SimplyFinance - Loans

Secured Loans: Finding the Best Deal

2007-08-30T23:00:00Z

There are countless financial institutions offering secured loans in the UK today and finding the best deal for you can be a daunting task. In brief, a secured loan is a loan where the consumer’s home, or another valuable asset, is used as collateral to secure a loan from the lender.

First of all, you should ensure that a secured loan is the right choice for you. If you are looking to borrow a smaller amount over a shorter term, or you are not willing to use your home as security, you should look for an unsecured loan. As such, there is no best secured loan deal available that will offer the best rate and options for everybody. The key is to find the best secured loan for you, given your own personal preferences and your financial situation.

Fortunately, there are many cheap secured loans on the market today as more and more loan companies come on the market, creating increased competition. This is good news for the consumer, and it offers a great opportunity to save money.

In an ideal world, the cheapest loan would be the one that offers the lowest annual percentage rate (APR). However, it is not so simple as there are can be many hidden charges that bring the true cost of the loan up, even though the APR is low. For example, some lenders will charge you if you pay off the loan before the agreed term. This is known as a redemption fee. If you feel you might pay off the loan early, find a lender who does not charge these fees, or negotiate so that the your lender agrees to waive such fees. Paying off a loan early can significantly reduce the total amount you repay.

Also, ask your lender to be flexible with the amount you repay. If you pay a little extra than the agreed amount every month, you can significantly reduce the term of the loan and save on the amount of interest you pay.

Some lenders may also look to charge a loan arrangement fee when the loan is finalized. Again, try to find a loan that does not charge this fee or ask your lender to waive the fee.

So where to start looking? These days it can be difficult to know where to start looking for that perfect loan as there are countless products on offer. All the high street banks offer secured loans, and it may be a good idea to start with the bank or banks you do your personal banking with. If you have built up a relationship with a bank, and if you are in good financial standing you may have more negotiating power when it comes to getting fees waived, and you may even be able to negotiate a reduced interest rate.

If you feel you may be able to get a better deal elsewhere, there is no shortage of choice. Go online and you will find numerous online banks offering secured loans and services that offer to find the best rate for you. You could also arrange your loan through a broker. Brokers can be the source of valuable advice, and some have access to a wide range of lenders, some who may only offer loans through a broker, and they could be able to find the best deal for you. Online services and brokers can save you a lot of time and may find you the best deal, but be sure you fully understand the terms and conditions of the final product to offered to you before signing.

If you decide to go it alone, try to have all the necessary paperwork in place before you approach a lender for a loan as it will speed up your application. The amount you can borrow will vary between lenders, but all lenders will assess the value of your property (or any asset you use as collateral), your ability to repay the loan, and your personal circumstances, so be prepared before you apply and don’t be afraid to negotiate.

If you are self-employed, unemployed or have a poor credit history, don’t worry. Because you are willing to offer security against the loan, most lenders will be happy to do business with you.

When looking for a good secured loan deal, the best tool you have is common sense. Have a clear idea of your needs before you begin your search and look at a wide range of options. And before you sign anything, make sure you thoroughly understand the terms of conditions of the agreement.

If you'd like to save some time and effort in finding the best secured loan deal for you, take a moment to fill out our simple questionnaire, and one of SimplyFinance's representatives will contact you shortly to introduce you to a lender that is picked for you based on your particular financial needs. It's quick, simple, and you're under no obligation to us or the lender we introduce you to.

Results of Missing a Payment

2007-10-09T07:00:00Z

Due to five interest rate increases in the past year, interest rates on mortgages and personal loans are extremely high. According to Karen Beavis of MoneyExtra.com, 3% of loan customers have missed a payment in the last six months, which comes out to 7,716 missed payments each day. This is an increase of an entire percent over 2006.

Even though accidentally missing a payment does show up in your credit report, most lenders will recognise a single missed payment as a mere slip up on your part, and they'll overlook it when considering you for a loan. However, if you have regular missed payments on your credit report, this is a good indicator to prospective lenders that you will miss a payment if they lend to you as well. Many lenders may choose not to lend to you because of your high associated risk. Other lenders may choose to lend to you, but they'll only do so if they charge you a higher interest rate than they would for someone without missed payments.

Missed payments remain on your credit report for up to 36 months, but CCJs, arrears, and bankruptcy remain on your report for up to six years. Most lenders will overlook you if you've got bankruptcy or arrears in your financial past, but there are some lenders, called sub prime lenders, that will work with you even if you've got a CCJ on your record.

On the other hand, if you've got a clean repayment history, no history of CCJs, and if you've got a controllable amount of debt in your credit report, lenders will be much more likely to want to lend to you. Not only will they want to lend to you, but they'll probably give you an interest rate that's right on point with the market rate.

Lenders will not only look at your credit report when deciding whether or not to lend to you. Here are a couple of other things to keep in mind:

In addition to your credit report, creditors will also look at the person you've got joint accounts with or the person you've got a shared mortgage with. If this person does not have clean credit history, this will reflect on you, and it may hurt your chances of being approved for a loan.

The size of your loan will have an affect on whether or not a borrower will want to lend to you. The more debt you have, the higher the risk you are to lenders, so if you've already got a large amount of outstanding debt, creditors will be less likely to lend to you.

The number of loans you apply for has an affect on how lenders see you. Each time you apply for a loan, a note is made on your credit report. If you apply for a large number of loans, lenders may see this as desperate, and they may take it as a sign that you will not have the money to repay the loan if they choose to lend to you.

Let's conclude not by focusing on what will happen if you miss a payment, but instead, let's focus on how to avoid missing a payment in the first place. Here are a couple suggestions:

Set up direct debit from your bank account to pay your loan, credit card, or mortgage payments. This way, you won't have to stress about remembering to make your payments each month, and they'll automatically be deducted from your bank account.

Keep an eye on your bank account to be sure that you'll have enough money to make your payment when the time comes. If you foresee a problem in making your monthly payment, contact your creditor as soon as you possibly can. They will most likely be happy to work with you to take care of the issue so it doesn't become a full blown problem.

Do You Need to Be Looking for a Bad Credit Loan?

2008-03-28T00:00:00Z

Before delving into bad credit loans, one needs to understand what bad credit is. Your credit score is an analysis of your financial history, including such factors as: bill-paying, number, kinds, and ages of accounts, and outstanding debt, all of which determines your qualification for future credit. The most frequently used credit report agencies are Trans Union (transunion.com), Equifax (equifax.com), and Experian (experian.com), most of which offer a quick and free credit check to you. It is suggested that you check your credit report for alerts or errors once a year. In doing so, you are prepared for future loan applications and results.

In the UK, Experian's credit reports place consumers on a scale of up to 1000 points. The average credit score in the UK is 763. According to Fool.co.uk, "A score of 721 or above qualifies you as a fair risk while a score of 961 or above means you are classified as an excellent risk."

With that general understanding of credit and credit scores, let us now discuss bad credit loans. If you find yourself with a bed credit score, you can still apply for and be accepted for loans, albeit bad credit loans, including bad credit loans for the home, credit cards, personal endeavors, and bad credit loans for autos. If your credit score is really problematic, you may have to work with a lender that specializes in bad credit loans, where you will most likely have a less attractive interest rate. Some lenders may even require that you go through a sort of credit counseling before you are accepted to receive a bad credit loan from them.

If you are in the market for bad credit loans, you must be wary of and research the offers that come to you as there are many negligible bad credit loans available. The Federal Trade Commission (FTC), which is an independent U.S. government agency, works for consumer protection and works against anti-competitive practices. Their website is a great source of financial information and warns of advance-fee loan scams as well as offers of debt relief, as often they are really offering bankruptcy, which will mar your credit report for at least ten years. The advance-fee loans scams come in the form of a credit card offer, for a fee, even before you apply. This may seem attractive to someone with bad credit; however, it is generally illegal and they are offering this to you for a reason: to make money off of you. This option makes no sense for someone with bad credit.

If you are looking for bad credit loans, in the end it comes down to responsibility. You have to decide what you can handle financially, and you have to do the research in order to verify the business practices of those that offer bad credit loans.