Finance Blog – Loans, Mortages, Insurance

Can you go on holiday if you have bad credit?

Posted by luqman - 16/08/11 at 12:08:57 pm

Anyone who has had credit problems might be considering the use of bad credit credit cards in order to finance their holiday.

It is a fact that people generally do pay for holiday spending on a credit card for ease of booking and to enjoy the protection this gives them under the Consumer Credit Act.

Unfortunately, this trend means that someone not in a position to apply successfully for a traditional credit card might find themselves with a problem.

There is light at the end of the tunnel, however. Specialist providers that issue bad credit credit cards may be able to help.

These credit cards often have a lower limit than some cards and so may not be suitable for more expensive holidays, but they can, if used properly help to rebuild the user’s credit profile.

If someone is taking out a credit card solely to pay for the holiday and they make very sure that it is paid off as soon as they return, then this good use of credit may help improve their credit profile.

It is important, however, that the card is not used for additional spending that may not be cleared when the statement comes in, as the interest rates on these types of cards are exceptionally high in most cases.

With some careful planning, the costs of a holiday can be greatly reduced, which limits the chances of further debt arising.

There are lots of great deals available, such as stretching a planned long weekend by an additional day, which can often be free.

If the hotels you are planning to stay in offer free breakfast, then this can be a great money saver. Often, breakfasts are a buffet style and you can eat as much as you want. A filling breakfast may mean that you will not need to buy lunch.

If you are planning to go abroad, check exchange rates before making a final destination decision. The differences between currencies can be staggering and you may get a lot more local currency for your money in one country than in another.

Self-catering apartments can often make a holiday far cheaper overall than paying extra for included meals. Buying and cooking your own food can also give a fascinating insight into local culture that you may not get from a hotel.

If your credit rating being poor has resulted from previous problems with debts, then it might be worth seriously considering whether a foreign holiday is affordable. There are a number of ways of enjoying the holiday season without needing to travel.

Especially during the summer months, many newspapers and magazines offer money off vouchers to all sorts of different attractions. It could be that several family days out may be more affordable and just as much fun as going abroad.

If a holiday is definitely decided on, then there is no doubt that paying by credit card is the most convenient and safe way to spend.

A poor credit rating in the past does not have to mean the end of holiday plans if you have the funds available to go. It just means that holidaymakers may need to start planning earlier to make sure they have the right card for them.

What to Consider When Looking For a Loan

Posted by luqman - 03/08/11 at 03:08:42 pm

Almost everyone will need a loan to finance something at some point in their lives. Whether it is for a holiday, major DIY project, a car or a wedding, loan repayment calculator will help a borrower to assess exactly what their options will cost them each month.

The days of sitting in the bank manager’s office to arrange a loan are long gone. There are all kinds of ways these days to apply for a myriad of different types of loan.

Although it sounds obvious, the first thing to settle is exactly how much you wish to borrow and how long you want to spend paying it back.

Once you have this most basic information you can use a loan repayment calculator to see whether your expectations are realistic when compared with what you can afford to repay each month.

Competition is fierce in the lending market but, as with any type of credit, lenders are choosier about whom they wish to lend to. It is always worth doing some groundwork with credit agencies to ensure there are no errors on your credit record that might cause a problem with applications.

There are hundreds of different loan products available for borrowers to choose from. Each of these has its advantages and disadvantages and should be carefully considered.

If you need to borrow a large amount, then a secured loan might offer a better rate as the lender has some security in the event of a default.

Rates on secured loans can often be more favourable than an unsecured loan, although assets are at risk if there is any default on repayments.

An unsecured loan usually attracts a higher rate than a secured loan and is usually over a shorter period than secured credit. The borrower stands to lose less if things go wrong, but will still face severe consequences that might include court action if they default.

Homeowner loans are secured on property and are usually taken out with the existing mortgage provider. Applying can be easier as they already have all the information about the borrower that they need.

With the current harsh economic climate, many have found themselves in financial trouble with mounting debts and problems making repayments.

Some providers specialize in debt consolidation loans that seek to offer a solution to existing debt problems. While the situation may be simpler as only one repayment is made and interest rates may be lower than existing credit, borrowers should be sure they can afford repayments or the problem will be compounded.

Payday loans are available and can be a good way of repairing bad credit ratings provided all the repayment terms are met in full. It should be remembered that the interest rates on these loans can be extortionate.

Some loans may attract an arrangement fee that must be paid in addition to the loan repayments. It is worth taking this into account when comparing costs as this might mean overall benefits between loans might be smaller.

The main thing to remember when considering any finance is affordability and ensuring that a loan really is the most suitable for your circumstances.

Loans are available from banks, building societies, high street providers and via the internet. Comparing as many products as possible will ensure the best deal.

THE PRICE OF GETTING OLD

Posted by luqman - 28/06/11 at 12:06:25 pm

Getting old now costs money. Many people are simply unable to save enough to cover the costs of living to a ripe old age and the state is facing a similar problem. Even looking at borrowing through loans can be challenging when there is no regular income to make repayments.

The average cost of residential care is now well over £25,000 per year. This figure rises to over £35,000 per year if nursing care is also required. Consequently, a few years in care can eradicate savings at an alarming rate, meaning that ultimately, the state will have an additional burden to cover.

Compounding the issue is the fact that the baby boomer generation (typically those born in the 60s) have not been saving sufficiently as they earned to provide a suitable pension. Indeed, many have taken the opposite approach and have taken out loans to fund current lifestyle options.

That said, the increase in average life expectancy caused by better healthcare and standards of living, have meant that annuity rates have dropped, so any saved funds have generated less life time income.

The government have not exactly helped or encouraged people to save for their old age. Gordon Brown’s notorious raid on pension savings in the late 1990s ripped at least £5bn per year out of pension savings.

Successive governments have done little to encourage saving for the future or to curb the cost of public sector pension schemes that are largely unfunded and paid from current taxation.

The position will get worse before it gets better. Although some reforms have been announced, they merely scrape the tip of the iceberg. With fewer working people and a growing elderly population, the sums simply do not add up.

There is also a growing sense of unfairness in the whole system. Those that have saved and been careful throughout their lives are being expected to pay for their own care, whilst those that may have contributed little or saved nothing get care paid for by the state.

Whilst there has to be a basic provision, those that have saved should not be unfairly treated else it will result in a general sense of ‘why bother?’

Increasing focus is being made on providing care at home rather than in a institution. A couple of hours’ care provision in the home can still add up to £12,000 cost per year.

State support is available, but the level depends on how much in the way of capital assets a person has. If they have less than approximately £14,000 (£22,000 in Wales), then the state will provide funding in full.

Where assets are over approximately £23,000 (£22,000 in Wales), then no state assistance is available. The fragmented devolved government approach has already opened differences in what can be claimed and is available.

But many people now own their own homes and by retirement age, this will typically be mortgage or loans free and worth considerably more than the £23,000 government support limits.

Whilst growing property prices over the past 30 years have helped boost personal wealth, cashing in on a capital asset can be difficult. Especially at a time when property prices have softened and the loans offerings are well reduced on recent years.

However, a number of loans based schemes have been developed over recent years to help elderly property owners release cash from their homes without the need to move out. Also, moving to a smaller property and renting out an existing home can generate income from a fixed asset.

Equity release loans are a way to get cash value from a property. One of the advantages is that no more than the property value can be borrowed, so there is no lasting debt burden passed to family members.

How do you find a Low Rate Loan?

Posted by luqman - 05/04/11 at 09:04:35 am

So you want to repair or renovate your home, maybe buy new furniture or appliances, maybe upgrade or repair your car, maybe buy a new home computer or enhance your educational level or something? Whatever it is that you plan to do during this recession period, rest assured it will cost you some money. While these things are all very important as they are part and parcel of life, you can make your dream come true by availing low rate loans. But how do you find such a loan in such tough economic times that we live in today? How do you choose the best low interest rate loans? And how can you be certain that they are the best and lowest rate loans in the market? Here is how you should approach the whole process.

First and foremost, check online for low interest loans. The internet has proven to be a very good source of affordable low interest loans. You only need to key in ‘low rate loans’ in your favorite search engine and you will be presented by thousands of results of websites that offer low rate loans. While most of the online service providers are genuine, it doesn’t mean there are not unscrupulous dealers out there. To be sure you are dealing with a genuine online loan provider, ensure the website is approved by the Better Business Bureau.

One way you can be guaranteed of a low rate loan is to check your credit score. This is because with a more than perfect credit score, lenders will reward you by giving you a less rate. Request for a free credit score report from independent credit score companies so you can check of any wrong entries in the report and ask for corrections immediately before you go out there and apply for the low interest rate loan. You might also want t ensure you pay up all your existing loans and debt so you can reduce your credit burden.

Be advised that if you have a bad credit rating you will automatically qualify for a high are loan as you are considered a high risk customer. In order to avail a low rate loan with a bad credit rating, you can ask a close friend or a close relative to be your guarantor when you apply for the loan. This way, at least the lender will have somewhere to fall back to should you default repaying back the loan.

You can also negotiate for a low rate loan. Remember there is very stiff competition in the loan market today and lenders are always ready to go to the extremes if only to earn your business. So, even if a loan appears to be a high rate loan, you can put your negotiation skills to test and start negotiating for lower rates. You could be very surprised by the savings you will get just by taking this action alone, besides, you have nothing to lose if you give it a try.

-------

The Statistics of UK Credit Rejection

Posted by luqman - 02/03/11 at 07:03:05 pm

Being rejected for a credit card or personal loan can have a detrimental effect on your credit rating, but if you have been rejected over the past 12 months, you’re not alone.

According to a survey of 2007 British adults (commissioned by Moneysupermarket.com and carried out by Opinium Research) a quarter of them were turned down for a credit card or loan.

Taking the total number of adults in Britain to be 49 million, the research claims that 36 per cent (17.6 million) have applied for credit, and therefore nearly 4.5 million (25 per cent) of those have been rejected for credit.

People living in the West Midlands, it seems, are most likely to be accepted for credit, as the figures reflect an 85 per cent success-rate for credit applications in the region.

Those living in London only had a 62 per cent chance of being accepted for credit though, according to the survey.

This infographic conveys the scale of credit-rejection across the country, broken down by age, gender and region.

The data shows that men are more likely to be rejected for credit cards or personal loans than women, as 30 per cent of the males who participated in the study said they had been rejected, compared to 24 per cent of women.

More than a third of 18-34-year-olds surveyed admitted they had been rejected for a credit card or personal loan, whereas just 12 per cent of the over-55’s said they had been rejected.

Making several applications for credit within a short space of time can be detrimental to your credit score. Each time you make an application; the lender makes a check of your credit profile and leaves a ‘footprint’ of the check, which is then visible to other lenders when they make subsequent checks.

It is believed that people with more credit applications tend to carry a higher credit risk, creating a catch-22 situation.

On the other hand, having no discernable credit history can also go against you in the credit application process. When lenders assess your application, they are trying to judge your ability to pay back the amount you are borrowing. If you have no credit history, then the lender has one less point of reference to aid them in making that decision.

For a small fee you can check your credit score online with Equifax or Experian to make sure your credit report is up to date and is accurate. If you notice any discrepancies you can contact the lenders in question to have the mistakes rectified.

Related Banners

•