilst most of us might be struggling to get a mortgage, worrying about negative equity or our creditworthiness for a personal loan, it’s unlikely that residents in these streets will have such worries:-

NORTH: Runnymede Road, Newcastle Upon Tyne. Average price: £1,135,625 (Alan Shearer and Kieron Dyer have lived here)

YORKSHIRE & THE HUMBER: Kent Road, Harrogate. Average Price: £1,173,373 (Attracts wealthy families as well as premiership footballers. Buyers will wait years for the right house on this road to come up for sale)

NORTH WEST: Congleton Road, Alderley Edge. Average price: £1,684,166 ( Home to Cristiano Ronaldo and Peter Crouch, it is the haunt of many premiership football players, pop stars and Coronation Street actors)

EAST MIDLANDS: Beeston Fields Drive, Nottingham. Average price: £972,214 (Owners tend to be entrepreneurs, sport agents and CEOs. Jane Torvill, the ice skater, bought a house here after winning her Olympic gold medal).

WEST MIDLANDS: Wellington Road, Birmingham. Average price: £945,500

EAST ANGLIA: Brooklands Avenue, Cambridge. Average price: £940,714

SOUTH WEST: Panorama Road, Poole. Average price: £4,158,333 (This is a road of two halves – on one side lie mansions with a harbour view, whilst the other side has smaller houses and apartments with no view. Harry Redknapp, manager of Tottenham Hotspur football club, has lived here.)

SOUTH EAST: East Road, Weybridge. Average price: £2,805,000 (John Lennon, Cliff Richard and Tom Jones have all lived here, and it has its own tennis and golf club.)

GREATER LONDON: The Vale, Kensington and Chelsea. Average price: £4,677,500

WALES: Llantrithyd Road, Vale of Glamorgan. Average price: £752,083

There is no doubt that it is not so easy to get a loan these days. Even a few months ago lenders were falling over themselves to offer you quite amazing amounts at relatively low interest. Now the rates are significantly higher and many loan companies are simply trying to avoid lending.

This is the time to look for help if you need a loan. Let someone who understands the market search out the best deal for you. You may be surprised at the terms that can still be achieved. One of the easiest ways to do this is to use the services of personalloansmadeeasy.co.uk. All you do is fill out a simple online form and they will do all the work for you – and it’s FREE!
If you're looking for a home loan, car loan, holiday loan, commercial loan, secured loan or a consolidation loan, they are truly useful (if you want to chat you can call them on 08844 560 7703)

They will find you a professional loans company that can help you get the loan you need for any purpose, even if the high street banks have turned you down. And if you’ve had credit problems in the past, or have no proof of income they can still help.

In tough times like these it makes a lot of sense to get experts on your side and working for you. Give them a try – there’s no commitment and no charge.

As net borrowing soared to £16 billion in November and the Government hurls more and more cash back at us with instructions to spend, spend, spend, the Archbishop of Canterbury questioned whether increased spending was the right way to tackle the downturn – he said it was like “the addict returning to the drug”

So now we have not only German Finance Ministers telling Gordon he’s wrong but also the head of the Church of England. Whatever next – a British Prime Minister who is as comfortable speaking from the pulpit as he is from the despatch box in the House of Commons?

To be fair to Dr Rowan Williams, two years ago the chances of dour, tight-fisted Chancellor Gordon crop-spraying recklessly borrowed cash across the population and yelling at us to spend it NOW were as likely as Scrooge presenting a life-size turkey to Tiny Tim. It just somehow doesn’t feel right does it? You have an uneasy feeling about it. As if Gordon’s scruples and morals might have been jettisoned in favour of cultivating the hero worship of the world he is saving.

Cue the highly moral Dr Williams.

The archbishop told BBC Radio 4's Today programme that the country had been “going in the wrong direction” for decades by relying on financial speculation to generate wealth quickly rather than “making things”. The downturn, he added, might force people to rediscover the need for patience if they want to build sustainable wealth.

Mmmm...don’t recall the archbishop actively opposing this kind of wealth generation before it all went wrong (but I may have missed it). And you have to ask how much he knows about drug addiction, or getting a mortgage, paying bills etc etc.

So whilst it’s nice to watch the comfortably-off debate concepts of Keynesianism and morality, we lesser mortals must focus on meeting the financial costs of the religious festival traditions whilst , at the same time , fending off our regular creditors. Neither the archbishop’s ‘patience’ nor Gordon’s 2.5% VAT cut is likely to help us in the here and now – but a personal loan wouldn’t go amiss.

Here’s an odd situation. There are moves afoot to restrict the selling of Payment Protection Insurance (PPI) alongside a personal loan - just at a time when unemployment claims on such policies are reported to have grown by 69% in a twelve month period.

Because of growing concerns about PPI being pressure sold, often at very high prices, to people taking out a loan, the Competition Commission is proposing tough clamp-downs that are likely to result in reduced sales of this type of policy.

The Association of British Assurers describe this move as ‘devastating’, arguing that stopping sales of PPI at the point of selling a loan will mean borrowers won’t bother insuring themselves. Against this is the argument that borrowers will have breathing space to find much cheaper PPI cover on the open market.

Awkward one this, but surely the best way is never to give in to pressure to buy PPI at exactly the same time as you take out the loan (usually from the loan arranger) BUT to make sure you do follow-up by looking at the merits of arranging this cover independently. It doesn’t just cover unemployment, (which is likely to be a bigger factor now than in recent years), it also covers you against loss of earnings from accidents or sickness.

The Guardian reports that doorstep lenders are set to collect £37m in interest payments from some of the UK's poorest families who borrow money to cover the cost of Christmas (guardian.co.uk 19th December 2008).

According to the article the average parent planned to spend £137 on presents for their children this year, and people who were financially excluded would be forced to borrow this money from doorstep lenders at interest rates of up to 600%. The prospects were even worse for those forced to turn to illegal loan sharks, some of whom charge 8,000% interest.

Trying to enjoy the festive season without incurring a financial hangover in the New Year is difficult for many people and, obviously, those that do have serious financial problems should seek professional advice as soon as possible because the longer they leave it, the worse it becomes.

However it is also important to search for credit deals that will minimise interest and offer affordable repayments. Bad credit loans can be the answer and, although they charge more interest than standard loans, they can be a much better alternative to doorstep loans (and certainly better than illegal loans).

If you have a poor credit rating and need more money you will need to apply for a bad credit loan. Around 1 in 5 people in the UK have bad credit so you are not alone and this is why lenders now offer a wider range of competitive deals in this area.

Although an adverse credit rating can mean that, if you are forced to take out a loan, you will have to pay a higher rate of interest it can also be a way of rebuilding your credit rating providing you keep up with your repayments.

So if you have had problems with debt in the past don’t despair. There are still deals to be had – and you don’t need to take the first deal you are offered, it pays to check around.

Famous economist John Maynard Keynes observed in 1931 (during the Great Depression): "A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him."

Are you comforted knowing that no-one is to blame for the financial disaster which is engulfing us all? Do you feel reassured because it’s a ‘Global Problem’ that Gordon is dealing with (because he really can save the world you know)?

There is a sort of bonhomie abroad (no, it’s not a good life in France) that encourages us to smile, tut good-humouredly, and roll our eyes to heaven as we hear of another high street giant toppled.

“Woolies gone, eh? Whatever next?”

But will we shrug our shoulders stoically as our homes are repossessed? Will we happily tune in to see which of the Big Bother housemates tops themselves first as everything they had is taken away? Mmm..actually that last idea might be worth pitching - no, stop it, stay on message.

Thing is, it genuinely isn’t our FAULT (unless you are one of those blameless sound bankers) but it is our PROBLEM. Wrapping the whole thing up as a Global Problem and leaving it to Darling Brown Inc to sort it out really won’t ensure our personal survival.

Instead of saving the world maybe Gordon should be offering us some advice for our own financial survival (no, maybe not).

Crucial to most of us is keeping our job, our home and enough income to pay for essentials – anything else is a luxury as recession bites. The debt we have already incurred and the debt we might have to incur to ensure we meet these key costs needs careful thought. Extension of debt term and debt consolidation are two prime methods of easing the burden. Also, in emergencies, contacting the loan provider and/or debt advice services is essential.

Above all, don’t be fooled into thinking someone else is dealing with this really nasty financial situation so you don’t have to – make sure you save your world!

Ever thought of starting an online business as a way of earning extra income (or maybe your main income)? As times get tougher and bills get bigger it could be a way of helping to maintain your standard of living.

Whilst start-up costs are comparatively low for an internet business, it is likely you will have some expenses. Computer hardware and software need to be of a reasonably high quality and you may need to pay marketing costs to get customers in. So, if you haven’t got spare cash, how do you get started?

Most people think of business loans first since that is what they are for. But there may be difficulties. Often you need to have been running your business for quite a period to show sufficient credit history.

Personal loans on the other hand can be used for almost any purpose and may be the quickest route to get your business up and running. How much you can borrow will depend on your credit worthiness but the loan does not need security or proof of business profitability.

You will need to calculate your likely profit from your online business to determine how much you can expect to pay in loan repayments and still gain extra income. The size of loan does not have to be large. Even if you have to buy a PC, peripherals and software you can do this for £1000-£1500. Adding in other initial set up costs and advertising might mean you need as much again so a total loan of £3000 could do the trick. Of course this assumes you don’t already have a suitable PC.

A personal loan could be a no-hassle quick start to budding online entrepreneurs.

No 7. Property

There’s good news and bad news on the property front. Prices are falling fast and our homes are losing value compared to just a few months ago. So what’s the good news? Well if you’re a first time buyer there are some brilliant deals cropping up – especially if you can benefit from a forced sale.

If, on the other hand, you are a homeowner facing financial hardship and threatened by one of those forced sale situations the present crisis can seem like a nightmare. So, be careful with debt – the less you have the safer you are from a crisis.

There are ways to avoid being forced to sell at a desperate price. If you must move consider renting out your home instead of selling. And if you just need a temporary fund to get you by, you might consider a low-interest personal loan, although be mindful of the advice about debt above.

If you can ride out the storm without selling then you should come out of this OK – it was the best strategy during the crash of the 1980s.

No 6. Budgeting and debt

It’s not rocket science but old fashioned budgeting comes into its own when outgoings rise to the point of crisis. And this is a relatively simple, if depressing, task.

Draw up a list of absolutely everything you spend and go through it rigorously and honestly to see if there is anything you could ditch or spend less on. Do you need the items you pay for via direct debit? Subscriptions should be looked at first – could you live without magazines etc.? Routine daily costs might offer savings – newspapers, take-out coffee, bought lunches. If you owe money on credit cards or a personal loan, check if you can switch the debt to cheaper or no interest providers.

Yes, it’s a miserable, belt-tightening exercise, but you might feel better for doing it if it balances the budget.

No 5. Savings

Now is not a great time for savers! In any case the government wants you to spend to help the economy.

It is still worth scanning the market as deals will vary as they always have done. You might want to ensure your money is saved somewhere that you can easily get at it in case you need cashflow for an emergency. Instant access accounts are what you need for this.

Look carefully to see whether the money you have put away is best left there or maybe used to buy something you want that is now at an all time low price. If you have a fixed rate of return on your savings though you might find it worth taking out a personal loan at the recently announced lower rates.

No 4. Pensions

There is no doubt that people who are about to draw their pensions are in a very difficult position because of current economic conditions. Major failures in the stock market have affected the values of nearly all pension funds and deficits are rising steeply.

If you are just retiring now make a strenuous effort to see if you can delay drawing on your pension fund at present. Look carefully to see if you can get by on other money for a brief period in the hope that funds will recover before you have to start your pension. Even taking a personal loan might be worth doing.

You can ask for a statement from your provider if you have concerns. If you still have a few years to go before retirement check to see if your pension provider has transferred funds out of equities and into safer cash or fixed interest assets It is usual to do this five years before your retirement date and you can do it earlier if you think it is advisable. It is best to check with your financial adviser.

No 3. Mortgages

If your monthly mortgage payments include an element which is repaying your capital borrowing and you are really struggling financially to meet all your commitments, you might want to consider switching to an interest-only mortgage arrangement if your provider will agree.

You may have to pay a fee for the privilege of doing this but it could save quite a chunk off your monthly payments. However it is worth stressing that such a move, even though very attractive when things are tough, can tempt you not to resume capital payments when things improve and this, in turn, might mean you are not able to pay off the loan at the end of the term.

An alternative is to extend the term of your mortgage if you are able to. This will also reduce monthly costs but will mean you pay more in the long run.

If your current difficulties are only very short term it may be preferable to leave your mortgage as it is and take out a personal loan to help get you through the worst of things

No 2. Investments

Right now any stock market investments you may own are likely to be looking a bit sick and quite probably worth a lot less than just six months back. The general advice is to leave them where they are if you can as the stock market is expected to rise again in the medium term and is highly likely to cover your losses.

The exception might be where you know you will need to cash in your assets soon (e.g., retirement). Here you should look at taking out your cash and switching it into safer cash or fixed interest assets in case things get a lot worse. However, if you only need a small amount of cash to get by or make a specific purchase it may make more sense to take out a personal loan rather than cash in currently low-value shares.

If, on the other hand, you still have cash to invest now might be a very good time to grab some very cheap shares. Brokers report healthy activity in this area.

No 1. Keeping your job

The likely major slowdown in consumer expenditure will mean businesses struggling to survive and a good chance of staff cutbacks. Higher unemployment means even less purchasing and therefore more job losses.

Although there isn’t much you can do in the face of wholesale downsizing, you can make some moves to try to ensure, when only a partial downsizing of staff occurs, that you are less likely to be chosen.

Demonstrate that you understand that the company is facing difficulties and make it clear you want to be flexible in order to help. Don’t resist changes that might help with survival, even if it means taking on work that wasn’t previously yours. Try to read the likely way things will go and be proactive in offering solutions in your area.

The company will want get through this period any way it can – so offer help and make sure you are still with it when it comes out of recession. In extreme circumstances part of the cost of keeping your job may entail salary cuts or at least lack of expected increases. Try to get by instead of formally complaining – it may be that you will need a personal loan to get you through until better times arrive.