SimplyFinance - Loans

Advantages of Secured Loans

2010-05-19T23:00:00Z

Have you known that the main advantage of secured loans is the low interest? Secured loans where first used in the mid-80's when the real estate market began to grew not only in size, but also in value. This loan product was invented to allow people to buy houses even in periods when prices increased considerably.

There are multiple offers of secured loans on the financial market. You can apply, for example for a home loan, which is a very cheap secured loan. Its price has the exact value as the price of a secured personal loan. When I say price I mean the total amount of money that you have to pay on interests and commissions. The fact that you grant your loan with an asset brings you not only smaller prices but also bigger amounts of money and longer payback periods. Lenders are offering you these advantages thanks to your guarantee. Having your asset as a guarantee, banks are sure that you will repay the borrowed money in time. After all, you don't want to lose your house, right?

Secured loans are very popular. Some people are applying for a secured home improvement loan because they want to give their house a modern look. Others apply for personal secured loans because they want to pay for their studies, to buy a car or even because they want to go on a vacation that they dreamed of for so long. Another category of borrowers use the money that they obtain to pay off an old and expensive loan. No matter what you will spend your money on, be sure and confident to choose a secured loan.

The maximum amount of money that you can obtain with this loan depends on the value of the asset that you granted with. If you want to know from the very beginning how high this amount will be, use a loan calculator! Only with a few details about your expenses, income and value of the asset that you will use as a guarantee, you will find out how much you will afford to pay in no time. Also, in order to obtain the best offer, first, compare loans! This analysis will help you decide upon the cheapest loan. There is no need to wait! Apply today and start enjoying right away all the benefits that secured loans are offering you!

How Our Financial Ignorance is Costing Us Millions

2010-09-29T23:00:00Z

Shocking new research from uSwitch.com shows that on average, Britons do not become knowledgeable about personal finance until the age of 27. 16% of those surveyed said that they did not get fully up to speed until the age of 35, and almost 9% claimed to be in their forties by the time they fully understood the financial products and services available in the market.

When respondents to the survey were asked whether they felt that we are financially educated as a nation, only 7% replied in the affirmative. 40% said that we are less money savvy than previous generations, and 70% felt that personal finance is now a lot more complicated than it used to be.

So are we less well prepared to manage our money now than in the past, or is personal finance just more complicated now than ever before? Whether one or both of these factors are responsible, it's clear that the UK population is feeling the effects. New figures from the debt charity, Consumer Credit Counselling Service (CCCS) show that 110,174 people in the UK are now enrolled in debt management programmes through the charity, a 12% increase on the previous year.

So how are Britons learning about money? 81% pick up their personal finance knowledge 'along the way', relying on trial and error to make the right decisions about their finances. A tiny 4% of respondents learned about money matters from banks, while just 3% more people received a financial education from their parents.

As well as revealing our current shortcomings in managing our purse strings, the research highlights a widespread anxiety about the longer-term effects on the country's future. 95% of respondents agreed that personal finance should be taught in schools, and 89% stated that it was wrong of the government to postpone plans to add money matters to the school curriculum.

As credit cards, personal loans and other financial products are available to consumers aged 18 and above, the gap between financial knowledge and credit availability clearly needs addressing. At the last count, our collective lack of financial education has cost us nearly 250 million GBP in charges and penalties alone, through exceeding overdraft limits, missing repayment deadlines and other personal finance deadly sins. 24% of those charged said that they did not fully understand the terms and conditions of the product.

Ann Robinson, Director of Consumer policy at uSwitch.com says: "Our poor understanding of personal finance is costing us money and now looks to be getting worse with each generation. While our debt is increasing, our knowledge is decreasing - the situation is a ticking time bomb. It's also vital that those who are beyond school age stay on top of this. "

"Taking the time to understand any personal finance product you are signing up to will save you money on interest rates and charges that can catch out the un-savvy consumer. By doing this and keeping an eye on your credit rating, you'll also be better placed to get the best deals on the market on your credit cards and bank account - which could save you over 400 GBP a year."

Click here for the 'Easy Guide to Reading your Credit Card Statement' and avoid those charges.

To Loan or Not to Loan?

2010-04-10T23:00:00Z

Thousands of UK consumers take out loans each year to raise money for thousands of different reasons. Here we consider two of the most common scenarios and offer some alternative suggestions to help you find the best solution for your needs.

You want to raise money to cover a large one-off expense

If you need a lump sum of cash to pay for a wedding, an expensive holiday or a new car, there may be a number of different options available to you. If you're a homeowner and you have equity available in your property, you could consider taking out a remortgage on the property as a way of releasing capital. This would involve swapping to another mortgage deal, either with your current provider or elsewhere. This would have the added advantage that you may be able to improve on your mortgage interest rate and actually get a more competitive deal.

If you do not own a property, or you do not have available equity, an unsecured loan is the main option available to you. Unsecured loans are usually available for amounts up to 25,000 GBP. There is nothing to stop you from taking out an unsecured loan if you are a homeowner, but because you are not willing (or able) to secure the loan against your property (thus providing the lender with some security against you defaulting on the loan), your rate is unlikely to be as competitive. If you would like to talk through your options with a loan adviser, simply fill out our short loan form to receive a callback.

If you are looking to buy a car or carry out some home improvements, it's worth looking at providers that specialise in loans for these purposes because they might be able to offer a better deal. For example, car loan providers often give you the option to include a balloon payment - a large lump sum that is made at the end of the loan term in order to keep your monthly repayments to a minimum. To find an adviser who can help you find a more specialist loan, complete our loan form and make sure to select your loan purpose when asked.

You need to pay off credit cards and other debts

When it seems as though your credit card balance never decreases even though you are making monthly payments to clear the balance, it's time to get yourself out of the vicious cycle.

Firstly, check whether the interest rate on your credit card has increased since you first became a customer. If your credit rating has gone down since you first took out the card, some providers will respond by upping the rate of interest you have to pay on your outstanding balance. Regardless of fairness, this is something that car providers are currently allowed to do for consumers they consider more 'risky'.

You can try calling them up to ask that they put the rate back down again, it does sometimes work. Alternatively, consider moving your balance to a 0% credit card deal elsewhere. Some card providers will offer you up to 15 months at a zero rate of interest, giving you a bit of breathing space to get that balance cleared. Compare some of the top credit cards in the market with our credit card comparison table.

As a side point, when you are paying off credit card debt, never, never pay back the minimum amount each month if you can avoid it, you'll never get it cleared this way. Use our 'Time to Pay Off Debt' Calculator to see how long it out take you with various different amounts, and pay back as much as you can each month.

So is a loan ever a good idea in this situation? If you owe money to a number of different creditors and are having trouble juggling the monthly repayments, an unsecured loan offering a lower rate of interest (often known as a debt consolidation loan) could be an option for you. However, as you would effectively be replacing debt with more debt, you have to be making significant monthly savings by taking this step to make it worthwhile. Find out more by requesting a callback from a loan adviser.

If you have been unable to apply for a loan and you are struggling with debt repayments, you may wish to consider a debt management programme. This would involve working with a debt specialist, who would negotiate with your creditors on your behalf and manage your available money each month to ensure that you pay off your debts as quickly as possible. If you'd like to request a callback from a debt specialist to talk through your options, please complete our short debt management form.

Ask the experts

If you are unsure about the right option to take, it's always better to seek some guidance from an impartial expert rather than trying to go it alone. This is especially true when you are considering putting your house at risk by securing a loan against it. If you'd like an initial chat with a loan adviser, you can fill out our short loan form and request a callback. There's absolutely no obligation to go ahead with any products that are suggested.

Are you guilty of the Credit Report Seven Deadly Sins?

2010-10-29T23:00:00Z

Five years ago, most people's attitude to their credit status was, "It must be OK - I'm always being offered cards and loans." Today, things couldn't be more different. Banks facing the combined effects of the credit crash and recession have tightened their lending criteria so that only the cleanest credit report will qualify you to borrow what you need.

A clean credit report is a golden asset but very few of us realise that we could inadvertently be trashing our credit status - and our chances of getting the deals we want. Below are some surprising ways in which you can damage your credit rating - and a guide to how not to fall into the traps.

-->> Have Debt? Click here to speak with a debt specialist . <<--

Deadly Sin no.1: Not knowing what affects your credit status

Lenders use a wide range of data when they decide whether to make you an offer, including details of your salary and how many people you support financially. They turn to your credit report to assess whether you are stable and a reliable borrower.

Your credit report lists your credit, such as cards, loans and your mortgage, along with your repayment record. You need to check it regularly to ensure that it's up to date and accurately reflects your circumstances. It's free to see your Experian credit report with a 30-day trial of CreditExpert.

Look for:
?
* Minor clerical errors, such as an outstanding balance you know you paid.
* Inconsistencies in the way your address is listed - for example, Basement Flat, Flat B and Flat 4.
* Applications and accounts you don't recognise.

If you find anything you disagree with, take it up with the relevant lender and ask for it to be correct - be ready to provide proof.

Deadly Sin no. 2: Not being credit-wise when moving home

You may think that a move is something to celebrate - but your big move is fraught with dangers for your credit record.

Remember to:

* Make any big credit applications before you move - lenders prefer you to have lived at the address you give for at least three years and you could lose valuable points from your credit score if you leave things until after you've settled in your new home.
* Cancel gas, electricity, phone and cable contracts in writing, at the same time that you tell your bank, building society and other key organisations that you've moved. If you forget, the people who move in could run up bills in your name. A single missed payment stays on your credit report for at least three years, while a court judgement will blight your credit rating for six years. Use a service such as www.iammoving.com to make this process easier.
* Redirect your post via the Royal Mail for at least a year. If your mail continues to go to your old address and is intercepted, the newcomers could use it to hijack your ID, open new accounts in your name and leave unpaid bills.

Deadly Sin no. 3: Forgetting to adjust your finances when you split

Every time you apply for or take out a joint credit account, such as a mortgage or even a mobile phone contract, you create what is known as a financial association. All these associations are listed in your credit report and lenders may check your financial associates' credit report when you make an application, because their circumstances can affect your ability to repay what you owe. So if your ex gets into money trouble, you could suffer.

Add to your to-do list:
* Agree who will take on what debt.
* Cancel old joint accounts and set up new, individual accounts.
* Tell the credit reference agencies immediately - Experian is the largest - and ask for the financial association to be removed from your credit report.

Deadly Sin no.4: Not registering to vote

Lenders check the electoral roll as a precaution against fraud, to see that you really live where you say you do.

So, even if you have no intention of voting, you should:
* Cancel any past registration, especially if it goes back some years and several home moves.
* Contact your local council or go online to www.aboutmyvote.co.uk and register.
* Check that your new registration is shown on your credit report.

Deadly Sin no. 5: Having an emergency credit card

Lenders don't only take into account the amount you actually owe when they decide whether you should be given access to further credit. They look at the amount available for you to borrow.

Before you make an application:
* Go through your credit report and look for unused accounts.
* See if you can roll up several smaller outstanding amounts into a single account - for example, transfer the balances from several cards onto a single card.
* Simply cutting up the cards is not enough. Pay off and close down any accounts you no longer need or rarely use.

Deadly Sin no. 6: Not having any credit accounts

You might think that lenders would love people who haven't borrowed a penny or have long since paid off what they owe and shut the accounts down. In practice, this means that you don't have a recent track record that shows you are a reliable borrower - and you could be penalised.

Consider:
* Taking out a credit-building card, using it for everyday shopping and repaying the total, in full, every month. Missing payments is as bad as having no credit history at all.
* Talking to your bank manager and getting a personal reference if you want a loan or find it difficult to qualify for a card.

Deadly Sin no. 7: Making multiple credit applications in a few months

Never window shop for a new loan, card, mortgage or any other form of credit by making a full application - lenders will check your credit report each and every time and every check will leave a trace. Other lenders may interpret these as a sign of desperation or even suspect identity fraud.

Instead:
* Do your research in advance - use personal finance websites, newspaper supplements and magazines and go to price comparison sites to discover the kind of deal you might get.
* Ask for a quotation search that will not leave a mark on your credit report.
* Only put in an application when you're sure you've found a deal that is suitable and affordable.
* See what the lenders are going to see by checking your credit report first: See your online Experian credit report for free with a 30-day trial of CreditExpert.

-->> Have Debt? Click here to speak with a debt specialist . <<--

Top Tips for Dealing with Identity Theft

2009-08-03T23:00:00Z

It's a shock to discover that your identity had been stolen and used to borrow money and run up debts in your name. Perhaps you receive a letter demanding payment for an account you didn't set up, your credit card statement shows a series of unfamiliar transactions or a lender turns you down on the grounds that you've not been paying your bills. Identity theft affects hundreds of thousands of people in the UK each year, and the numbers are constantly growing.

If you don't check your credit report regularly for suspicious transactions, it could be a long time before the companies notice that there is something untoward happening, by which time your finances and credit rating could have seriously suffered. Research by Experian's Victims of Fraud team shows that it takes an average of around 500 days to discover the crime - and a further 300 hours to set the record straight. In the meantime, you could find it impossible to borrow what you need because your credit status has been trashed by criminals. Here's what to do if you suspect you might be one of the unlucky ones.

Check your credit report

This is your personal credit history and details the loans, cards, mortgages and other credit accounts in your name, along with your repayment record. If you spot anything you did not apply for or see an outstanding balance far higher than you can explain, someone is probably using your identity to commit a fraud. You can see your Experian credit report for free with a trial of the credit monitoring and identity protection service CreditExpert.

Report your suspicions

Tell the police if you think your identity has been stolen and used fraudulently and get a crime number or incident number. You should also tell one of the credit reference agencies that holds your credit report - Experian is the UK's largest.

Get help

The Victims of Fraud service will help you to investigate and put matters right. They can tell you what to do and help you to set the record straight. If appropriate, they can also add security features to your credit report to obstruct the fraudster and prevent him or her from running up more debts in your name. Call the Victims of Fraud service on 0844 481 8000 to report a possible case of indentity theft.

Contact the organisations who have been duped

Your credit report contains a list of all the lenders who've given you credit, along with their contact details. Get in touch with them and explain what's happened. Be prepared to provide proof - for example, that you could not have been in the place where credit card transactions occurred or that you do not live at the address given for a fake account.

Tell the Post Office

The most common way of stealing an identity in the UK is intercepting your post, so unless you've already identified the cause of your problems you should contact the Post Office and ask them to investigate. In the meantime, make sure your mail isn't left where anyone else can take it, like in a shared hallway.

Take precautions

Your identity is a precious commodity, so take every precaution to ensure that it isn't abused again. For example, you should shred sensitive documents before throwing them away and always report the theft of items such as credit cards, passports and driving licences as soon as possible after the incident occurs.

Who is using your Details?

2009-12-02T00:00:00Z

There has been a 12% rise in the number of cases of identity fraud since the start of the year. Data collected by National Hunter, the fraud prevention database operated by credit reference agency Experian, shows that there were 13.37 cases of identity fraud per 10,000 applications in the July-Sept period. This is compared to the January to March period when there were 11.91 cases per 10,000 applications made.

Fraudsters use the details of unsuspecting consumers to make applications for credit cards, personal loans and mortgages, with many people not realising their details have been used until they unexpectedly get turned down for credit.

Darryl Bowman from CreditExpert.co.uk, the website run by Experian, says: "The surge in cases of identity fraud is very worrying. As we get wiser to protecting ourselves from fraud, it's clear that criminals are working even harder to steal our personal details so they can apply for credit.

"Missing post, unexpected phone calls and strange emails are signs we look out for and know suggest potentially fraudulent activity. Criminals also know this and that's why they use techniques that can take a long time to detect. A new catalogue account at a new address could be the stepping stone to much more significant lines of credit and ultimately a much bigger problem for the victim to resolve."

The best way of preventing identity theft is to ensure that you only enter your details onto trusted websites. Any sites where 'http://" is not included at the start of the address are not secure, and therefore could be accessible by fraudsters.

Never provide any personal details in response to a bank's emails - banks would never ask you to email them with this kind of information, and would never even ask you to provide a full password over the phone. Con artists use a system called 'phishing' to create fraudulent emails and websites that look like they have come from banks and reputable companies, with the aim of fooling you into parting with valuable information. If in doubt, don't divulge any information, and call the bank/company back on the number provided on their website to verify.

However, your details are not just at risk online. Anyone who lives in accommodation with a shared hallway needs to be careful that their post is delivered directly to their door to avoid it being intercepted. Shred any mail giving account details, and other sensitive information such as your place of birth, date of birth or mother's maiden name.

Of course, if you do not tend to make credit card applications very frequently, you are unlikely to find out that you have been a victim of identity fraud until months, even years, after the damage has been done. Therefore, it is advisable to keep an eye on your credit report. If you subscribe, you receive notifications any time a credit check is made (suggesting that an application has been made on your behalf) or any other changes occur.

Even having a one-off glance can make all the difference, because mistakes and recorded transactions that you don't remember making can be sorted out very easily. You can see your credit report for free with a 30-day trial with Experian, or can apply to any of the UK's credit reference agencies (the main ones being Call Credit plc, Experian and Equifax) for a one-off copy for a couple of pounds.

Six Reasons Why Your Loan Application Will Be Rejected

2010-03-18T00:00:00Z

New research from lender Kensington reveals that more than 10 million UK residents could fail an automated credit score because they have insufficient credit history to be considered a reliable borrower.* Lenders operate strict credit scoring for mortgages, personal loans and credit cards to try and calculate how 'risky' a customer you would be.

-->> Click here to get a loan today! <--

The credit scoring system differs from lender to lender, and you will never have one single score across all lenders. This is because some lenders specialise in lending to certain groups, such as first-time buyers or those with previous debt problems, and therefore their 'ideal customer' will vary.

However even though there is no universal credit score for each potential customer, there are some criteria that will land you in the doghouse with the majority of lenders. We take a look at all the reasons you may be rejected for credit, even if you are a responsible borrower.

1. You Have no Credit History

You'd think it would be a good thing that you'd never needed to borrow money before, wouldn't you? Not so. The main reason that lenders give you a credit score is to determine the likelihood that they'll get their money back with interest if they lend to you. If you have no previous record of borrowing money, they have no way of knowing if you're reliable and therefore are taking a much greater risk by lending to you.

Boost your score by: Getting yourself on the radar as a responsible borrower. If you plan to make a mortgage application soon, start by taking out a credit card and making sure you pay off the full amount each month. Make sure you don't spend more than you would normally - perhaps plan to just use the card to buy groceries and petrol.

2. You're not on the Electoral Register

If you are not registered to vote at your current address, this will put a black mark against your name as a potential borrower. Credit reference agencies - the organisations that hold our credit reports - update their records from the electoral roll each month, and if you are not found there, this makes you seem less of a solid prospect for credit.

Boost your score by: Getting registered straight away. As updates happen monthly, you'll see a relatively quick improvement to your credit rating by registering to vote. Get in touch with the Electoral Services department at your local Council to register.

3. You Made 10 Credit Applications last Year

If you're making loan or credit card applications left, right and centre, you're going to give off an air of desperation. Multiple credit applications suggest that you need money fast, either to pay off existing debts or because you are spending your cash at a rate of knots. Neither possibility is going to fill a potential lender with confidence in your ability to manage your (or their) money.

Boost your score by: Holding off on making further applications for around 6 months after being rejected. Also, if you are applying for new cards, make sure that you have officially closed the other credit card accounts first (simply cutting the cards up does not count!). It's also worth checking your credit score before making any further applications, so that you can spot what the lenders are concerned about.

4. Your Credit History is Tied to Someone Else's

It's pretty commonplace to have a joint bank account, credit card or mortgage with a partner. However, if the situation changes, many people don't realise that you have to actively 'disengage' yourself with that person on your credit history to avoid being forever financially linked with them. This means that they are getting into debt or have been unreliable about paying back loans, you could also be penalised through no fault of your own.

Boost your score by: Getting in touch with one of the UK's credit reference agencies, Credit Expert (Experian), Equifax or Callcredit, and informing them that you are no longer with your ex-partner and no longer wish to be associated with them. This also applies if you once shared a mortgage with a friend, but no longer have both your names on the property.

5. Your Repayments are often Late

Even if you eventually pay back the money you owe on credit cards, the fact that you often have to be chased up about it is a red light for many lenders. Lenders like some bad habits such as using a credit card for withdrawing cash (which comes with hefty fees), or making only the minimum payments on your balance (which keeps you continually in debt) because they make more money out of you without incurring any risk themselves. However, being a late payer is a bit turn-off for most lenders, because they have to chase you up and may even lose money by lending to you.

Boost your score by: Making sure that you keep on top of your repayments by setting up a monthly direct debit from your account, set to come out as soon as you are paid to avoid running out of money mid-month.

6. Someone Is Using Your Name

Identity fraud is an increasingly common problem in the UK, made worse by the fact that so many payments are now made online each year. Unfortunately, if you do not regularly check your credit report, it can take months and months to notice if someone is fraudulently using your details. The first time you notice may be when you try and apply for a loan or a credit card and are rejected, even though you have taken all the right steps to improve your rating. Even if you're not a victim of identity theft, mistakes can still appear on your credit history, meaning that you are penalised for things that are not your fault. You can rectify these mistakes with the credit reference agencies once you have pointed them out on your credit report.

Boost your score by: Applying for a copy of your credit report. You can do this for a couple of pounds through Credit Expert, Equifax or Callcredit, and Credit Expert also offers a free trial subscription for a month. By going through all the applications made under your name, you should find it easy to spot any that you do not recognise. If you do see anything suspect, report it to the credit reference agency (and to the police) immediately. The damage will be much easier to repair if you act quickly.

To find out more about making an application for a Personal Loan, visit our Loans pages.

If you're in debt and need some advice, have a look at the articles on our Debt pages or fill out our short debt advice form to be connected with an experienced adviser.

* Based on a survey of 2,000 UK residents, 13% of whom have no record of taking out a financial product in the last 10 years.