Categories
Loan Types

An Honest Introduction to Payday Loans

Payday loans are a convenient method for borrowing a certain amount of money for an extended period. With proper planning and good intention, a payday loan can help you overcome your financial obstacles.

A credit check is not needed for a payday loan. As long as you have a job or a bank account, a personal guarantee, you are good to go. These loans are unsecured and unguaranteed. However, it is super important for you to be honest with the lender when answering their questions about your credit history and financial situation.

Advantages of Payday Loans

An important advantage of these loans is that they can help you out of an emergency that arises between paydays. This can come in handy when you have to pay medical bills, rent, or utility bills without the funds in your hand.

Most payday lenders understand that there is no safety net for those who are working irregular hours. They also understand that the cost of living has increased and you may not get paid every payday. If you need extra cash during these tough times, you might consider using a payday loan as an alternative.

Payday loans are also an effective means to repay a car or home mortgage. In most cases, borrowers are required to submit a proof of income statement, but they can usually avoid these forms of collateralization.

Payday loans are quite attractive to many people because they do not require credit checks. The only thing they need to provide is a job or a bank account, and a clean driving record. Although the rates on these loans tend to be higher than standard loans, the payment duration is generally longer and the terms more favorable. You can also be assured of fast approval of these loans.

Disadvantages of Payday Loans

The disadvantages are minimal. However, there are certain things that you should know before taking out such loans. Read on to find out more.

First, these loans are meant only for short-term financial emergencies, so it is crucial to make sure that you are not going over your budget. A small financial emergency could get out of control if you are careless. As much as possible, be prepared.

Second, make sure that the loan is affordable. Do not take on too much debt when you are still trying to recover from the last one.

Third, keep in mind that you cannot borrow against your next payday until you have received a pay stub from the previous one. When a lender sees that you are up to date with your payments, he will automatically deny the loan application. This means that there are strict requirements that you have to fulfill to be approved for a payday loan.

These loans are also quite risky. The interest rates are higher than usual and there are higher penalties if you fail to meet them.

To avoid falling into the trap of these loans, look for a lender who is experienced and reliable. If you are applying online, make sure that you fill out the loan application form completely and accurately, because the details are sent to the lender immediately.

Final Words

In the end, it is always better to do your homework and learn everything before signing any form of paper regarding your financial matters. This way, you will be able to determine whether a payday loan is right for you. Furthermore, there are plenty of payday lenders out there. So, why not look around, compare rates, compare terms, and get a loan from the lenders with the best terms and conditions.

Categories
Students

How to Make Repaying a Student Loan Much Easier?

For many individuals, getting a student loan is the only way to pay for University and, while there are many NGOs and other organizations that try to make the process easier, the fact that repaying the money is often extremely difficult. This is partially due to the fact that the loans are extremely large and it often takes several years to pay them off.

However, the worst thing for most is the fact that once they finish their studies, they are thrown out in a world where it is difficult to find and keep a high-paid job. The pressure of working to pay monthly expenses, as well as to repay a student loan can be too much for most, and this can easily lead them to more serious debt, as they mismanage their finances.

This having been said, properly managing your student debt takes careful planning, especially if you have just finished your university studies and are getting ready to repay your loan. Here is what you should consider doing:

Find a Stable Workplace Rather than One with the Highest Possible Salary

Although it may seem counterintuitive, it is usually better to choose a job that offers a large degree of stability rather than a highly-competitive one that is high-paid but also extremely dynamic. The reason behind this choice is simply that repaying a large loan first requires ensuring that you will be able to make the payments consistently.

If you are worried that your salary may not be able to cover both your monthly expenses and the repayment of the loan, try to create a budget and establish how you could spread the income between all the expenses.

Please keep in mind that this is in no way a suggestion to get a low-paying job, rather get one that allows you to make a decent amount of money, consistently.

Look for Sources of Passive Income

We live in a world that is constantly connected through the internet. This makes it now easier than ever to find sources of passive income. The best choice for graduates is to look at what they have learned at University and try to teach others. Some may prefer to tutor students while others can go for an online format such as Webinars. Regardless of your choice, this method will enable you to make £50-£500 per month that you can use to supplement your income.

Look for Ways to Refinance or to Consolidate Your Debt

If you’ve just finished your studies, chances are that you may also want to buy a car or a flat. Most lenders will agree to give you a loan for either of these things, however, managing both repayments at the same time can be difficult. This is why you should look for ways to consolidate your debt as soon as possible. Doing so will essentially fuse all your payments into one and make the debt more affordable.

Look at the terms and conditions of your student loan. In some situations, you may be able to refinance the loan or to repay it early (which is where the debt consolidation loan would come into play).

Final Words

The important thing to remember when it comes to repaying your student loan is that once you finish your studies, you will have refinancing options that you may not have been aware of initially. Speak with the lender that you borrowed the money from and determine if there are any ways to either extend the term of the loan or to make the payments easier to handle. By speaking with the lender, finding a secondary source of income (preferably a passive one), and properly budgeting your income you will make your life a lot easier.

Categories
Loan Types

What Are the Different Types of Loans That You Can Get?

Banks and various private lenders are constantly making it easier and easier to take out a loan. Unfortunately, the sheer number of different loans that most individuals can access often creates a lot of confusion. While most banks do attempt to explain their offers to those interested, it is usually better to know what various types of loans are before going to the bank.

This having been said, we will look at the 4 most popular types of loans and at what they can be used for. Please keep in mind that each lender may name its deals in different ways, however, they will still have the same structures. While their name is a marketing concern, we will analyse their overall terms and conditions.

Personal Loans

Personal loans are extremely easy to get due to the fact that borrowers do not need a very high credit rating. Furthermore, there are no restrictions when it comes to what you can do with the money. These two characteristics make personal loans the most popular type of debt in the world.

While most personal loans are unsecured, some will require collateral. This usually applies to loans that have a higher value or when they are given out to individuals who have a bad debt repayment history.

Lines of Credit

These are often used as direct alternatives to credit cards. Lines of credit give individuals access to a large amount of money, for a specific time. Just like when using a credit card, the borrower must only pay interest for whatever money he has used. Most lenders offer rates that are lower than those attached to credit cards, which makes a line of credit considerably more advantageous.

The main downside with these is that, unlike a credit card, a line of credit usually needs to be secured against the borrower’s property. Generally speaking, lenders prefer their clients to put up their homes as collateral, or another piece of real estate.

Home Equity Loans

This type of loan addresses individuals who are paying a mortgage on their home and would like to access financing for various projects. As the name implies, this loan is secured against the equity that one has in one’s home. Depending on the lender, these home equity loans can be repaid as a single mortgage, or they can replace the main one that the homeowners are currently paying.

Debt Consolidation Loans

Debt consolidation loans were designed to help individuals that are having a difficult time managing their debt. The loan is usually large enough to cover most if not all of the borrower’s outstanding debt and can be secured or unsecured, depending on the value. This type of loan has low interest rates and makes it easier to repay current loans by transforming them into a singular debt that has one interest rate and requires one monthly repayment.

The main disadvantage of debt consolidation loans is the fact that they are designed only for individuals who have specific difficulties repaying their debt. Those who have only taken out a single loan will not be able to consolidate their debt, however, they may refinance it.

Final Words

These are the main types of loans that are currently offered by both banks as well as private lenders. Each one is more or less designed for specific types of individuals and comes with different pros and cons. Furthermore, keep in mind that the interest rates for each of these are established by the lenders, depending on the borrower’s credit score. This may make certain types of loans even more affordable for those who have great relationships with banks and have built up their credit rating.

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Bad Credit

Alternative Borrowing Options for Those with Poor Credit Ratings

The fact that not everyone has a chance to build up their credit score over time is a reality that most lenders are aware of. However, the services that they offer are set up in such a way that they favour those with high credit ratings. This, unfortunately, lease all the ones who have a poor credit score unable to get the loans that they need from banks.

This having been said, there are other lenders, most of which have designed their products and services specifically for individuals with low credit scores. All of them are regulated by the government and can be trusted with your financial data, however, some will have rasher terms and conditions than others, which makes knowing which one to choose a priority.

Requesting a Loan from a Nearby Credit Union

Credit unions are nonprofit organizations that consist of people who either come from the same community, work in the same place, or share another common bond. This restricts their services to those with which they share a particular link.Finding a credit union should not be difficult. They often advertise their services in local newspapers or through online ads.

From a financial point of view, credit unions are great choices if you need a loan as they are limited to how much interest they can charge (usually 3% per month). Furthermore, there are no hidden charges to worry about and the loan can be repaid early with no issues.

Getting A Budgeting Loan from The Social Fund

Those who need money urgently may be able to get a loan from the social fund. These funds are handled by local administrations throughout England and are given to individuals regardless of their credit score. However, depending on where you apply for a loan, there will be various conditions and requirements that you have to take into account.

Worst Case Scenarios

If you have had bad relationships with lenders, consistently, and cannot use any of the options presented above, you might be able to borrow money from the following ones. Keep in mind that the lenders presented above are far from ideal places to borrow money and they often actively work towards forcing their clients’ hand into paying more than what they initially expected. Nonetheless, they can be useful in extreme cases.

  • Payday Loans

Payday loans are a very expensive form of debt, however, they can be lifesavers as long as you try to repay them as soon as possible. Aside from the large interest rate, it is important to also keep in mind that these loans have limited value.

  • Pawnbrokers

When it comes to pawnbrokers, you must take into consideration the fact that they are not traditional lenders, but companies that focus on maximising their profits. This having been said, borrowing money from pawnbrokers will require that you offer your property as collateral. This can be anything from a smartphone to jewellery. How much money you get is established by the value of the object that you leave behind.

Getting the object back will require you to return the money, along with interest.

Final Words

Regardless of which service or lender you use to borrow money, always make sure that you stay clear of loan sharks. These are illegal lenders that are not regulated by the government or authorised in any way. They often have very high interest rates and often harass their clients in order to get their money back. As for the rest, all the lenders that are included in this article are safe to use in case of an emergency.

Categories
Debt

How Debt Prioritisation Can Improve Your Financial Life?

It is currently almost impossible to go through life without having at least some form of debt. Our society and work industry are intertwined with the services and products offered by banks and many private lenders, making it almost a requirement to use them.

For those who do not know how to properly manage their income and expenses, this can mean going into considerable debt that must be then paid off over extended periods of time. If or when this happens, it is essential to know how one can prioritise one’s debt in order to mitigate much of the impact that it has on one’s daily life.

Understanding how various forms of debt can be organised is vital to balancing them with your monthly income and maintaining a comfortable lifestyle.

Why Is Prioritising Important?

Each loan that you take out or form of debt that you must pay will have different terms and conditions. Some may have penalties that are more serious than others or they may have larger interest rates. This makes the order in which you repay them extremely important. When it comes to financial advisors, the general consensus is that you should categorise your repayments as follows:

  • Priority repayments;
  • Non-priority repayments;
  • Debt emergencies;

Generally speaking, non-priority forms of debt refers to loans that do not have any immediate consequences or that do not have to be repaid on a very strict timetable. This category usually includes credit cards, lines of credit that are not nearing their term, and unofficial loans (such as those taken from friends and family).

At the opposite end of the spectrum, we have debt emergencies. These are the ones that may result in court action, eviction, bailiff action or disconnection, depending on the type of debt. Your biggest priority should always be to repay these first as they can do immediate damage.

Lastly, there are priority repayments. This category includes loans that have large penalties for late repayments, court fines, rent, utility bills, and payments to the DWP and HMRC. These have to be paid on time, however, being one or two days late will not have dangerous consequences.

Repay Emergencies and Priorities First

Emergencies and priority repayments should be made first, however, if you are having financial difficulties, you may not have enough money for all your debts. If this happens, If this happens, simply start by taking care of the emergencies so that you will only be left with the priority repayments.

Next, you will have to look at your lender agreements and check to see which one of the payments must be made urgently and which can wait. For example, electric companies often wait 30-60 days before disconnecting a client from the grid. This gives you time to find the money needed to pay the bill.

Consolidate Your Debt

Prioritising your debt is extremely important because it keeps your credit score up and your financial life as healthy as possible. This having been said, if you ever find that you are unable to repay your debt on a monthly basis, it may be time to get a debt consolidation loan. This will allow you to repay all the other ones that you may have taken out and leave you with a single monthly payment and a single interest rate.

Final Words

Repaying all of your debt at the same time is not always an option. This makes it imperative to properly manage your income and prioritise your monthly payments.Not repaying certain debts on time can have extremely serious consequences and may leave you defenceless in front of liquidators and the authorities.