Posted in: Personal Loans

Should I Repay my Personal Loans Early?

We often hear about repaying loans early and the benefits of doing that. This is something that can have advantages and disadvantages though. So, whether you have a personal loan or any other loan it is worth thinking through them all before you make a decision. There are some listed below to start you off.

Advantages

  • If you repay a loan early, it is usually the case that you will not have to pay so much money in interest on it. This means that by repaying early you will save some money. This can make a big difference if the interest on the loan is really high, but even if it is not that high it can still save you some money and that will be helpful. It can always be good to pay less if you can and so if you have this capability, to be able to repay the loan early, then you will pay less in total for the loan, in interest, compared with repaying it as required.
  • If you find having a loan stressful then repaying it early means that you will be able to get rid of that stress. Some people do not get that bothered by owing money, but there are some that worry about it and so by paying off they will be free of that stress. This can be a great thing because stress can have a big impact on our lives as well as our physical health.
  • If you repay a loan early it could improve your credit score. It might look better to a future lender if you have repaid early as it will demonstrate that you have the capability of managing your money really well.

Disadvantages

  • You will need to find the money to repay early. This could mean that you will be cutting back elsewhere. You will need to be careful to make sure that it does not leave you short of money for things that you really need. You do not want to risk having to take out another loan because you have paid off the other one and then find that you need money for something that you had forgotten about. Therefore, you need to plan really carefully to make sure that you can afford to repay it.
  • Some loans have an early redemption fee. This means that they will charge you a fee if you repay it early. Some lenders only have very small ones and other have large ones. You will need to check whether the loan you are considering repaying has one and how much it is. Then you will need to calculate whether it will be cheaper to repay the loan early or whether it will actually be dearer. To do this you will need to calculate how much you will avoid paying in interest if you repay the loan early. Then look at how much te fee is and see if it is more or less than you will save.

Whether repaying the loan is the right thing to do will depend on you and the circumstances you are in. Obviously, you will need to have the money available to repay it but you will need to make sure that if you do spend it that you will not be short of money elsewhere. You will also need to think about whether you will end up paying more due to fees that you pay for repaying it early. You will therefore need to do a bit of investigating before you rush in and pay it back. Normally it will be worth it, but you need to be completely sure before you repay so that you do not make any mistakes.

Posted in: Short Term Loans

Will Short Term Loans Work out for me?

If you are considering short term loans, you may wonder whether they will work for you. It is well worth considering this. Even if you know a lot of people that have used them successfully, it is good to contemplate whether this will be the case for you. We are all very different and so what works well for one person may not work out for someone else and so you will need to have a good think about the situation you are in yourself. There are certain things that you should think about which could be a big influence in your decision.

Amount you can Borrow

To start with you need to think about how much money you need to borrow. Most short-term loans will tend to lend up to £1,000. This may be enough money for you, but even if it is it is worth noting that you may not get this much. Lenders do not always loan the full amount that they advertise. With short-term lenders they will want to build up some trust with their borrowers first. This is because they take on borrowers with a poor credit record and so they may have had a record of not repaying loans in the past. This means that the lender might want to just lend them a small amount of money to start with and then if they repay that successfully then lend them more. Therefore, you should check with the lender to make sure that they will be prepared to lend you the amount of money that you need, before you apply for the loan.

Cost

It is also well worth looking at the cost. The cost of loans can vary a lot and lenders will vary in how much they charge as well. Therefore, finding out the cost can mean that you will need to look at a selection of different lenders and find out how much they charge to see what you might be likely to have to pay. You will find that they will have an interest rate and if you go to a comparison website this is likely to be the way that they calculate who is cheapest. However, you need to beware of using the interest rate. Firstly, interest rates tend to either be the annual percentage rate or the annual equivalent rate. If you are comparing different rates between different lenders then this will mean that you will not be comparing like for like. Also, some loans will not just charge you interest but they will charge fees as well. The annual equivalent rate is the interest rate calculated if the fees are added in which means if you compare these rates then you get the best idea as to which is cheapest. However, this can all be rather complicated. This means that it can be better to find out what the cost will be in monetary terms. There are often calculators on the lenders websites which will allow you to calculate this. This will be handy because not only will it allow you to make a proper comparison between the different loans but you will be able to see exactly how much they will cost you.

Repayments

It is important to find out how the loan is going to be repaid. This is because you will need to work out whether you will be able to afford the repayment. If you cannot pay it, you will have extra charges to pay and no one wants to have to do this. So, make sure that you work out whether you will be able to afford those repayments by checking your bank statements, before you sign up.

Posted in: Debt

Are Short Term Loans Good or Bad Debt?

We may hear about good and bad debt and think about whether the borrowing that we are doing is good or bad. This is a really sensible approach to have as you need to think about what will work out well for you. Therefore, you may be asking yourself whether short term loans are good or bad debt. It is a good idea to know exactly what is meant by good and bad debt and then you will be able to make a judgement.

What is Good and Bad Debt?

There are a few different ways of differentiating debt into good and bad. It can either be to do with what the money is being used for or how you go about getting the loan. Some people feel that a loan should only be used for a good purpose. What they consider to be good would be where you use it to better yourself such as using a mortgage to buy a home which will mean you will no longer have to pay rent or using it to pay for a course which will advance your career. However, using a loan to spend on extravagant items such as your third holiday in a year or some expensive jewellery would be considered to be bad debt. Also, it is considered to be bad debt if you take out a loan without comparing types of loan to see which will suit your needs the most and the different lenders to see which will offer the best value for money. Also you need to check the repayments and see whether you will be able to afford them.

Are Short Term Loans Good or Bad?

So, deciding whether a short term loan is good or bad is not something we can do on a general basis but it has to be looked into on an individual bases. So, if you are considering one then you have a lot to think about. You need to think about your reason for borrowing and whether it is a good one or not. Then you need to think about the loan and whether it is the right type to suit your needs. You then need to think about whether you are able to repay the loan. There will be a bit of calculation to do here. You will need to think about whether you are capable of repaying it in normal situations by looking at your bank statements. You will also need to consider whether you will be able to repay it at the moment considering what is happening to your finances right now. Also think about what else you have to pay for and whether you will be able to afford that as well. You should also consider whether you think that the loan will offer you good value for money considering how much you will need to repay and what the cost is.

Many people will jump to conclusions when it comes to short term loans and just assume that they will bad. However, it really depends on what you need the money for and what your situation is as to whether you think that it is bad or good. It is worth having a think for yourself and considering all of your options so that you can make the right decision for you. It may seem a pain to do this, but it could save you having any regrets in the future. So, make sure that you do give it some thought as it could be time very well spent and it will mean that you can move forward knowing that you have made the best decision with regards to your own personal circumstances.

Posted in: Guarantor Loans

Who to use for a Guarantor for Guarantor Loans?

If you are interested in getting a guarantor loan then you will need to think about who to use as a guarantor. This can be a big decision and you will need to think about whether the person you choose will be suitable. It is good to think about what is needed in a guarantor and then who you know and whether it will work.

What is Needed?

A guarantor will need to have a good credit record as there will be a credit check done on them. They will have to give their bank details because they will have to cover the repayments for the loan if you cannot pay them. This means that you need to choose someone that you know will have a good enough credit record. They will also have enough money so that they can cover those repayments if you cannot and this means that they will need to be able to manage that. It could be that they will make every repayment (although I am sure you will hope that this will not be the case) and so they will need to have enough for this. Of course, they will also need to agree to help you out like this.

Who do you Know?
So, you will need to think about all of the people that you know and whether they fit these criteria. Of course, you will not necessarily know what the credit record is like for all of the people you know. However, if you can come up with a list of people that feel should have enough money and that will be willing to help, then you have somewhere to start. You will have to talk to them about it of course. So, then you will be able to ask them about their credit record and if they will be able to help.

Will it Work?

It is not as simple as just picking them and asking though. Before you speak to them you need to think about how it might impact your relationship with them. For example, how will they feel about the fact that you are even asking for help? How will they react if they have to make payments for you? Will they expect you to repay them and if you cannot afford to what will the consequences be? It is good to think about these things and then if you do decide to ask them, discuss it with them. It is really important to decide, before taking out the loan, what is going to happen with regards to repayments if they make one. Will they expect you to pay them back at all? If so when? It is good to have something in writing to because if their situation changes and they suddenly need money, then they might expect you to help them out and repay what they paid on your behalf. If you cannot afford to do this then you could find that you will fall out with them and this could ruin your relationship. You need to think about whether it is worth taking this risk just to get a loan. There may be other people that you could choose which you are less likely to fall out with so take time to think about their personalities too. It can also be worth thinking about your relationships with others. For example, if you have a sibling and use your parent as a guarantor and they make some repayments for you, that sibling could get jealous and you could fall out with them. This could happen with other family members or friends too and so you need to consider whether it is worth it.

Posted in: Payday Loans

When to Consider Payday Loans

There are many situations where we might need to borrow some extra money. It can happen to any of us at any time. There is nothing wrong with borrowing money either, in fact it can be extremely useful. However, it is really important to make sure that you are borrowing at the right time, for the right reasons and using the right type of loan. Therefore, you need to consider each of these before knowing whether it is the right time to consider a payday loan.

Is it the Right Time to Borrow?

Borrowing has a consequence and that is that you will need to repay the loan. Therefore, timing the borrowing is important as you need to make sure that you borrow at a time when you will be able to afford to repay the loan again. Repayments are such an important thing as if you cannot pay for them, you will have to pay extra charges. You do not want to have to pay anything extra to what you have to, partly because it will be money wasted and also because it could make it more difficult for you to cope with paying for everything else that you need to buy. Therefore you need to start by checking how much you will need to repay and when and then you will need to check whether you can afford that amount by looking at your household finances in detail.

Do you Have the Right Reason to Borrow?

It is also worth thinking about whether it is a good idea to borrow at all. Think about why you are borrowing and whether it is necessary to have the money for the aim that you have in mind. If it is an emergency and you have no other options or it is something which will make a really big difference to your future, potentially your financial future then you will have good reason. For example, if you have no food and no money to buy it or you want to buy a house so you can save on rental payments, then these would be good reasons to borrow. It is not always that straight forward, but it is certainly well worth a think about what you are spending the money on and whether it is justified, considering that borrowing costs money.

Which Loan Type is Right?

Once you have decided that getting a loan is the right thing to do, then you need to choose between all of the types of loans that are available, even those with no credit check. It is really important to think about how much they lend, how long they last, how the repayments work and whether they are available to you as well. Then you may also want to think about the lender, their reputation, customer services and thing like that. So, for example, a payday loan is for up to £1,000, all the money has to be repaid on your next pay day and it is available to anyone regardless of their credit record. Once you know these basics, you can decide whether you think that this specific loan is your best choice. Obviously, you will need to find out about all the other loan types as well and match them to your requirements and then you will be able to find the one that is best. You will then need to look at the different lenders and think about which you feel will suit you the best with regards to how they work, their customer service, reputation and of course, cost. It will take some work, but it will be worth it as you will get much better value for money as a result.