Debt consolidation loans: converting unsecured debt into a secured debt.
To reduce monthly repayment, consolidate debt – Professor of Truth: Do you think of consolidating a debt which has a secured loan? Does it make sense to convert an unsecured debt into a secured debt? Find out what effect debt consolidation loans has on household finances.
A loan which is secured for the sake of consolidating debt targets to simplify family finances and makes it more affordable to make monthly repayments. The loan can be used on multiple personal debts under one roof such as overdrafts, small loans, hire purchase and credit card debt. Distributing payments over extended time, aides to reduce expenditure and frees up money for other household bills as well as expenses.
How debt consolidation loan minimizes monthly payments.
Debt consolidation loans, aides to reduce monthly payments, mainly because of extended repayment term as well as low APR. The fixed charges on the secured loans imply that the lender is prepared to give more affordable charge rates as well as lending money over a period of up to 25 years.
- A £10,000 pound unsecured loan for over five years. At 8.9% results in monthly payments of £205.44.
- A £10,000 secured loan over a period of 10 years. At 8.9% results in monthly payments of £124.29.
Effect of debt consolidation over a longer-term
When consolidating debt with secured loan, it minimizes monthly payments; it raises the cumulative amount of interest paid in the long-term of the loan. While the extended period is normally marketed as a means of selling point, long-term loans prove to be of more benefit to the lender than to the debtor.
- A £10,000 debt consolidation loan which is not secured over five years that 8.9% results in the total of £12326.22. An interest of £2326.22 will be paid.
- A £10,000 which is secured loan of attending as that 8.9% results in monthly payment of £14,914.47. An interest on £4914.07 is payable.
Risks of consolidating a debt using a secured loan
Consolidating debts using a secured loan is normally used to convert unsecured debts into secured debts. While monthly payments are normally reduced, creditors get more authority because of the availability of collateral. The vast majority of secured loans are mainly tied to property. Failure to pay under certain circumstances leads to house repossession. Credit card debt is unsecured, which implies that the homeowner is better off with an individual Voluntary Arrangement or a Debt Management Plan.
In case one consolidates a debt using a secured loan, this minimizes the monthly payments to those with good credit-rating. Though, extending the period of interest bearing personal debt increases the cumulative interest paid in the end. He should therefore carefully think before converting an unsecured debt into a secured debt.
Disclaimer: the ethical attempts in no way to give talks on legal advice. One arched consult a licensed tax advisor, attorney, or any qualified professional.
The times are tough due to the recession and though things are slowly getting back to normalcy, many individuals are finding it difficult to meet their monthly expenses. People are trying out a variety of things like taking up part time jobs, selling antique stuff in online auction sites and so on to ensure that they are able to generate some income. In this context, it is worthwhile looking at the option of raising much needed money by selling gold. The cash for gold and the need to sell gold options are definitely worth considering at these times especially since the metal is trading at an all time high.
It is worth mentioning here that some individuals may not wish to sell gold due to sentimental reasons or may just want to keep it for a rainy day or for an emergency. However, when you are really struggling for cash, the emergency is already at your doorstep and you need to be dispassionate about the option of selling gold and must in fact look at the best ways to get the maximum benefit out of such a sale.
Typically, gold as it exists or is owned by people in the form of scrap gold, precious jewelry and broken gold. Of the three, scrap gold is the one that is usually found in large quantities with individuals as they often tend to accumulate it over time. Next comes the broken jewelry and then you have unused jewelry.
In earlier times, before the advent of the internet, there was no other option but to approach the pawnbroker or the family jeweler when you had to sell gold. That often resulted in the individual getting a raw deal as information on gold prices, the method of evaluation as well as other constraints meant that the pawnbroker or jeweler invariably made a hefty profit at the expense of the individual.
Now you can sell gold online at cash gold sites, the process is a transparent one and you can get the money instantly into your bank account. You can thus make good use of your unused gold by selling it at a price that is at an all time high and use the money for things you really need. The gold lying unused in your locker thus becomes the ideal vehicle for you to raise disposal income.
Going into debt is a huge burden to the mind and finances. Debt exerts pressure on relationships, family and lifestyles in extremely worse possible ways. Today, with the easy access to personal loans, mortgages and credit cards, getting oneself into debt is quite easier, and most people do not realize their situation until when they’re deep in debt. After incurring a debt the difficult part is getting you out of it and starting on a clean page. However, there are several debt relief solutions which can used so as to manage debt as well as be debt free again in no time.
1 – Comprehend that debt is not good and that before you is a problem staring at you. Without concluding that you have found yourself in a difficult situation where it will require effort to get yourself out of it, it is going to be somehow difficult to have your debt managed. Accept that you made several mistakes and be ready to change your activities and begin managing your debt so as to acquire better life in future and gain financial freedom.
2 – Sum up your debts. This number may be astronomical but you should be aware of the amount of debt you have accrued so as to pay everything back. The quantity of your debt may not be high or it may be relatively high, regardless it should be paid down as fast as possible so as to free yourself and have better management of your finances.
3 – Create a budget which will work in your favor. How much money you earn regularly and note as well how much do you spend? Record your income, variable and fixed expenses and give a 10% allowance for the unexpected expenses which may arise during the month. What is left is the money which can go towards repaying your debt. Do not use it on anything else except in reduction and management of your debt.
4 – Make extra income so as to do extra payments, save on interest payment and manage your debts better. Additional income can be from a hobby which makes money, an additional job during the night or during the weekend, or sell a commodity at the market or on eBay. Many ways are available to earn additional money so as to rearrange your finances as well as manage or cut debt levels.
5 – Stop accruing new debt; it is unlikely that you require even half the items you bought on credit anyway. Our society has changed to a want society, and it is ‘I want it right now’. There is nothing like delayed enjoyment or saving money for something. It is credit, credit and additional credit. Put yourself into increasing debt and it will control your life, it shouldn’t be this way, it should be the other way round. In case you desire to manage your debts, stop accruing new debt which will only put additional strain to your life as well as your finances.
Car finance is a very important part of owning a car and car finance deals thus play a huge role in this regard. By car finance deals, one means the various credit products available to let you afford the car of your choice. With profitable car finance deals, you can avail low Annual Percentage Rate (APR), which would enable you to pay up for a more expensive car in lieu of a flexible budget. You have to look into certain factors in order to avail the best car finance deal.
The most significant factor regarding car finance is interest rate. Although each and every car company would present you a price chart as per your budget, you should compare all those in order to optimize it and come up with the best possible option. However, your choice of a new car and a used car would largely determine car finance deals. Once you calculate your incoming and outgoings and the amount of money that you would be able to keep aside for the purpose of replay, you task of budgeting would become very easy.
You would benefit to a great extent if you avail the service of finance professional. Such a professional can help you set your car finance deals at a low interest rate. Greater the number of features, higher would be the rate of interest. Fewer features would always guarantee a proportionately low rate of interest. Rates of interest keep varying with the prevailing market conditions. You can even get your best car finance deals with bankruptcy!
Another important issue influencing car finance deals is your decision of the car you would purchase. You need to look at the various models and their features and specifications. The size of the car, choice of fuel such as whether petroleum, gas or diesel would determine your car finance deals. In fact, car finance deals vary on the basis of a car’s make, body and class. Being a luxury car or a casual one would influence your deals greatly.
Carrying out a detailed survey is necessary for availing the best possible car finance deal. Having a detailed knowledge on the price range of various models in the market would let you freeze your choice. Factors like mileage, year of the vehicle become important in making decision. Keeping an eye on websites and magazines highlighting cars can keep you updated. You should never opt for the specific car finance deal you have been offered. You must carry out a rigorous survey before giving in to any deal. Extended warranties, opportunities for free upgrades, low interest rate and some extras too should be your target when you plan to go for an expensive purchase like a car!
Consumer debts have become a grave issue in the face of UK economy. They are constantly defaulting and over burdening themselves with debt. People are frantically looking for a debt relief option to get out of debt. But surprisingly! They are unable to decide which would be a better option for their financial situation whether filing bankruptcy or an Individual Voluntary Arrangement (IVA). Through this article you will get the required information on both the programs.
What are the eligibility criteria for bankruptcy and an IVA?
- If you are jobless and financially strapped then bankruptcy would be a better option. In order to file for bankruptcy you need to submit relevant documents and pay for the court charges. But remember, if you owe over £750 then you are considered to be eligible to file bankruptcy.
- If you are considering an IVA then make sure that you have a stable income. IVA would be the right option for you if you want to avoid the hassle of bankruptcy.
Here are the main advantages and disadvantage of bankruptcy and its effect after filing:
- With the approval of the bankruptcy filing your debts would be discharged immediately. Once the court grants your petition you would get liberated from the liability of debt
- If you have a stable income then the court appointed trustee would design a repayment plan or you so that you pay back your creditors. This is known as income payment order. If you do not want to part with your asset then this plan would prove to be beneficial.
- Before you file for a petition you need to go for a credit counseling session. That would help you to evaluate your financial condition and prevent you from further getting into debt.
- You can open a new bank account after your bankruptcy is discharged but you have to undergo certain conditions. But before you apply for a new account reveal the fact that you are a bankrupt.
- Filing bankruptcy can adversely affect your credit rating. Effect of this on your credit file would remain for six years that would create hindrance if you plan to take out a loan.
- In case you have incurred debts through frauds, certain crimes and fines then filing bankruptcy won’t help to discharge your debt.
- If you want to file bankruptcy again then you have file after 15 years from the date of your initial filing. If it has been five years since your recent filing then you are eligible to file a petition in the court. But you have a risk as the court may delay the discharge or dismiss the petition.
Here are the main advantages and disadvantage of an IVA and the after effects of an IVA:
- Unlike bankruptcy you can protect your valuable assets while eliminating your debts.
- Any individual can opt for an IVA if he has a stable income. And avoid the negative consequences of filing bankruptcy. You have five years time to pay back the owed amount that you can afford.
- In this program you can even help to negotiate with your creditor to lower your outstanding balance.
- On opting for IVA you get protection from the court against the creditor harassment.
- Expenses of filing bankruptcy are higher than IVA program.
- But if you fail to have a proper income then you are not eligible for an IVA.
- The creditors may not agree with the proposed amount of the negotiator.
- While you are in the IVA program you may be able to apply for an unsecured.
- You credit report is blemished for six years.
This is a guest post by the Webmaster of Fileyourbankruptcy. Here he provides exclusive information on all types of bankruptcy.