All About Loans Weblog

Many young people are leaving it later and later in life to start saving money. However the longer you leave it to start saving the more difficult it is to actually save anything.

For example imagine the following scenario; suppose you wanted to have savings of £10,000 by the age of 30. If you started saving for that at the age of 13 you would only have to put away 78p a day till your thirtieth birthday. If you left it till they age of 25 you would have to save £4.47 a day, however if you only started saving on your 29th birthday you would have to save £27 a day to make it to £10,000.

From this example it becomes quite apparent that for each day you put off saving, the more and more difficult it will actually become to start saving. Therefore you can never be too young to start saving.

However smart financial decisions are not all about saving money, as they are also very closely related to how well you can save your time, for example if you like to shop in a posh shop for some perfume, you could save up to £10 if you were to buy that same item in a supermarket. But it is not only about saving £10. If you earn £10 an hour than you have also just lost a whole hour/s work as well.

Additionally, people don’t understand the facts behind APRs and interest rates. When asked the difference between a 10% APR and 15% APR, most people would say “5%”. The truth is actually 50%, because you would be paying 50% more interest on your loan or credit card. This is why it is so important to shop around when seeking financial products such as personal loans, car finance and cards. Taking the high rate offered by your bank could cost you a fortune in interest over the years.

Following these easy steps could save you substantial amounts of time and money over the course of your life. It’s your money – use it wisely!

Whilst borrowing is a great way of letting you spend money when you don’t have any it is also a lot more than that. Each time you borrow money from a lender what you are really doing is giving up all or some of your future income.

For instance, suppose you take out a personal loan of £2,500 at 12% interest to repay over 36 months, what you are agreeing to with your lender is that you are going to repay £94 of your monthly income for the next three years. However you are also paying for the privilege of getting the money right away. You pay for the privilege in interest repayments and in this case you will be paying an additional £900 back to your lender in interest.

Never be fooled into thinking that your lender actually wants you to pay off your loan as quickly as possible. That is why most lenders set very low minimum repayment rates, This way it ensures that most of what you are repaying to the lender is interest and not actually the money you borrowed. This can substantially increase the length of the loan from the lender at your expense while they make large extra profits. Lenders like nothing better than having customers in the minimum payment trap.

However, lenders are also more likely to offer you a better rate of interest if you take out a large loan over a longer period, so a long-term deal is not necessarily a bad one.

The wisest idea when getting loan quotes is to ask the lender what your total repayment will be over the period. This way you can compare deals and see just how much interest you will be paying back over time.

There has been a lot of controversy in the last few months over the 40 year mortgage. Many people are opting for the longer term mortgage because it lowers the monthly loan repayments. However, few people calculate how little the ‘wrong’ 40 year mortgage will lower the payments.

It is possible for a mortgage to be arranged in such a way that the real discount is less than fifty-pounds difference. The problem comes when consumers do not shop around. They let the bank or mortgage broker compare their choice of 25 year mortgage against the 40 year loan.

There are hundreds of 25 year mortgages, with many varying a few pounds, to a couple hundred pounds, when borrowing the same capital.  The 40 year mortgages can vary as well.

The mortgage broker may be showing a difference of a couple hundred pounds, but the 25 year mortgage may be one the customer would never qualify for.

For example, a couple with a low risk mortgage, and 25% down, with the capital only four times their annual income will pay less for a mortgage than a young couple in a high risk, with 5% down, and who are borrowing six times their annual income.

However, a clever broker may compare the 25 year mortgage for the second couple against the 40 year mortgage of the first couple. The results will be very different than if the broker arranged a 25 and 40 year mortgage for the same couple.

The big sell for most 40 year mortgages is a lower monthly payment. The broker wants to show that there is a big difference in the monthly payments, but in reality, the difference is rarely more than one hundred pounds a month.

Well here is the scenario; you have three or four credit cards, a bank overdraft and guess what, they are all overdrawn. Throw in a few loans you have and a mortgage and soon enough you are swamped in debt. Well its not that bad; let’s say you can still afford all the repayments but it’s getting a bit out of control. So should you pool your debt into a consolidation loan?

Well, consolidating can bring down the amount you pay out in interest and remove the headache scenario of paying off multiple bills. Also you could be protecting your credit rating by avoiding the embarrassment of missing a repayment. Well at least that is what the debt consolidating companies are telling you anyway. But then again they need to be making money from you some how, so are you really getting a better deal?

Debt consolidating companies most often work by moving all your loans into one single loan with a lower interest rate. Here is the trick to making sure you get a good deal: Since credit cards typically have annual percentage rates exceeding 10% you can find cheap loans with better rates and track their progress far more easily.

The best way to get a good deal is always to do your homework. Shop around and find out the best deal that suits your needs. A general rule is the more you borrow, the lower your interest rate. Loans can be secured like when it is tied to your house, or unsecured and not tied to anything but if you default on repayments at best you will end up with a bad credit report, and at worst you could lose your home.

If you trust your bank, it seems you are one of a small minority. A new survey has shown that three quarters of all customers in the UK do not trust their bank. Some of the fears that these customers have raised in the survey include experience of very poor service, rip-off charges for simple mistakes, a lack of respect from staff and from the institution as a whole, and fears that the security systems in place by the bank are inadequate.

One of the biggest reasons that customers’ relationship with their bank breaks down is due to the very high penalty charges that banks impose if you are late on a credit card repayment, or you allow your bank account to exceed its overdraft limit. Although the Office of Fair Trading has stated that such charges are illegal, the banks continue to levy them and there is little sign that they are going to let up, any time soon. The banks seem determined to delay and hinder any claims made by customers to reclaim the penalty charges.

Many banks are guilty of piling penalty on top of penalty, forcing customers deep into debt. Then the bank advises the customer to take out a personal loan to clear the debt. However, the customer is not encouraged to shop around for a cheap loan, but instead is offered the bank’s own high-interest product.

Identity theft is another fear that customers cite, and they are not satisfied that the banks’ own systems are as secure as they need to be, or that the banks take sufficient care with the personal information that they do have in their possession. Stories such as those that broke in March, of major banks simply dumping customers’ personal information in bins outside of branches have done very little to improve trust between banks and their customers.

Another finding that customers made clear was the fact that bank staff simply do not act as if they care about the customers. While many of the services that customers require from banks are extremely important, staff show no empathy and do not appear to take the requirements of bank customers seriously. They simply act as if they are paper pushers, and that nothing they do will make any difference to customers. Whatever the internal procedures of the bank may be, the least that bank staff can do is take customers’ fears and anxieties easily and explain the systems that are in place.

Analysts predict that more banks and building societies will increase their savings rates as the number of savings accounts paying six percent interest or more is increasing as providers enter a price war.  Many banks and building societies are entering a price war where the paying interest rate is now higher than the Bank of England base rate, which is currently set at 5.5 percent.

A six percent interest rate on savings accounts has not been offered since 2000 to 2001, however analysts believe that the six percent savings account is returning and over the coming weeks will increase as more banks and building societies being to offer these higher rates.

Online savings accounts are leading the way, with a number of new entrants to the savings market that are offering market-leading rates along with the increase in the Bank of England base rate, there are a number of accounts that are paying six percent or more.  Currently one instant access savings account in eleven pays more than the current Bank of England base rate, which is set at 5.5 percent.

However, as attractive as a number of these savings accounts may seem, savers are warned to be careful with the small print as many of these attractive accounts rely on short-term bonuses or require huge deposits.  It is important to look at the track record of the business before you choose an account.  Some of the safest accounts are online savings accounts, or accounts that promise to keep interest rate high for a set length of time.

This is an interesting time for consumers who have spent the last few years borrowing money on personal loans and credit cards. The mood in the market is now for saving instead as even cheap loans seem less attractive than a healthy bank balance.

Several balance transfer deals have hit the market in an attempt to lure consumers who are struggling with the increased interest rates.  There are now over ten cards on the market that are offering over a year’s worth of free interest on balance transfer deals.  The Royal Bank of Scotland will launch a new card with a year’s free credit on switched balances, and HSBC will launch a brand new 12-month offer.

The launch of these interest-free balance transfer deals come at a time when interest rates are rising and making it harder for consumers to repay debts, especially for homeowners who are feeling the pressure of the increased interest rates. The credit card offer is a way for lenders to gain customers, especially at a time when the offer is most appealing.

However, for those consumers who are looking into a balance transfer card, it is advised that they check the Balance Transfer Fee, as it could be more beneficial for them to choose a lower balance transfer offer period if it comes with a smaller fee.

Almost all credit cards charge a balance transfer free which is typically two percent, but it can be as much as five percent on some cards.  Consumers are advised that when searching for a balance transfer credit card that they carefully read over the fine print and make sure that they understand all the charges that are involved with the transfer.  They should also make themselves aware of the card issuers interest rate once the period expires to avoid any surprises.

Consumers who are looking to consolidate debt or who are moving a high balance which they can only pay off incrementally would do better to consider a cheap loan. Any consumer can save themselves a good deal of money by looking over the figures carefully and seeing what the longer term picture is, rather than the short term gain.

Figures have shown that the cost of running a home has risen 12 percent in the last year. With the annual cost of running a home costing an average of £11,035, many homeowners are finding it harder to keep from falling into the debt trap. With the costs of heating, maintaining and paying for a home rising to £3.28 per day, one may ask if anything can be done.

Because it has become so expensive to run a home, a homeowners best chance of being able to reduce their annual expenses is to shop around for a cheaper mortgage, home insurance, and to switch gas and electricity suppliers, which could cut your utility costs considerably. By shopping around and comparing prices consumers can make sure they are receiving the best deals that are available. Mortgage payments have risen more than £600 over the last two years and can be considered the biggest expense for a home. With the biggest expense being the monthly mortgage repayments it is advisable that homeowners shop around with various lenders and look into the option of remortgaging, especially if they have an adjustable rate mortgage as the interest rates are predicted to rise in the coming months.

Utility costs such as gas and electricity is another large expense as the average gas bill now costs £595 which is up twenty-seven per cent; electricity bills have risen nineteen per cent to £383 a year. Council Tax is another big expense along with the maintenance and upkeep of a home as well as home insurance. If you are a homeowner with current home insurance, there are things that you can do to your home to bring down the cost of your policy, or you can shop around in search of a cheaper insurance quote with the same, if not better, coverage. If you are paying a fortune in interest on your debts, a debt consolidation loan could be the answer to spreading the cost or reducing payments.

Your house is most likely the single biggest asset that you own.  So deciding whether or not you want to refinance can become a difficult decision.  So before you refinance your home there are a few things that you will want to take into consideration before you sign the loan documents and put your house at risk.

You will first want to ask yourself about what it is you want to accomplish in the short term and long term with a refinance before you start the refinancing process.  Often people choose to refinance for a lower rate, lower payment, and debt-consolidation or to get out of a variable rate program into a fixed-rate loan.  Some people may be looking to pay off their home as soon as possible with a 15 year repayment term, or maybe they want to have a 30 year term to lower the monthly payment and use the extra income to invest it.  You will then want to determine your maximum monthly payment that you will be comfortable with.

If you are refinancing to release capital, you may be wiser to consider a secured loan instead. You may find that you pay less interest in the long term on this, even if the interest rate is higher in the short term. You may be looking to finance improvements on your home, in which case a home improvements loan frequently offers excellent rates.

You may also want to take into consideration the length of time that you intend to live in your home.  If you plan to move out within a short amount of time then you may want to consider an adjustable rate loan which may be cheaper than a fixed rate loan.  As you step into the bank you will want to speak to your loan officer about your concerns and your plans, as they can help guide you into the right refinance loan that is suitable for you.

There are many credit card offers available to choose from with some cards being very desirable to you while others are not.  With so many credit cards to choose from it can be difficult to find an ideal credit card.  Whether you are looking for a credit card for the convenience of it or if you plan to consolidate your debt onto the card the one thing that you will want to look for in a credit card offer is the APR.  The annual percentage rate that the credit card company is offering is an important feature in the credit card and should be the one thing to look for in an offer.  The lower the annual percentage rate the less you pay in interest and the better the offer.

As you are searching for a credit card you will not only want to find a card with the lowest annual percentage rate but a card that is suitable for your needs and interest.  By evaluating all the credit card offers and comparing the various features that they offer you will be able to find a card that is right for you.  You should always compare credit card offers before you make a decision to ensure you find the right credit card.  You will want to read over the fine print and make sure that you understand the terms and conditions before you apply for a credit card.  If you do not understand some of the terms in the agreement then you should search online for an answer or definition of the term.  This way you will know what type of responsibility you will be required to handle.