Top Energy-Saving Tips For Your Home in the UK

Top Energy-Saving Tips For Your Home in the UK

Your monthly energy bill may not seem like much . However, it adds up to a lot of money every year. The average monthly energy bill (depending on the house) ranges from £61 for a small house to £125 for a large house according to the latest statistics. Considering you don’t have to spend as much money as you do on energy bills, you can save plenty of money if you decide to become more energy conscious. It is possible to pay approximately half of what you normally pay by considering the energy saving tips below. Here’s what you need to do;

1. Switch off lights/appliances you don’t need: This is an obvious but commonly overlooked energy saving tip in most households in the UK and around the world. If you just switched off all the lights you don’t need at any given time in your home, you are bound to save some money every year. The same applies to appliances. You should switch off/unplug all appliances and chargers you don’t need at any given time to save energy. It’s worth noting that leaving appliances on standby isn’t enough. Most appliances must be turned off completely, otherwise they will continue consuming power. You can save approximately £50 (even more) per year by following this tip alone.

2. Switch to energy saving bulbs (LEDs): This is another great home energy saving tip to consider. Typical light bulbs consume up to 10 times more power than energy saving bulbs. Considering every household has plenty of bulbs, switching to LEDs will definitely lower your energy bill. Although energy saving bulbs are more expensive than typical light bulbs, the savings you stand to enjoy justifies the cost. Furthermore, LEDs produce light that is bright enough. Switching to LEDs costs approximately £100 for the average household however you stand to recoup your investment in less than a year.

3. Draught-proof your home: Most UK households spend the most electricity on heating. Draught proofing your home is an excellent way to ensure you don’t have to use home heating appliances for extended time periods. It’s worth noting that households lose heat via draughts around windows and doors. Blocking these gaps will ensure your home retains heat much longer during cold seasons reducing your energy bill in the process. Considering you stand to save £100+ annually and you don’t have to hire a professional to draught proof your home, this tip comes highly recommended.

4. Use energy efficient appliances: You can also save more on your energy bill by sticking to appliances which have been certified energy efficient i.e. Energy Star appliances. Such appliances have a blue Energy Star label. It’s easy to find Energy Star appliances in the UK so you shouldn’t have a problem implementing this tip. To avoid incurring huge costs initially, you can switch to Energy Star appliances gradually. Switching to an Energy Star appliance i.e. a fridge can save you up to £100 a year.

5. Transition to solar power: Solar power is the cheapest form of power available today. Although installing solar power in your home is costly, the saving you stand to enjoy in the long-term is significant given the fact that you will never have to pay any monthly energy bill going forward. Solar power also has other notable benefits i.e. it is cleaner/safer. To avoid incurring a huge initial cost, you can transition slowly i.e. install a solar water heater first since water heating contributes significantly to your monthly energy bill.

Summary

It is possible to reduce your monthly energy bill by more than 50% by taking the above measures. Obvious measures such as switching off lights and appliances you don’t need as well as using energy-efficient appliances go a long way in ensuring you pay only for the energy you need/use. Measures such as draught proofing your home will reduce your energy bill significantly during cold weather. To enjoy the greatest energy savings, in the long run, consider transitioning to solar power.
Many people take out short-term loans such as payday loans to settle emergency bills i.e. electricity bills. Get your energy bill in control and forget about taking out loans to cover such bills.

What Are Bridging Loans?

What Are Bridging Loans?

Bridging loans are short term loans extended to individuals who have to pay their debt soon but haven’t had access to their main line of credit yet. Bridging loans ‘bridge’ the gap that exists when you have pressing cash needs that must be attended to immediately but you still have to wait for your main line of credit to become available.

Bridging loans are popular in real estate investments. They resemble payday loans but in a real estate context. The loans usually facilitate property purchases that wouldn’t normally be possible. In today’s world of downsizing and upgrading homes, the chances of finding your next home before you clear your current mortgage loan is very high. In such a case, a bridging loan will be perfect for you.

Bridging loans are short term loans like payday loans. However, they are larger. The loans are also high-interest. Bridging loans are typically meant to help you buy new property while you are waiting to sell/receive proceeds from the sale of existing property. The loans are also used to help individuals planning to sell their property/home quickly after renovating. Bridging loans are also ideal for individuals planning to buy property at an auction.

How do bridging loans work?

The loan amount you receive is usually dictated by the equity you have in your existing property. Interest is usually calculated on a short term basis i.e. on the term of the loan which is usually less than a year. Your credit rating or credit score is also considered when calculating interest. Banks also consider other normal lending criteria. Borrowers are expected to make their repayments normally until the property in question is sold. Bridging loans also attract new property purchase costs such as legal fees and stamp duty.

When are bridging loans good for you?

Bridging loans are great options for property investments that require large sums of money in a short time. In such instances, traditional forms of financing aren’t suitable because they take too long to process. Banks take long to process mortgage loan applications. In cases where you need to buy property from an auction, it might not be possible to secure financing in time if you apply for a typical mortgage loan.
Some borrowers also use bridging loans today as simple alternatives to mainstream lending. If you home has some equity, you can always get a bridging loan to take care of some pressing cash needs. It is, however, advisable to think about all your options before using a bridging loan as an alternative to mainstream lending. Bridging loans are perfect when you have a clear exit strategy i.e. an ongoing property sale that is about to be concluded. A bridging loan will also be perfect for you when you intend to use it for property investment purposes only i.e. when you want to a buy-to-let mortgage.

You should also consider taking a bridging loan when you are sure you can get access to a mortgage loan with a mainstream lender. This is important since it eliminates the risk of losing your home/property in case you are unable to meet your repayment obligations. In simpler terms, you shouldn’t take a bridging loan if you can’t qualify for a typical mortgage loan. The FCA has raised concerns about financial advisers recommending bridging loans too quickly. This can be attributed to the high-risk and high-interest aspect of such loans. Ideally, you should tread carefully if you haven’t taken on a bridging loan before. Besides the high-risk and high-interest aspect, bridging loans also tend to attract hefty fees and some hidden charges as well which could easily render the loan unmanageable.

In a nutshell, a bridging loan shouldn’t be viewed as a suitable alternative to traditional lending. Short term loans like payday loans are better alternatives since there are lenders that offer high borrowing limits capable of catering for substantial cash needs.

Getting a bridging loan

There are many bridging lenders in the UK ranging from small one-man bands to professional outfits regulated by the FCA. When taking out a bridging loan, stick to lenders who are regulated by the FCA since such lenders are bound legally to recommend bridging loans when they are appropriate for you.
 

Even After Brexit the UK is Still Among the Strongest Economies in the World

Even After Brexit the UK is Still Among the Strongest Economies in the World

The Office for National Statistics (ONS), the Organisation for Economic Co-operation & Development (OECD) and the Bank of England (BOE), say the UK economy is booming despite earlier post-referendum fears and warnings that the UK would face severe economic shocks for passing the Brexit vote.
The media also seems to have joined the pro-Brexit bandwagon mocking dire warnings from British Conservative Party politicians like George Osborne.

Numerous reports show the British economy is sound and prospering after the UK decided to withdraw from the European Union on 23rd June 2016.

ONS statistics

According to the latest ONS statistics, the UK hasn’t experienced any post-Brexit economic shocks as earlier anticipated. ONS statistics show that consumer spending is strong. The statistics also show that the housing market is stable and unemployment is low. These findings by the UK’s official statistics body mock George Osborne’s pre-Brexit warning of immediate and profound economic shocks on the UK economy if UK citizens didn’t vote against Brexit.

Bank of England sentiments

The BOE has also affirmed ONS statistical findings by admitting that the business sentiment in the UK has improved drastically post-Brexit. The BOE also stated recently that the fall in the value of the pound has boosted tourism. The Bank of England has also changed its tone on economic growth. Before the referendum, the BOE warned that UK economy would slow down and companies would be less willing to invest or hire. The bank has however changed its earlier sentiments.

OECD

The OECD hasn’t been left behind. The body has raised its UK growth forecasts despite being among the many international forecasters that predicted an economic catastrophe post-Brexit. The body now expects the UK economy to grow at a faster rate than the same period last year. A 1.8% growth forecast puts Britain alongside other major economies like Germany.

The sudden change in tone by three notable bodies clearly shows that post-Brexit forecasts were wrong. This has led some legislators such as Tory MP, John Redwood to demand an apology from the people who threatened Pro-Brexit UK citizens with dire consequences.

Banking sector sentiments

The banking sector hasn’t been left behind either. Banking heavyweights such as Bank of America, UBS, Merrill Lynch, JP Morgan and Morgan Stanley have also raised their forecasts for the UK economy.
There is also a separate ONS report showing that the UK’s deficit fell because of an increase in corporate as well as income tax. Car production statistics also show that there is a booming demand for UK-made cars overseas. Statistics indicate that car production is at a 14 year high.

Housing prices are also increasing steadily while the construction and manufacturing sectors have remained on the same growth path as before. The consumer confidence is also stable, and fears of a sharp decline as earlier feared have decreased.

The ONS chief economist, Joe Grice has also attested to the fact that the Brexit referendum results haven’t had a significant effect on Britain’s economy as earlier anticipated. However, Grice is quick to point out that the there may be long-term effects of Brexit that are yet to been seen or felt.

Before Brexit, major banks had downgraded UK forecasts. Morgan Stanley now expects the UK economy to grow by 1.9% up from its 1.2% forecast in August. UBS has also raised its forecast to 1.9% up from 1.3% stating that the UK economy is more resilient now than earlier anticipated.

Treasury forecasts

Independent forecasts by the Treasury also show the UK economy in a positive light. The Treasury is far more optimistic now than before the Brexit vote.

Brexit voter sentiments

A new study has revealed that pro-Brexit voters were interested in cutting funding to the EU as well as migration and Brexit supporters still stand by their vote. Almost 80% of all UK citizens want the government to stop sending money to the EU since UK has no say in how the money is spent. There is equal support for controls to be put in place to determine who enters the UK. Furthermore, most UK citizens are optimistic about the future of their economy and country going forward regardless of the hurdles that remain before Britain makes a full exit.

What Does the New £1 Coin Mean for the UK?

What Does the New £1 Coin Mean for the UK?

The UK has released a new £1 coin that is set to become the most secure coin in the world.
This new release puts an end to the reign of the old £1 coin that has been in circulation for thirty years now. The new £1 coin which has 12 sides will enter circulation officially on March 28th, 2017. The old coin will stop being used as legal tender from 15th November 2017. The Royal Mint is set to make 1.5 billion + new £1 coins.

Brief history

The British government has always had plans to replace the £1 note and coin. The plans were first launched on 21st April 1983. Since then, the British Royal Mint has made over 2.2. Billion £1 coins. There has been an increasing need to replace the old £1 coin since statistics indicate that one in every thirty £1 coins exchanged in the recent past has been fake. The increasing vulnerability of the old £1 coin informed the decision to introduce the new £1 coin.

Features of the new coin

The new £1 coin has numerous security features among them being a hologram. Depending on the angle from which you view the coin from, the hologram changes (from the pound symbol to 1). Also, the new coin features an outer and an inner ring coloured using gold and silver respectively. The coin is also lighter and thinner than the old coin and features smaller lettering. The diameter is, however, larger. The old coin also has milled edges.
Also, there are more than 25 different designs appearing on the new coin. The design ranges from trees to dragons. The new coin has borrowed its design from the old twelve-sided threepenny bit that seized being in circulation back in 1971. The new coin also features a latent image, has very small lettering, and milled edges (groves on the alternate sides of the coin).

Effects

It’s worth noting that approximately £1.3 billion is stored in savings jars (in coins) across the UK and the current one pound coin accounts for approximately 33% of these coins. As a result, people have been urged to either spend their old £1 coins or return them before they seize being legal tender. People also have the option of banking their old coins.

Another notable effect revolves around counterfeiting. The new one pound coin was designed solely to stop counterfeiting. As a result, businesses across the UK are expected to save the millions lost in counterfeit one pound coins. The new coin features 12 sides which are instantly recognizable. The coin also has a secret high-security feature that prevents counterfeiting in the future.

All UK businesses are also expected to prepare for the introduction, co-circulation as well as demonetisation periods i.e. when the coin is first introduced, when it will be in circulation alongside the old coin as well as when the old coin stops being used as legal tender.

When preparing for introduction, all business are expected to check if they operate equipment i.e. vending machines which accept/handle the old £1 coin. If so, business owners should contact their equipment suppliers to know if they will need any adaptations or replacements on their machines and when those adaptations or replacements should be performed. Business owners are also expected to train their staff on the new coin features as well as consider any other changes to cash handling processes.

During the co-circulation period, business owners should have equipment accepting/dispensing the new coin. During the demonetization period i.e. 16th October 2017 onwards, all coin handling equipment should accept the new coin. Business are however free to decline payments made using the old coin. Business owners who handle machines which accept the old pound coin i.e. vending machines stand to be most affected. Such businesses must incur the cost of updating their machines or risk losing business.

What happens to the old coins?

According to the 2014 budget announcement, the old £1 coins which will be returned will be meltdown and reused to make more new £1 coins. Old coins should be spent before 15th October 2017.

Higher Education in the U.K vs. USA: Is it worth the debt

Higher Education in the U.K vs. USA: Is it worth the debt

According to a recent Sutton Trust report, UK graduates face higher debt levels compared to their US counterparts. According to the report, US graduates leave with higher education debt averaging £19,100 to £29,100 depending on factors such as the institution attended while UK graduates leave with approximately £44,500 in debt. Higher education debt has always been higher in the U.S. The UK has however overtaken the U.S. causing huge concerns.

UK graduates also have a higher debt to starting salary ratio than their U.S. counterparts. The Sutton Trust Report, however, states that the repayment system in the UK is more advantageous to borrowers. The report which focuses on graduate debt in the UK and U.S. among other countries such as; Australia, New Zealand and Canada recommends that UK legislators assess UK’s higher education funding policies as well as the impact of those policies on poor students.

The report also calls for a complex assessment on whether UK’s current student loan system provides value for money to higher education learners as well as taxpayers. There are huge concerns about policies adopted in the UK on student funding such as maintenance grants which are set to be scrapped and replaced by loans which feature a frozen repayment threshold. Poor students are bound to be hit hardest by these policies increasing the debt levels of UK students even further to £50,000+ after graduation. This begs the question; is higher education worth the debt?

a. Many jobs today still require a degree

Most people still argue that taking a student loan is worth it because most jobs in the UK, as well as most places around the world still, require a degree. Although students stand to accumulate thousands of pounds in debt, majority of the jobs require a bachelor’s degree as the minimum and most important requirement. You must have a college degree to get a job in the industries offering the most jobs today i.e. the finance, engineering and education industries.

b. If you will make enough to pay off your student loan comfortably, go for it

If there are prospects of earning enough money to repay your loan, taking a student loan is worth it. Although repaying £44,500 may seem challenging when you consider interest on the loan over periods exceeding ten years, devoting approximately 10% of your salary every month will be adequate to clear a typical student loan. Furthermore, it’s better to dedicate a small percentage of your future income that have no income at all because you didn’t take a student loan.

c. Your future earning potential is higher

A degree increases your earning potential exponentially over a lifetime. Earning a university degree sets you up for better-paying jobs in the future that a high school graduate may not have access to. A degree also opens up doors for higher learning opportunities which increase your earning potential even further. In essence, a £44,500 student loan isn’t much when you compare what you stand to earn in a lifetime once you graduate, get a job and advance in your career.

d. The benefits of higher education go way beyond education

It is also worth taking a student loan since you stand to enjoy greater benefits than simply getting a good job and salary in the future. Higher education broadens your perspective in life allowing you to make better/more informed decisions in life. The goal of higher education goes way beyond earning a living. For instance, studying abroad will definitely increase your general knowledge, social skills and broaden your horizon about life and people in general. These benefits are extremely valuable although they can’t be quantified.

Summary

Accumulating debt isn’t interesting. Taking debt is however justified in some cases. For instance, taking a student loan to pursue higher education is wise since the benefits you stand to gain far outweigh the cost. Although the UK has the highest student debt levels currently, you should really consider taking a student loan if you want to increase your chances of securing a good job in any of the major industries. In most cases, students are able to pay off their student loans fast when they secure a job after graduation. You should, however, choose the higher education institution you go to wisely and avoid unnecessary expenses throughout your studies to keep the debt at manageable levels.

How payday loans differ in other countries: UK vs. U.S

How payday loans differ in other countries: UK vs. U.S

Payday loans are the most popular short term loans globally. The loans are available in all major economies globally. If you care to know how payday loans vary from one country to another (particularly the UK and U.S.,) look no further. Here’s what you need to know;

Payday loans in the UK

Although payday loans originated in the U.S., they have grown more rapidly in the UK. According to a recent PWC study, over 40% of all youth in the UK use payday loans. The UK payday loan industry is estimated to be worth billions of pounds today.

Typical UK payday loans range up to £500. Many UK payday loan lenders, however, offer flexible lending limits amounting to more than £1,000. Interest rates stand at approximately 25% per month for typical payday loans. There are however many lenders charging way less.

Largest Participants 

Wonga is the largest UK payday loan lender with approximately 30% market share. The second largest lender is Dollar Financial Group which owns the Money Shop as well as payday lenders; Payday UK, Ladder Loans, and Payday Express.

Regulation

The UK payday loan industry is regulated by the FCA (Financial Conduct Authority). The FCA took over the regulatory role from the FSA back in 2014 in an effort to exert tighter control on rogue payday loan lenders.
In January 2015, the FCA introduced strict regulations that guide the payday loan industry to date. For instance, payday loan lenders in the UK should not charge more than 0.8% interest per day. The total charges on all payday loans including interest and default charges are also capped at 100% of the total amount borrowed.

Status

The UK payday loans industry is currently transforming. The industry has had a bad name for years due to an increasing number of rogue lenders using unfair lending practices. The tightening regulation has however brought back sanity to the industry. The FCA has fined numerous payday loan lenders found guilty of using unfair lending practices. Although many lenders have closed shop, there is still a high demand for payday loans in the UK.

Payday loans in the U.S.

Payday loans originated from the U.S. They are also known as; cash advances, salary loans, payroll loans, cash advance loans, payday advance, etc. The loans date back to the 1900s where they were known as salary purchases. Initially, lenders would buy a borrower’s next salary for less and then disburse the difference to the borrower after deducting all applicable charges. Fast forward today, the industry has grown from 500 lenders to 22,000+ lenders. The U.S. payday loan industry is estimated to be worth over $46 billion today.

Regulation

Payday loan regulation in the U.S. varies widely from one state to another. To avoid unfair lending practices, many jurisdictions in the U.S. have APR (annual percentage rate) limits that all lenders must adhere to. It’s also worth noting that some jurisdictions in the U.S. have outlawed payday loans completely i.e. Georgia. In total, 14 states have forbidden payday lending. Other jurisdictions have few restrictions on lenders.

Some states also have laws limiting borrowers from taking payday loans repeatedly. Such states include Michigan, Illinois, Florida, Indiana and New Mexico just to mention a few. These states have statewide databases that require lenders to assess a customer’s eligibility to get a payday loan before issuing the loan. There is also regulation restricting the number of times a payday loan borrower can roll over their loan. Some states restrict rollovers i.e. Arizona. Other states i.e. Delaware allow a maximum of four rollovers.

Initially, payday loan rates were restricted in most U.S. states by the USLL (Uniform Small Loan Laws). The USLL restricted the rates at 36 to 40% APR.

Status

The U.S. payday loan industry caters for the young and poor mostly, low-income communities residing near military bases. A recent study conducted by Pew Charitable research also indicate that the payday loans in the U.S. are taken mostly for subsistence or recurrent spending as opposed to funding emergency cash needs. The interest rates charged on U.S. payday loans also remains higher than other alternative short term loans. The difference in regulation per jurisdiction is to blame for misinformation as well as ongoing unfair lending practices in the industry.

Legal Tax Loopholes in the UK: What You Need to Know

Legal Tax Loopholes in the UK: What You Need to Know

You don’t have to lie or do anything illegal to reduce your tax bill in the UK. We don’t advocate for any illegal activity here. Please note that there is a difference between avoiding and evading tax. The latter is illegal. Furthermore, there are some tax incentives you can utilise legally to save a lot of money with little to no effort. Here’s what you need to know;

1. Borrow tax-efficiently

This isn’t exactly a tax loophole. It’s more of an obvious but commonly overlooked tax saving tip. You can save a lot of money on taxes in the UK if you borrow wisely. Anyone who has buy-to-let property is eligible for tax relief on their mortgage interest. It, therefore, makes more sense to borrow and buy property for rental purposes than to use the money to reduce the total mortgage amount since you aren’t eligible for any tax relief in such instances. Furthermore, it is possible to borrow more when you start getting rental income and in such cases, you can use the money to buy more property for rental purposes.

2. Invest tax-efficiently

You can also maximise tax benefits by investing wisely. It’s worth noting that you get a huge tax relief by investing in Enterprise Investment Schemes or Venture Capital Trusts in the UK since both investments are aimed at encouraging private investment in small to medium-sized companies. Buying shares of qualified companies under Enterprise Investment Scheme rules qualifies you for a 20% tax reduction on your personal tax bill, and you get to enjoy other tax benefits such as relief from inheritance and capital gains tax. Investing through a Venture Capital Trust qualifies you for a 30% tax reduction on your personal tax bill, and you can invest up to £200,000. Instead of investing typically, you should really consider Enterprise Investment Schemes and/or Venture Capital Trusts. In case the investments don’t do well, the tax benefits usually cushion investors against investment risks.

3. Consider going offshore

It’s worth noting that there are very little advantages for UK citizens using offshore regions like Luxembourg, Liechtenstein etc. for purposes of avoiding tax. UK taxpayers are required by law to declare all their worldwide earnings including interest income earned on money deposited in overseas bank accounts. Nevertheless, there are still overseas tax loopholes to exploit. For instance, some offshore bonds still offer benefits to higher-rate taxpayers because they allow a person to defer tax. Offshore bonds are however complex products that should be used by individuals who are fully aware of their tax benefits.

4. Claim all allowances

You can also reduce your tax liability legally in the UK if you are self-employed. For instance, you can claim costs associated with running your business from home i.e. lighting, heating, property insurance, repairs as well as mortgage interests to reduce your overall tax bill. Such costs can be deducted from your overall profits. However, you may be required to pay capital gains charges that may be applicable when such a premises is sold even if you only used a single room in your home to conduct business.

5. Avoid confronting the taxman on an individual basis if you are married

There are plenty of tax allowances and reliefs in the UK offered to civil partners and married couples. These allowances and reliefs can reduce your tax bill significantly if you take the time to arrange your finances accordingly. This loophole works best when one partner pays a lower tax rate. You can switch income generating assets like investment funds, shares, jointly owned property, etc. to a partner who pays less tax. In such a case, you are only liable to paying tax on rent, dividends, and savings interest. This loophole is completely legal and effective provided you are married.

Summary

You don’t have to pay more tax than you should. You don’t have to evade tax either. There are legal alternatives for reducing your taxes in the UK. You just need to get informed. Luckily, the above information will help you enjoy some significant tax savings legally.

Payday Lender The Money Shop On Sale Due to ''Tough Times''

Payday Lender The Money Shop On Sale Due to ”Tough Times”

DFC Global, the American owner of payday loan lender Money Shop, has put the company up for sale as the company shifts focus from the increasingly regulated payday loan business in the UK.

Although DFC Global says it received a bid approach offer from an unnamed suitor, the company also admits that the Money Shop has been facing difficulties over the past few years now.

The recent crackdown on rogue UK payday loan lenders and tightening regulation has pushed DFC Global to reconsider participating in the UK payday loan industry. Since buying the Money Shop back in 1999, DFC Global has closed down more than 50% of its stores in the UK in the past couple of years as the company looks for ways of coping in an increasingly difficult business environment.

About DFC Global

DFC Global is an American-based financial services company with operations in 1000+ locations in 7 countries. DFC Global focuses on low income or bad credit consumers offering short term loans such as payday loans. The company also provides pawnbroking as well as gold buying services. DFC brands include; The Money Shop in the UK and Ireland, Insta-Cheques, We The People and Loan Mart. The company owns high-end pawnbroker, Suttons & Robertsons and also operates online short term loan lenders such as Payday Express and Payday UK.

In 2009, DFC Global was UK’s largest payday loan provider with a market share of approximately 25%. The company which was previously known as Monetary Management Corporation changed its name in 1990. DFC Global is owned by U.S. private equity firm Lone Star Funds.

The sale

DFC Global is believed to have hired KBW (Keefe, Bruyette & Woods) investment bankers to sell Dollar UK which owns; the Money Shop, online payday loan companies Payday UK and Payday Express as well as several pawnbroking businesses owned by DFC.

According to a DFC spokesman, DFC is aware of the ongoing media speculation on the sale of the Money Shop. However, the company insists that the details remain confidential between all the parties involved. DFC, however, reveals that an approach bid has been made and the company plans on assessing the offer in the ”normal” manner.

UK payday loan lender struggles

Most UK payday loan lenders have struggled to stay in business since the Financial Conduct Authority (FCA) began tightening regulation and cracking down on lenders using unfair lending practices.

In January 2015, the FCA capped the interest rate to 0.8% per day ensuring payday loan borrowers never pay over £24 in interest charges for £100 loans granted for a month. The FCA also capped the total fees and charges applicable ensuring borrowers never have to pay more than they borrow in fees and charges.

Since then, many payday loan lenders in the UK have closed shop. The Money Shop has closed more than 300 branches in the UK alone. Currently, the lender has reduced its branches from over 600 to 230 in an effort to remain profitable in an increasingly difficult business environment.

The Money Shop has faced other struggles besides having to close down most of its branches. For instance, the lender has also been forced to pay fines for unfair lending practices. Just recently, the Money Shop was ordered to pay some of its customers (147,000 customers) £15.3m as compensation for unfair lending practices ranging from system errors to bad affordability checks and debt collection practices.

According to DFC, the lender has since changed its operations by choosing to focus on pre-paid credit cards as well as longer term loans. Although this move among many other moves taken have been deemed viable, the Money Shop is still posting losses. According to the lender’s recent accounts, the UK business suffered a full year loss amounting to £104m in 2015.

Speculators have no choice but to make the worst assumptions regarding the sale of the Money Shop. Although it is clear that the Money Shop is struggling to adjust to the FCA’s new rules and guidelines on payday loan lending like most payday loan lenders in the UK who had been used to lenient rules and guidelines, a sale, that will hopefully reverse the fortunes of the lender is underway.

DFC is also banking on the fact that the Money Shop has changed operations to focus on more profitable/less risky lending.

The Money Shop is a major sponsor of football club, Wolverhampton Wanderers.

Borrowing for a holiday: Is It A Good Idea?

Borrowing for a holiday: Is It A Good Idea?

Let’s face it! It doesn’t sound too smart taking out a loan to finance a holiday right? Well, yes but there’s a twist to it. You’ve probably heard that it’s a bad idea to borrow to finance a liability. Well, a holiday can be an asset or a liability depending on who you ask. So, should you really borrow to pay for a holiday? If you want to take out a personal loan or any other kind of short term or long term loan to finance your holiday, here’s what you need to know first.

1. There are situations that warrant borrowing for a holiday

First and foremost, it’s important to note that it’s not always a bad idea to take out a loan to finance a holiday. Having quality time during the holidays with your family is very important so there’s no problem borrowing some money especially if you can afford it. Furthermore, you don’t need to be broke to take out a loan. You may be taking out a loan because you don’t have access to your money at the moment. For instance, you may have some investments that you don’t want to liquidate because the returns aren’t favorable at the moment. In such a case, a loan is justified. The consequences of failing to spend quality time with your family is worse than having to borrow a small loan to fund your holiday expenses. If you can pay for the loan comfortably, go ahead.

2. You need to plan in advance (know how much you need to borrow)

When taking a loan to fund your holiday expenses, you need to plan in advance otherwise, you will end up having problems later. You should never take out a holiday loan before you determine the amount of money you need. Borrowing using estimates is a recipe for disaster. Planning in advance ensures you borrow exactly what you need which is a great way of controlling your expenditure. It doesn’t really matter if you are taking out a payday loan or personal loan to finance your holiday, you must know how much you need in advance.

3. Look for holiday loan offers

Retail stores aren’t the only businesses offering great deals during the holiday season so, if you have to borrow, make sure you are getting the best deal possible. Banks among other financial institutions offer great loan deals for the holidays. It’s therefore up to you to source for the perfect holiday loan deals. There are plenty of great holiday loan deals available currently in the UK. You just need to shop and choose the best deal for you.

4. Plan to spend wisely

Most people have problems on holidays because of overspending. It’s very easy to overspend during a holiday if you don’t have a budget/plan in place. This is precisely why many people end up taking more than one loan to fund holiday expenditures. To avoid taking in an extra loan and incurring unnecessary expenses, spend wisely. Avoid impulse buying at all costs. You should also capitalise off the numerous discounts offered during the holiday season. Always remember that there is life after the holidays. Have a budget and don’t get carried away!

5. Borrow to fund basic holiday celebrations

Sometimes you may feel the urge to borrow to fund an overseas trip. In such a case, it’s better to consider less expensive holiday celebrations unless you lack money temporarily. It’s never a good idea to borrow to fund a lavish holiday especially if you will have trouble repaying the loan.

Summary

The holiday season has many surprises. You may not get your finances in order in time because of many reasons i.e. late/delayed payments etc. In such instances, you may be forced to borrow to fund your holiday expenses. As long as you plan in advance, look for the best holiday loan offers and spend wisely, you shouldn’t have any problems repaying your loan after the holidays. Furthermore, there is much more to holidays than spending money. If you can stick to a loan amount that is manageable, then there is no problem with taking out a loan for a holiday.

Loan Refinancing - What You Need To Know

Loan Refinancing – What You Need To Know

Overview

Are you having difficulties managing and/or repaying your loan? Do you want to alter the terms of your loan? If yes, look no further. Here’s what you need to know;

What is loan refinancing?

Loan refinancing can be defined as the replacement of an existing loan with another loan under different terms. The term loan refinancing is very common in the mortgage loan industry. Loan refinancing is available to individuals who face financial difficulties meeting their loan repayment obligations. Loan refinancing (also known as debt restructuring) allows borrowers to get more favourable loan terms making it easier for them to meet their repayment obligations.

A loan can be refinanced for many other reasons i.e.

• To alter or reduce risks i.e. when switching from a variable rate to fixed rate loan.
• To reduce monthly repayment amounts.
• To consolidate debt i.e. combine many loans into one manageable loan.
• To capitalize on better interest rates. i.e. by lengthening the term of the loan.

Loan refinancing is, therefore, beneficial to buyers who aren’t necessarily in distress as well. All in all, loan refinancing makes it easier to manage debt over a long period. For instance, if high-interest debt is consolidated with long-term debt like a mortgage, it becomes easier to pay it off over a prolonged period. Loan consolidation also has some tax advantages in some countries.

Why should you refinance?

If the interest rates have fallen since you took your loan, you can refinance to benefit from the low rates if you had taken a fixed rate mortgage. You can also refinance to enjoy a fixed rate if the rate appears to be rising. Refinancing is also advisable when you want to use your home’s equity. If your home appreciates in value after taking a mortgage loan, you can refinance to borrow against your home’s equity.

Top benefits of loan refinancing

1. Better loan terms: Loan refinancing allows borrowers to enjoy better terms i.e. a reduction in interest rate charges as well as lower monthly repayments. It is also possible to lengthen or shorten your repayment time by refinancing.

2. Additional borrowing against equity: Loan refinancing also gives borrowers (mortgage borrowers) an opportunity to borrow more i.e. when a home appreciates in value. The borrowed money can be used for investment purposes.

3. Better loan management: Loan refinancing allows borrowers especially those with multiple loans to be able to manage their loans better.

4. Reducing loan risks: It is also possible to reduce risk (interest rate risks) by refinancing your loan to enjoy a fixed or adjustable interest rate depending on market fluctuations.

5. Quick loan repayment: Loan refinancing also allows borrowers the opportunity to be able to repay loans off faster. This benefit applies mostly to mortgage loan borrowers. By restructuring your mortgage loan, you can alter the loan term and pay off the loan faster.

Disadvantages of refinancing

Loan refinancing has some cons to. They include;

1. The gains enjoyed when you refinance your loan can be eaten up by applicable fees, paying points or closing costs. For instance, you might be charged a penalty for repaying your mortgage early. In such an instance, you may not enjoy any cost benefits. You must determine the true/real costs of refinancing before you actually do it just to make sure it makes financial sense to you.

2. Borrowing against your home’s equity may work against you if you are borrowing to spend on liabilities i.e. instead of investing. You also end up owing more money when you refinance your mortgage.

3. It is also possible to pay higher interest even after refinancing your mortgage. There are always interest rate risks that are hard to get rid of. For instance, it is difficult to predict interest rate movements with certainty before they actually happen.

Summary

Loan refinancing may be a viable option when you want to manage your loans better or when you simply want better terms. You should, however, beware of the cons of loan refinancing. In some cases, you may end up in a worse financial position. Weigh the pros and cons. Also, consider seeking professional advice to make sure financing benefits you.

Top 6 Signs You Should Choose A Payday Loan

Top 6 Signs You Should Choose A Payday Loan

There are unique circumstances that warrant you choosing a payday loan over any other types of loans. In fact, payday loans are ideal for almost all kinds of situations that warrant people to take out short term loans. If you’re wondering if you should take out a payday loan or not, look no further. Here are the top 5 signs you need a payday loan.

1. You are tired of high-interest debt

If you’re looking for affordable short-term debt, that’s a clear sign that you need a payday loan. Personal loan and credit card debt are very expensive compared to payday loans. The FCA highly regulates the payday loan sector in the UK. There are interest caps that ensure payday loan borrowers never pay more than they have to. Furthermore, with interest rates caped at 0.8% by the FCA and there being many affordable payday loan lenders, there is no reason why you should continue using other high-interest debt.

2. You have emergency expenses to settle

Payday loans are the best sources of short-term cash for catering for emergency cash needs. Emergency expenses range from unexpected bills to an expensive car repair. Payday loans can also come in handy when you have emergency home repairs i.e. a damaged roof after a storm. When faced by a crisis, there are very few places you can turn to for quick cash. Payday loans are the most favourable sources of emergency cash because they are readily available. You can get a payday loan instantly (a few minutes after your application is approved). It takes longer to borrow personal loans or obtain a credit card or even borrow from friends. If you have an emergency expense that can’t wait, this is a sure sign that you need a payday loan.

3. When you want to enjoy unmatched borrowing convenience

Online payday loans are the most convenient types of short term loans available today. Unlike other types of loans available today, payday loans can be applied for and received 100% online. You just need to fill in a simple online application form and submit it. The best payday loan lenders in the UK process loan applications within a few minutes. If your application is successful, your money is wired to your bank account instantly. You can also make enquiries online. Payday loans offer unmatched convenience. You don’t need to waste any time or effort visiting a bank. Everything can be done online including managing your loan. If you want to enjoy unmatched borrowing convenience, this is another sure sign you need a payday loan as opposed to any other types of short term loans.

4. When you want to boost your credit score

Payday loans are the best types of loans to use to boost your credit score. The loans are readily available, easy to get and manage. Payday loans are also affordable provided you choose a reputable lender. The loans are also available to individuals with bad credit. Unlike other loans, you won’t be overcharged because you have a bad credit score. Taking a payday loan is a great way of boosting your credit score as long as you meet your repayment obligations. Personal loans have a tedious application process. They also tend to be expensive. This makes them less attractive if your sole purpose of taking out a loan is to boost credit.

5. You want variety/unmatched comparison

Shopping for loans traditionally is very limiting. If you are fed up of being confined to a few lenders, this is a sure sign that you need to consider using a payday loan broker to obtain a short term loan. There are many payday loan lenders in the UK most of whom offer online payday loans. As a result, by using a payday loan broker you only need to fill in one application to apply to most payday lenders in the UK.

Summary

Payday loans offer very many benefits over typical short term loans. If you want to enjoy unmatched convenience, variety, comparison and low-interest rate charges, this is a sure sign that you need a payday loan over conventional short-term loans. You also need a payday loan when you want to take on debt for the sole purpose of boosting your credit. Payday loans also need to be your #1 source of cash when you are faced with emergency expenses because you can get a payday loan within minutes.

How Can You Use Technology To Save Money?

How Can You Use Technology To Save Money?

To be able to reduce your over-reliance on short term loans such as payday loans, you need to save enough money first. Fortunately, there are high-tech methods you can use to boost your saving efforts. You can save a lot of money using technology. Here’s what you need to do;

1. Shop online

You can save lots of money if you choose to do most or even all your shopping online. The internet is full of amazing shopping deals. There are very many online shops in the UK that offer discounts that are impossible to get offline. You can use discount coupons to get even better deals on anything you can think off from food to household appliances among other types of household goods. It is also possible to buy clothes online, cars and cosmetics, name it!

Deals aside, online shopping offers unmatched convenience which also attracts savings. When you do your shopping at the comfort of your home, you save on transport costs. You also save precious time which can be channeled to doing more important things. You also enjoy other saving benefits such as free shipping when you buy from most online stores.

2. Use budgeting apps

You can also use budgeting applications to help you in your saving efforts. There are very many free budgeting apps available today. You can install such apps in your Smartphone, tablet or laptop and use them to prepare a budget, track your spending, etc. Many people have problems saving because they find it hard preparing a budget and monitoring their expenditure. Budgeting apps do all the work for you.
All you need is to make a few inputs i.e. your income and expenditures to get budget suggestions. The apps let you know how much you should be saving depending on your income and expenses. You can also set saving goals to get suggestions on what you should do to achieve them. There are also budgeting apps that can be synced with your credit cards to track spending and alert you electronically when you start overspending. It all depends on your preferences. You just need to conduct a quick search online to get the perfect budgeting app for you.

3. Use VoIP services

You can avoid phone bills by using VoIP services such as Skype and Google Hangouts. VoIP services are online services which allow you to make calls via an internet connection. Most VoIP services are free. They are also better than regular phone calls since you get to see the person you are talking with live. As long as you have a Smartphone, there is absolutely no reason why you should be paying to call your friends and family members. Use these services and enjoy huge saving every month.

4. Use free online text messaging services

There are also many free text messaging services online you can use to send texts for free. In this time and age, you shouldn’t be paying for text messages as well. You can download apps such as Textfree and WhatsApp and use VoIP services on your mobile phone to enjoy free telecommunication services.

5. Entertain yourself at home with services such as Netflix

Many people spend a lot of money going to the theatres to watch movies. If that sounds like you, it is possible to save a lot of money by using services like Netflix. You could also choose services like Netflix as alternative entertainment instead of having to leave your house. For a few pounds monthly, you can rent as many movies as you like with Netflix and watch them all at the comfort of your living room. You can also stream TV shows, and films live with Netflix. There’s a lot more entertainment online. For instance, you can also play games online instead of having to indulge in expensive entertainment outdoors.

6. Hold meetings online

This is another excellent way of saving on travel/meeting costs today. You don’t have to travel to meet people personally today. You can do a video conference when holding meetings with people who are far away from you. Doing this can help you save thousands of pounds in travel costs especially if your job involves a lot of traveling.

Summary

Technology offers huge cost saving benefits. By implementing the above tips into your day-to-day life, you are bound to save a lot of money. Don’t spend any money unless its necessary. Shop online, use budgeting apps, VoIP services, free text services, online entertainment services and video conferencing and watch yourself save a significant amount of money monthly and use emergency loans like payday loans when they are absolutely necessary.