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Posts Tagged ‘loans’

If there’s one thing it’s always worth doing, it’s shopping around for best deal. This is generally true for all purchases you’re going to make, but one place it’s more important than most is with loans. Many people don’t think about it too much, but loans are for many people, the single biggest financial transactions they’ll make in their lives.

All the major purchases you’ll make will involve credit of some sort. If you’re buying a house you’ll be searching for a mortgage. If you’re buying a new car it’ll be auto finance. When you travel you’ll likely need a credit card if you don’t already have one. Remodelling your home, paying for college, for almost everyone, they involve a significant amount of credit.

Shop Around

So it’s worth shopping around. If we spend a day or more looking for a good deal on a pair of jeans, why should we accept the first credit offer we receive? Loan rates and terms can vary enormously from lender to lender. All of them offer many different rates at the same time depending on the promotion you’re applying under. They will also be setting the rate according to your credit rating. The important thing to remember is that credit is a very flexible market and pretty much all lenders will be willing to negotiate rates and terms with you.

You’ve Got To Haggle

For example, if a rate seems too high to you, simply tell them that, and ask if there’s a better rate available. Often their first offer is not the lowest they’re willing to lend at. Another thing you can do is offer security for the loan. If you own you’re home and are confident in your ability to repay the loan, maybe ask what the rate would be if it was secured over your home. You’d be surprised at the difference in rate you’ll get simply for offering security.

Mortgages

If it’s a mortgage you’re negotiating, ask for both the variable and fixed rate. Typically the variable mortgage will be a good 0.2% to 0.5% cheaper. This is because you will be bearing the risk of an increase in interest rates. Auto finance is one of the most varying areas in the market. You’re dealer might be offering you what seems like a good credit rate, but often if you agree to pay cash, the price of the car becomes cheaper, which means the loan is actually more expensive than it appears. If this is the case, try and get the finance from another lender and get the dealer’s cash price for the car.

One other way of making a loan cheaper is by dropping optional extras such as loan repayment insurance. This is often offered when you take out a loan and can make a big difference to the cost of the loan.

It is a fact that sometimes, money is tight. Everyone will be in this situation at some stage in their life. They are in urgent need of funds to avoid bouncing checks or missing important payments. If you have a steady source of income, and you need money for only a short period of time, a cash loan, or paycheck advance may seem like an attractive option. But take care, as they are often a lot less attractive than they seem.

Cash loans are for relatively small amounts and are very fast and easy to arrange. They are for very short periods but the rates of interest charged can be very hefty indeed. The whole loan can be arranged in minutes and typically involves presenting your paycheck or other security such as a car title. If the loan is approved you can walk out with a check or a transfer can be made instantly to your account.

However, they are extremely expensive forms of credit. While most credit cards offer a grace period during which you can pay your bill and avoid interest charges, cash loans usually start charging interest immediately. There may also be a fee for arranging the loan and other charges. If you add this up, the interest rate will usually be shocking. Indeed, even the high rates of interest charged by credit card companies for taking out a cash advance may turn out to be significantly cheaper than cash loans.

Luckily, there are alternatives to these cash loans. One such option is an overdraft on your current account. This will be provided by your bank and will have associated fees, but it means that you can spend up to an agreed amount more than you have in your account. While the charges and interest rates vary, they should work out cheaper than cash loans.

Another option is to contact your creditors and try to negotiate an extension or rearrange your repayment schedule. Many lenders will be willing to work with you if you are having trouble keeping up with repayments. For example they may be willing to extend the period of the loan so that your monthly repayments are lower.

Finally, if you do need to go for the cash loan, try to take out the bare minimum necessary to tie you over till your next pay check. Then, when you have the money, pay back the loan immediately. It is tempting to extend the cash loan but in the long run, the cost of this is not worth it.

Buying a property usually means having a big mortgage, which will also mean having big debts, but it can also mean big savings. While most of us will accrue various debts as we go – credit cards, student loans, bank loans and overdrafts – taking a look at your existing mortgage arrangements could mean finding ways to better manage your debt.

In this article, we will discuss ways to reduce the interest you pay on your debt and release money from your investments are looked at, including second mortgages and remortgaging.

Debt Consolidation Analysis

The basic principle of debt consolidation is simple – using the assets you have (normally your property) either to raise cash or reduce your payments. Often you can get a lower interest deal, particularly as the market in recent years has become so fiercely competitive, with relatively low interest rates and ever more flexible arrangements. In an effort to attract new customers, lenders offer cut price deals if you switch.

Play It Safe!

Unfortunately, this is an area that carries the faint whiff of dodgy loan providers and there certainly are people out there who circle like vultures, offering instant debt solutions that turn out to be filled with hidden clauses and stiff penalties. Normally you should be able to spot these providers quite easily; they normally want up front payment of certain fees or are overly keen to get you to sign on the dotted line for a loan.

Debt certainly can cause problems for some people, and the short-term solutions can seem tempting. Be wary, however, of trying to solve debts by borrowing more – you could end up just making the long-term situation worse. Rather than panicking about monthly payments, try to look at your long-term plans.

Citizen’s advice bureaus or the National Debtline (0808 808 4000) are a starting point for sorting out the mess.

Financial Long Term

So, debt consolidation should be looked at as a way to update your finances, rather than a desperate attempt to keep your head above water. As modern living becomes ever more debt laden, and our economy relies more and more on clever, flexible borrowing, most of us are learning to live with our debt and manage our commitments without letting them get on top of us. With sensible planning, you could take advantage of some of the options.

You may find that existing loans are at a high rate of interest, and as a homeowner, you can qualify for a better deal. It can also make your finances simpler to manage, for example merging all your debts into one loan, with one monthly repayment every month can mean you are less likely to forget or lose track of what has been paid and what’s outstanding. As we lead busier and busier lives, the chance to streamline our finances and make things cheaper and more straightforward is an opportunity not to be ignored.

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