Are Short Term Loans Risky? What You Need To Know

Are Short Term Loans Risky? What You Need To Know

Short terms loans such as payday loans are regarded as risky by many, however, is this really the case? If you’re looking to take out a short-term loan, but you want to know what you’re getting yourself into first, look no further. Here’s what you need to know and do to minimize the risks

Possible risks

Like any other kinds of loans, short term loans such as payday loans have risks. The most common include;

1. Misuse: Short-term loans are prone to misuse more than any other types of loans. As a result, there is always a risk that you won’t use any short term loan you take responsibly. You can do away with this risk by being a responsible borrower. You should borrow short term loans like payday loans when you have pressing needs only i.e. when you have emergency cash needs.

2. Repayment risks: Due to the short term nature of loans such as payday loans, there are higher risks of failing to meet repayment obligations as stipulated in the terms. Typically, payday loans are supposed to be paid off in full using the next paycheck. If you don’t borrow more money that you can repay comfortably, there is a high risk of having difficulties repaying the loan in full. The best way of avoiding this repayment risks is to always make sure you can repay the loan amount in full without difficulties during your next payday.

3. High-cost risks: Short term loans also tend to be more expensive than regular loans, so there is a high likelihood of being overcharged especially when you don’t take the time to borrow from reputable lenders. Payday loans are good examples of expensive short term loans if you borrow without doing your homework. There are very many unscrupulous payday loan lenders in the UK who overcharge their customers by using confusing terms and conditions. To avoid this, you need to borrow from reputable UK payday loan lenders only like Swiftmoney.

4. Habitual borrowing risks: Short term loans are also known to cause habitual borrowing i.e. borrowing when you don’t need to. You should never get a short term loan simply because it is available to you otherwise you stand to plunge yourself into a never-ending debt cycle. Furthermore, the loan might not be available to you later when you really need it. It is worth noting that failing to repay any loan damages your reputation as well as your credit rating.

5. Scams: There are also more scams associated with short term loans than there are scams associated with long-term loans. The popularity of short term loans like payday loans has attracted a lot of unscrupulous lenders out to exploit lenders. Some even pose as lenders only to steal the identity of their clients. The importance of dealing with renowned payday loan lender or broker can’t, therefore, be overemphasised. In fact, dealing with a renowned payday loan broker like Swift Money can reduce most risks associated with payday loan today.

Verdict: Are short-term loans risky?

Short term loans can be very risky if you are dealing with a bad lender. When you choose a good lender, you get rid of most of the risks associated with short-term loans. First and foremost, there’s need to worry about scams if you are dealing with a registered lender with all the relevant FCA authorization. You also don’t need to worry about paying a high-interest rate or paying more in fees because of hidden terms and conditions.

It’s also possible to reduce the risks associated with short term loans by being a responsible borrower. If you borrow a payday loan for emergency reasons only, there should be no cause for concern. A responsible borrower also uses his/her loan for the intended purpose and repays the loan as agreed. Being a responsible borrower eliminates risks of misusing your loan, having repayment problems as well as becoming a habitual borrower.

In essence, short term loans have risks. However, the risks can be eliminated by choosing a lender wisely as well as practicing responsible borrowing behaviour.

Recovering Financially After Going On Holiday

Recovering Financially After Going On Holiday

The holiday season is over. You have plenty of memories as well as a huge debt to clear because you possibly got carried away and overused your credit card. You may also have taken out a payday loan or any other kind of short term loan to fund unexpected holiday expenses. How do you recover financially?

Start by lowering your spending (save more)

The most natural place to start when you want to take charge of your finances is your spending. You must make some sacrifices to repay your payday loan, credit card debt among other types of loans you may have taken during the holiday. Luckily, there is always something you can cut back on to get that much-needed money to pay your loans as fast as possible. For instance, you can stop eating out, paying for entertainment, using your personal car, etc. Pursue every avenue available to reduce your expenses as much as possible. Save more and recover financially as fast as possible.

Pay your most expensive debt first

If you have loans to pay after a holiday, you need to sit down and determine which debt is the most expensive to pay and make plans to repay such debt first. Expensive debt can take a huge toll on your finances if you don’t repay immediately. To be able to recover faster at the lowest cost possible, pay expensive debt first.

Declutter your house

This is another great way of getting money to pay off any debts that you may have accumulated over the holiday. Decluttering can also give you some much-needed cash to cater for New Year expenses that you may have overlooked during the holidays. There is always something you don’t need in your house that you can sell. Luckily, there are also online platforms i.e. eBay and Craigslist that allow you to sell households among other items online easily.

Find an extra source of income

You can also look for a job to recover financially after a holiday. There are plenty of jobs you can do online to supplement your income. You just need to find a job that is in line with your interests to make some extra money and enjoy the process while at it. The internet is full of money making opportunities. You just need to take time and search for what works for you. A typical (offline) job is also great if you can find one.

Shop online exclusively

Besides cutting your spending, you need to look for other avenues of saving money. Shopping online is a great way to save money today. The internet has the best deals on anything you can think off. Furthermore, there is nothing you can’t find and buy online today. You can save money by taking advantage of online discounts. You also stand to save on convenience. When you shop for things online, you don’t have to waste time traveling. Most online stores also offer free shipping which translates to more savings.

Open a savings account

To avoid suffering financial distress ever again while on holiday, you need to set up a savings account immediately. This tip will help you avoid borrowing when you go for your next holiday. Although this tip won’t give you quick financial gratification, the account will help you avoid getting into a similar financial situation in the future.

Summary

It is very easy to overspend during the holiday season. If you face financial constraints after a holiday, it’s time to take the necessary measures. Focus on getting more money by saving, selling what you don’t need or finding a job and repaying all your debt as fast as possible to be able to recover in record time. You can also take out a payday loan if you are in dire need of money until your next payday. Lastly, make sure you open a holiday savings account to ensure you don’t find yourself in the same position again.

Getting Rich, Why Is It So Hard?

Getting Rich, Why Is It So Hard?

Tired of relying on payday loans? Well, you need to get rich. Everyone wants to be rich. However, very few people become rich. Amassing wealth is arguably the hardest thing one can set out to do. People have a hard time accumulating enough money because of many reasons. If you’re interested in discovering the most popular reasons from experts so that you can make the necessary changes in your life, here they are?

1. Consumerism

Consumerism can be defined as the culture of spending. Many people have a hard time getting rich because of adopting consumerism lifestyles which popularize spending as opposed to saving and investing/producing which are some of the greatest ways of building wealth. Most people would rather spend money on consumer goods to boost their current lifestyle as opposed to saving to accumulate capital for starting a business. Many societies across the world are consumer oriented which is a huge barrier to wealth creation. If you want to be rich, resist the urge to spend and save to invest instead.

2. Very few people love working hard

It takes hard work and plenty of sacrifices to get rich. Unfortunately, most people aren’t willing to put in the work. To amass wealth, you must be willing to work extremely hard and make a lot of sacrifices along the way. For instance, you need to resist the consumerism mindset which is very tempting. Most people dream of having a lot of money, however, very few back up their dreams with actions.
You must get your hands dirty and work tirelessly for years to get rich. Some people get rich without working hard i.e. they inherit or win a lottery. The chances of winning a lottery are however very slim. Unfortunately, most people would rather buy a lottery ticket than work extremely hard in their business or job.

3. Procrastination

Procrastination is also to blame. Many people know what they need to do to improve their lives and purpose to do it, however, very few actually do it. Most people are chronic procrastinators. This behaviour is very counterproductive in the search for riches because it compromises a person’s ability to do what must be done.
You can’t be able to work effectively if you keep postponing important tasks knowing very well that delaying them puts you in a worse situation. Procrastination is by far the worst psychological barrier to success in life. Although it is normal to procrastinate, you must learn to avoid procrastination to become wealthy. Unfortunately, most people are never successful in the fight against procrastination.

4. It takes money to make money

The mere fact that it takes money to make money puts many people at a disadvantage in their search for wealth. Furthermore, the more money you have, the higher your chances of making even more. These laws of money favour very few people. If you’re starting with nothing like most people, you need to accumulate money first to get a headstart. Considering it’s extremely hard to accumulate money in a consumer based society, the odds are usually against most people from the start. If you are not willing to take risks like most people i.e. take loans and invest, you have a very slim chance of getting rich.

5. Social conformity

Many people also have a hard time accumulating wealth because of factors such as peer pressure. Many people would rather change their behaviours or beliefs to fit in a group than stand alone and pursue their dreams. It takes a lot of boldness to be able to pursue your dreams regardless of what other people think. Unfortunately, most people would rather conform to societal standards than follow their hearts which increases a person’s chances of success in life.

Summary

The above information highlights some of the main reasons why it is very so hard to get rich. If you spend more than you save or invest which is what most people do, you will have a very hard time becoming rich. Many people also hate working hard, love to procrastinate and conform to societal standards which are proven barriers to success. Some laws of money also put most people at a disadvantage.

Money and Festivities: Top 6 Christmas Money Tips

Money and Festivities: Top 6 Christmas Money Tips

Overview

Christmas is a time for celebrations. It’s time to spend quality time with family and friends. But celebrations need financing so, how do you make sure your finances stay in check over Christmas and the rest of the December holiday? If you want to enjoy your Christmas without overspending, here’s what you need to do;

1. Plan thoroughly: This tip is very popular but commonly overlooked. You must plan thoroughly for the festivities otherwise, you will end up overspending or taking short term loans like payday loans to fund unforeseen expenses. Although there is nothing wrong with taking a payday loan to cover unexpected expenses during the festive season, some careful planning goes a long way. When you plan thoroughly for your holiday, you set aside money for everything including emergency expenses. Planning puts you in the best financial position possible. For instance, you are able to find the best ways of spending what you have. In most cases, you’ll have enough money to enjoy your festivities if you have a solid plan.

2. Shop online, save money: The internet is by far the best place to find Christmas gift deals. Online shopping has many benefits from offering the best variety to the best prices possible. Online shopping is also convenient. You don’t have to spend money traveling from one store to another. In a nutshell, shopping for Christmas gifts online is better in every sense including saving. You may see great Christmas deals in stores around you, however, the best deals are online. 

3. Takes advantage of popular Christmas gift hacks: One of the most common ways people spend money during Christmas is; buying Christmas gifts. If you’re not cautious, you could end up overspending on Christmas gifts. To avoid this, you can take advantage of Christmas gift hacks like ”Secret Santa”. As opposed to everyone buying a gift for every member of the family, every member can be assigned to buy a gift for one member only. Using this gift hack controls expenditure on Christmas gifts without compromising anything including the fun and the importance of Christmas gifts.

4. Shop during odd hours: If you have to shop traditionally, do so during odd hours. Stores are usually full of shoppers during the festive season making it hard to spot good offers. It is, therefore, better to shop at night if there are many 24-hour shopping centres around you. The festive season has great deals which can save you a lot of money. You must, however, make a point of shopping differently to save the most. Remember, shopping during odd hours saves you time and time is money.

5. Track your spending: Impulse buying is one of the most common causes of overspending. Unfortunately, it is harder to control spending during the festive season due to an abundance of irresistible offers. To save money effectively during Christmas, you must stick to your budget and buy only those items you plan for. You should have an idea where every single cent you spend goes otherwise, you will not be able to avoid overspending.

6. Don’t compete with anyone: People also tend to overspend during the festive season by trying to compete with others i.e. ”keeping up with the joneses”. Just because your friend or neighbour bought something for himself or for his wife/children shouldn’t mean that you should buy the same thing. It takes a lot of discipline to avoid being influenced by other people’s expenditure during Christmas. You have to stick to your plan if you want your finances to be in check during and after the festive season. 

Summary

You don’t need to blow your budget to have a great festive season. You can follow the above tips to ensure you enjoy your Christmas celebrations without suffering financially. Planning thoroughly is a great place to start. You also need to think of shopping online, using popular Christmas gift hacks, shopping during odd hours, tracking your spending and sticking to your spending plan. Besides, Christmas isn’t about how much money you spend but the time you spend with loved ones. 

Top Loan Negotiation Tips to Use to Get the Best Terms

Top Loan Negotiation Tips to Use to Get the Best Terms

Even if you are getting what appears to be the best loan deal in the market at any given time, there’s always room to negotiate. Banks price loans with this in mind because they don’t expect you to accept the initial loan terms. Unfortunately, not many people negotiate and the few that do don’t do it like they should.

Instead of leaving your bank to decide all the loan terms or accepting the next best terms given to you, there are a number of things you can do to get loan terms which most people can’t get. You should always remember that banks need to give loans to make money so, you are not the only one getting help. It’s a symbiotic relationship, and as the customer, there are always ways to get better terms. Here’s what you need to do;

1. Work on developing a relationship with your bank’s loan officer

Always remember that the bank gives its best loan terms to the customers it knows/has a relationship with so, start cultivating your relationship with your bank early. To do this effectively, you need to know the bank workers who matter the most. Although the tellers and bank managers can help you get loans, loan officers are the once who have in-depth knowledge about the best loans and terms. In simple terms, a loan officer who knows you and your financial situation is in the best position to find you the best loan and terms so, take time and know your loan officer before you decide to take out a loan.

2. Identify your bank’s needs

You also need to know how what your bank needs at that particular time. As mentioned above, banks depend highly on interest income to make money so knowing how well your bank is doing can help you negotiate the best terms. For instance, although a bank that is struggling will be highly motivated to give loans, a bank that is doing well will be more willing to negotiate. The most important thing is finding out how motivated your bank is to bend their terms.

3. Come up with a negotiation strategy in advance

You should also prepare in advance to make sure you have the upper hand while negotiating. First, you must find out which aspects are highly important to you (non-negotiable) as well as the once you are willing to negotiate. You should also know how far you are willing to negotiate. Ideally, you should only negotiate those loan issues that are less important to you. Preparing in advance gives you an upper hand at the negotiation table.
Bankers tend to respect borrowers who can read in between the fine print. If you can be able to compare loan terms for what they really are instead of listening to your lender tell you how great the terms are, you will erode your loan officer’s power and be in a better position to negotiate. The idea here is making sure you gain respect and participate in the negotiations like an equal as opposed to being the pigeon.

4. Don’t accept high-interest loans

Interest is one of the most crucial factors to consider when negotiating for loans because it determines how much more you need to pay for the money you are getting. So regardless of your credit situation, don’t accept high-interest loans. Borrowers who show a willingness to compromise on interest rates never get the best terms. In fact, you should be willing to walk away if your bank appears to be rigid about high interest rate charges. Although different banks may charge different rates, you should be able to get a single digit APR if you have good to average credit. If you have bad credit, you shouldn’t accept rates as high as 25%.

5. Negotiate everything

Although interest may be the most important factor to consider when negotiating for the best loan terms, there are many other factors to you should consider like payment schedules, security arrangements, fees payable, etc. that have a direct impact on the final cost of the loan. For instance, you should choose flexible repayment schedules and an appropriate repayment term that matches your cash flow. Also, the security you are supposed to put up and the fees payable shouldn’t be excessive. Remember to negotiate on all these things including the loan restrictions. You will be surprised how much banks earn over and above the interest they charge.

6. Be willing to look around to get what you want

You also stand to get the best loan terms if you show your bank that you aren’t desperate to get a loan from them. If you do your homework in advance and show your bank that you can get better terms with other banks, you stand to get those same terms or even better. Always remember that the best deals are given to those who aren’t desperate so even if you seriously need money, never show it. Do your homework and stand your ground when you get to the negotiating table.
It doesn’t matter if you want a personal loan, short-term loan or long-term loan. You can’t get the best terms possible if you don’t negotiate. Luckily, you now know everything you need to know to negotiate effectively.

Top Credit Report Myths Busted

Top Credit Report Myths Busted

Overview

Credit reports have been around in the UK’s financial landscape since the advent of the industrial revolution in 1842. However, there’s a lot of confusion about the kind of information they contain as well as the role they play in the applications of loans, credit cards as well as mortgages. If you’re keen on discovering the most common credit report misconceptions, look no further. Below is a list of the most common credit report myths.

1. A poor credit history translates to a credit blacklist
This myth is among the oldest and most common credit report myths in the UK and the global financial world as a whole. It is worth noting there is no single credit score that UK lenders use (or all other lenders for that matter) to decide if they will lend people or not. Instead, different lenders use different ways of evaluating the risks involved in lending individual customers. This simply means it is possible for one lender to accept a customer’s loan application while another lender rejects the same customer based on the same credit history. Having a bad credit history doesn’t, therefore, result in an automatic credit blacklist.

2. Credit reference agencies decide who gets loans
There has also been this misconception that credit reference agencies play a key role in deciding the outcome of credit applications. This couldn’t be further from the truth. The work of credit reference agencies is simply supplying lenders with credit information about different borrowers. Lenders ultimately decide who they want to offer loans based on the information supplied by credit reference agencies. They also consider any information they may have about borrowers as well as the information borrowers submit in their application.

3. Credit reference agencies have the same information about borrowers
Many people have also been tempted to think that UK’s main credit reference agencies namely; CallCredit, Experian and Equifax all have the same information about individual borrowers. This is not the case. Different credit reference agencies have slightly different credit information about borrowers. The slight differences are as a result of lenders sharing credit information with some (not all) credit agencies at any given time. Credit reference agencies also tend to use the same formula in a different way. As a result, credit scores and reports are rarely identical in all three of the main credit reference agencies.

4. Checking your credit report frequently damages your credit score
Many people also tend to believe that credit reference agencies penalise individuals who check their credit scores too often. This is a false belief. You can check your credit report/score as many times as possible without damaging your score. In fact, it is advisable to do so to make sure your credit report has the right information. Checking your credit score often also helps you to identify any fraudulent activity that may have taken place. You should only be worried about making too many loan applications instead since declined applications have an adverse effect on credit scores.

5. Credit reports retain information on missed payments indefinitely
Your credit report retains information on defaults for a maximum of 6 years after you have settled payments or defaulted. Most information i.e. account data including missed or late payments is removed after 6 years. It is, however, worth noting that most lenders use new as well as old information to determine if they will issue loans or not. It is therefore in your best interests to make sure you don’t default or miss any payments. You shouldn’t, however, be worried if you do so due to unavoidable circumstances.

6. You have a better chance of getting credit/loans if you have never borrowed
Many people also tend to think that having no credit history is a good thing. This isn’t the case. Lenders love borrowers who have borrowed before because it’s easier to assess the risk profile of such borrowers. If you haven’t borrowed before, it’s hard for a lender to determine factors like your credit worthiness. Considering lenders rely heavily on such information, your loan application can be easily denied if you have never borrowed before.

Summary

There’s lots of inaccurate credit report information out there today. After going through the above information, you shouldn’t have a problem identifying common credit report myths which usually stand between you and the credit you deserve. Furthermore, having accurate information about credit reports and scores is the first step to making sure you maintain a healthy credit report/score.

Bankruptcy in the UK Explained: Important Facts and Info

Bankruptcy in the UK Explained: Important Facts and Info

Ever wondered what happens when you become bankrupt in the UK? If yes, look no further. If you’re facing debt problems, you may be thinking of filing for bankruptcy. However, it’s important to understand what bankruptcy is, your alternatives, the procedure, etc. You must, however, understand that; filing for bankruptcy doesn’t mean you are a failure. Bankruptcy is a great way to protect yourself when you are unable to meet your debt repayment obligations. Many people have filed for bankruptcy including Donald Trump and come out of debt stronger financially. In a nutshell, there is nothing to be ashamed of about bankruptcy. However, you need to understand bankruptcy for it to work in your favour. Let’s start with the definition.

What is bankruptcy?

Bankruptcy can be defined as a legal procedure that relieves a debtor of the liabilities of their debt/s by making legally approved arrangements for partial payment of the debt. When you become bankrupt in the UK or any other place in the world, your non-essential assets i.e. possessions, property as well as your excess income is used to pay your debts and most debt is discharged or canceled at the end of the bankruptcy period which is usually one year.

Becoming bankrupt

You can apply for bankruptcy when you are unable to repay your debts. It costs £680 to apply for bankruptcy in the UK, and you can only apply online (https://www.gov.uk/apply-for-bankruptcy). The online application process is simple. You simply need to provide basic information about yourself i.e. your income, expenses, and debts. You need to create an a/c to which you will submit the required information i.e. your wage slips, benefits statements, bills, etc. You can only submit your application after paying the bankruptcy fee in full.

It is, however, possible to request for installment payments if you can’t be able to pay the full fee at once. In case you need further assistance filing for bankruptcy, you should consult a debt adviser. It’s also worth noting that you can’t apply for bankruptcy (make yourself bankrupt) in the UK if you are a Scotland or Northern Ireland resident.
In cases where an adjudicator declares you bankrupt because other parties i.e. your creditors have requested that you be declared bankrupt, you will receive a bankruptcy order. You may also be interviewed.

What happens when you are declared bankrupt?

After being declared bankrupt, your assets may be used to settle your debts. You also become subject to UK bankruptcy restrictions. For instance, you can’t be able to borrow more than £500 without disclosing you are bankrupt to your lender. Also, you can’t work as an authorised debt specialist, a company director, form, manage or promote any company or manage any business without seeking the court’s permission.

When you are declared bankrupt, your name among other details i.e. address are published in the IIR (Individual Insolvency Register). You can, however, request for your address to be removed from the register if it exposes you to security risks.

Bankruptcy professionals: The role of official receivers and Insolvency practitioners
When you are declared bankrupt, an official receiver will be appointed to handle your bankruptcy affairs i.e. protect your assets or act as a trustee if you don’t have assets. If you have assets, an insolvency practitioner is appointed to sell your assets and act as a trustee.
How will bankruptcy affect you? Main advantages and disadvantages of bankruptcy in the UK

Advantages of being bankrupt

Being declared bankrupt has some advantages. The main advantages include;

1. You get a chance to start afresh after the bankruptcy period ends which is usually after 1 year.

2. Declaring bankrupt reduces the pressure of having to deal with creditors

3. You get to keep essentials i.e. household goods as well as a reasonable amount of money for catering for living expenses.

4. Your creditors are forced to stop most/if not all court actions against you aimed at getting their money back.

5. The debt is usually written off after the bankruptcy period is over.

Disadvantages of being bankrupt

1. You need to pay a bankruptcy fee of £680

2. The bankruptcy period can be extended to 3 years if you have a high income

3. Your credit rating/score/history is affected for 6 years.

4. It is harder and more expensive to get loans.

5. Your possessions/property i.e. your home, car/s, etc. can be sold to repay your debts. Your pension savings can also be taken.

6. You may not get certain jobs in the UK if you are bankrupt or have been declared bankrupt before.

7. Your bankruptcy is published publicly which may introduce security risks and/or result in other problems i.e. victimisation etc.

Summary

Although bankruptcy is a viable option when you are unable to repay your debts, it’s important to think of the repercussions of filing for bankruptcy. Understanding bankruptcy is highly recommended before you decide to file. It’s also advisable to seek professional help. Ideally, bankruptcy should be considered as a last resort.

Payment Protection Insurance: Important Facts and Info

Payment Protection Insurance: Important Facts and Info

What is payment protection insurance (PPI)?

As the name suggests, PPI is a special type of insurance that helps you cover your loan repayments when you faced factors such as illness, unemployment or death among other factors that make it impossible to meet your loan repayment obligations. Payment protection insurance can cover your credit card payments, payday loan payments mortgage payments, catalogue payments among many other credit obligations you may have resulting from factors beyond your control.
Is payment protection insurance mandatory in the UK?

PPI isn’t mandatory in the UK. Lenders are however required by law to offer this type of insurance to borrowers who apply for loans. Under the Central Bank of Ireland Consumer Protection Code, for instance, lenders must quote for payment protection insurance separately and provide separate application forms when offering loans.

Do you need payment protection insurance?

Considering the insurance helps you meet your credit obligations when you face life’s uncertainties that are beyond your control, it is definitely important to have this type of insurance. PPI insurance is also important given the effects of missing payments on your overall credit score/report. It is, however, worth noting you may not need payment protection insurance in the UK if you have; a secure job with very little to no risk of redundancy. Also, you may not need PPI if you have a regular income, a similar insurance i.e. income protection insurance.

Coverage

PPI covers all monthly repayments or a fraction of the repayments for a certain period. For credit cards, PPI usually covers the lowest/minimum repayment amount which is usually 2 to 5% of what you owe. Most PPI policies cover repayments for a few weeks to months so it is important to have an emergency fund on top of the insurance coverage. Nevertheless, different PPI policies have different terms so it’s important to choose a policy that matches your needs perfectly.

Eligibility

Like any other insurance cover, there is a certain eligibility criteria you have to meet to qualify for PPI insurance in the UK. For instance, most insurers offer PPI to individuals aged between 18 and 65 years old. You also need to work more than 16 hours every week to qualify for PPI.

Claiming

You can’t make a claim successfully if you have prior knowledge you will/may become unemployed in the future or if you are self-employed and you go out of business. Individuals who have existing medical conditions which aren’t disclosed at the time of taking a PPI policy may also fail the eligibility criteria for claiming. There are many other exclusions that may be considered in PPI policies. It’s, therefore, important to research before taking a PPI policy.

Taking PPI insurance: Important factors to consider

Before taking out PPI insurance, there are a number of factors you need to consider. First and foremost, you need to consider if you really need the cover. You should also consider the total cost, if you have other related covers, the effectiveness of the policy i.e. what it covers in case of eventualities as well as the alternatives available. For instance, it may be better to take out an income protection policy, serious illness cover or personal accident insurance depending on the risks you are exposed to. Below is a brief discussion of some of the most important considerations to make.

a. Cost: Although the monthly premiums may seem low, they can easily add up to a lot of money if you pay for the entire term of the loan. For instance, the total amount of premiums paid can easily amount to 20% of the total amount borrowed for a loan exceeding 5 years. It’s, therefore, important to calculate the actual cost of the insurance to be able to decide whether the insurance is viable or not given the possible risk/s.

b. What is covered/what is excluded: It’s also important to find out what your policy covers and excludes. This is a very important factor to consider since different PPI policies may cover and exclude different things. To avoid surprises, you must take time and understand what is covered as well as what is excluded.

c. Receivable benefits: Most PPI policies cover repayments for a certain period usually one year. It is, therefore, important to understand the benefits you will receive before you take a PPI policy in the event of a claim.

d. Premium payment terms: You also need to find out how you will be paying the premiums. There are two alternatives when it comes to paying premiums for PPI policies. One, the premiums can be added up to the total cost of the loan. The premiums can also be calculated as a separate cost. It is better to take the second option since adding up the premiums to the total cost of the loan exposes you to unnecessary interest charges.

Summary

The importance of taking payment protection insurance can’t be overlooked given the impact of missing loan repayments or defaulting. Payment protection insurance also protects you from life’s uncertainties i.e. unemployment, injury, disability, etc. that can easily compromise your ability to meet your debt obligations. To protect yourself from life’s uncertainties that can easily make you default on your loan/s, it’s advisable to take payment protection insurance. You, however, need to consider the factors discussed above to ensure you get a PPI policy that serves your needs perfectly.

The Process Of Taking Online Payday Loans Explained

The Process Of Taking Online Payday Loans Explained

As the name suggests, online payday loans are payday loans which are applied for and taken online. Some lenders even offer online loan management. If you’ve ever wondered how all this works, look no further. Most online loan applications are the same. Everything takes place online from the application process to loan management. This makes online payday loans the most convenient types of short term loans today.

Application

All online payday loan lenders have online application pages where borrowers complete application forms. The best lenders have online application forms that are straight forward/easy to understand. Such lenders require basic information that is easy to obtain so you shouldn’t expect a complicated application process if you choose to apply with a reputable online payday loan broker like Swift Money.

A typical online loan application requires personal and financial information like;

• Your full names
• Date of birth
• Address
• City/Location
• Postcode
• Email
• Mobile phone number
• Loan amount
• UK bank account details
• If you have considered bankruptcy etc.

You may also need to consent to a disclosure document, state the purpose of the loan, state your marital status, source of income or employment details such as your employment status, monthly income, length of employment, name of employer, work phone number, next pay date, among other information like existing loans, other expenses etc.

Processing

Online payday loans processing takes place faster than typical loan processing. It may take a few minutes to a few hours depending on the lender you choose among other variables i.e. the number of pending applications. If you have filled in everything accurately and selected a lender that caters to the needs of borrowers like yourself, it shouldn’t take long before you receive an email confirming that your loan application has been approved.
Reputable lenders offer no obligation online loans with very high approval rates so you shouldn’t worry if you meet the basic criteria for application.

The confirmation email you receive should come with a loan agreement that is automatically generated once an application is approved. You should take your time and read the loan agreement to make sure it matches your expectations. If you’re happy with the loan agreement, you can proceed and finalise the application process by signing the application electronically. Reputable online loan lenders have user-friendly loan online loan application tools that enable you to do everything online so you shouldn’t worry about finalising your application.

Receiving payment

Once you have finalised your application, it takes a few minutes for you to get your money. If you filled your bank account details accurately, you shouldn’t expect any delays. Upon approval, Swift Money sends money to your bank account within 10 minutes. It can take less time. The best lenders offer options for faster payment to borrowers who don’t have the luxury of time. Charges may however apply. It’s important to note that payments may take some time to be available for withdrawal depending on your bank. It is advisable to choose a bank which processes payments fast since online loans are short term loans taken to cater for emergencies.

Paying back online payday loans

Some payday lenders offer automatic loan repayment options whereby the loan amount or repayment amount is automatically deducted during the next payday. It is up to you to choose the repayment option that is most convenient for you. If you prefer sending the payment yourself, well and good. The electronic repayment option is, however, the best if you don’t want to forget and miss a repayment and attract charges as well as damage your credit score.

Loan management

Some lenders may also have loan management tools that help you manage your loan online i.e. calculate your remaining balance, interest, modify repayment patterns, etc. Such tools are useful for online loans that require more than one repayment.

Summary

Taking online payday loans is easy if you are dealing with a reputable lender with a user-friendly and secure online platform. Reputable lenders also process applications and deposit funds to your account fast. The process of taking online payday loans is similar to that of taking conventional loans. The only difference is everything is done online thus it is more convenient and fast.

Brexit: Everything You Need to Know

Brexit: Everything You Need to Know

Overview

The word Brexit has dominated news headlines in the UK for months now. If you still don’t understand what Brexit is all about from the meaning to the process, economic impact, etc., look no further. Let’s begin by defining the term.

What does Brexit mean?

Brexit is a shorthand term defining Britain’s exit from the European Union. On 23rd June 2016, a referendum was held to decide if the UK should remain or exit the European Union. 52% of the UK citizens who voted (30 million people or 71.8% of the population) were in favour of Brexit (the UK leaving the European Union). To understand the impact of Brexit in-depth, it’s important to define the European Union (EU).

The EU is simply a political and economic partnership between 28 European countries. The EU was formed after WW2 to boost economic co-operation among member countries as well as avoid war between member countries. Since then, the European Union has become a single market allowing free movement of goods and people to/from member states as if they were one state/country. The EU has its own parliament and currency used by 19 member states. The EU Parliament sets the rules on a wide range of areas/issues affecting member states from transport and environment issues to consumer rights and mobile phone charges.

Reasons for the UK wanting to leave the EU

Britain wanted to leave the EU because of a number of reasons relating to economic, immigration and identity issues. In regards to economics, some UK citizens were concerned about the money Britain and every member state sends to Brussels (EU headquarters) to fund programs some UK citizens don’t necessarily support.

In regards to immigration, some UK citizens felt that non-UK citizens were immigrating into the UK and using the country’s already scarce resources like welfare.
In regards to identity, some UK citizens felt that they were losing their British identity by continuing to be part of the EU.

Final vote

England and Wales voted strongly for Brexit by 53.4% and 52.5% respectively while Scotland and Northern Ireland voted to stay by 62% and 55.8% respectively. The final vote was in favour of Brexit i.e. 52% of UK citizens voted to leave the European Union.

Impact of Brexit

Britain exit from the European Union impacts a variety of areas. For instance, it affects how Britain will be conducting business with European Union member states going forward. Before, when Britain was an EU member, Britain could trade freely with EU member states. Brexit introduces some new trade challenges which have an impact on the economy. The British pound has also fallen to record lows (near the 30-year low) increasing the costs of doing business for UK companies operating outside the UK.

Britain has also lost its AAA credit rating making it more expensive for the UK government to borrow money. The Bank of England has however responded swiftly with an interest rate cut (current rate 0.25%) down from 0.5% the lowest levels since 2009 in an effort to stimulate the economy.

Brexit also affects the free movement of UK citizens within the European Union. Before, UK citizens could move freely and work in the EU without the need for visas. This changes immediately.

The Brexit process

The UK will leave the EU fully in 2019. The exit process is supposed to last for two years. It may, however, vary depending on the precise exit agreements made. The UK has to invoke Article 50 (of the Lisbon Treaty) to exit the EU. The article gives the UK two years to leave the EU. It may, however, take longer or shorter depending on final agreements on immigration and trade.
The UK also needs to decide which parts of EU legislation to keep or change via a bill known as the Great Repeal Bill. The UK is in the process of finalising the bill.

A government department has been set up to negotiate Britain’s exit. The department is headed by David Davis, a Veteran Conservative MP and vocal pro Brexit campaigner.
Although the entire exit process is expected to last for two years according to Article 50, it is expected to last longer since Britain is expected to engage all EU member states first.
Meanwhile, Britain is still bound by EU laws and treaties until it finally ceases being an EU member. Britain can’t, however, take part in any EU decision-making processes.
Was Brexit a good decision? Well, it depends on who you ask. Only time will tell.

Mortgage Tips for First-time Home Buyers in the UK

Mortgage Tips for First-time Home Buyers in the UK

Overview

Buying a house for the first time in the UK (and anywhere else for that matter) can be challenging when you don’t know where to start. To ensure everything goes on according to plan, you need to be equipped with important information from; how to get your finances in order, how to find a suitable mortgage loan, the process of applying for a mortgage among other important information.

Getting your finances together: How much deposit do you need?

To get a mortgage, you need to have a deposit. Mortgages in the UK require a deposit of 5 to 20% of the total cost of the home in question. You can raise your deposit in many ways. One of the best ways is saving. Since mortgages are loans, you need to avoid borrowing the initial deposit to avoid increasing your debt levels. It’s also important to save as much as you can to be able to access the best mortgage rates in the market since a higher deposit translates to a better interest rate. You can also negotiate for better terms when you have a good deposit.

Make sure you can meet your repayment obligations

Raising a deposit is the first step to securing a mortgage. You also need to consider the repayment obligations of the mortgage you take. When you’re buying a home for the first time, you need to make sure you can afford to make the repayments comfortably. Although mortgage lenders perform stress tests to assess a borrower’s ability to repay their mortgage comfortably, you need to perform your own assessments considering your monthly living expenses, your planned retirement date, emergency expenses, etc.

Consider costs associated with buying a home

You also need to consider other costs associated with mortgages. Over and above your mortgage deposit and monthly repayments, you will be required to pay stamp duty or land/building tax in Scotland on the property/home you are buying. You will also be required to pay mortgage valuation and arrangement fees, solicitor’s fee, removal costs, survey costs, initial furnishing costs, insurance costs i.e. payment protection insurance, etc. These costs can easily add up to a significant amount, so you need to have some money left after you pay your deposit and first monthly repayment.

Understand the different types of mortgages in the UK

As a first time home buyer, it’s also important to note that there are different types of mortgages. The two major types are fixed and variable rate mortgages. As the name suggests, fixed rate mortgages have a fixed interest rate while variable rate mortgages have a variable interest rate. Both mortgage types have pros and cons so it’s important to understand each type so that you can be able to choose the best mortgage type for yourself. Fixed rate mortgages protect you from interest rate fluctuations. However, the mortgages tend to have a higher rate. Also, you don’t get lower repayments when the interest rate falls. Variable rate mortgages feature lower interest rates when the interest rate falls. The interest rate on the mortgage, however, rises when the interest rate rises. The interest rate on the mortgage can also change at any time making it hard to budget.

Consider affordable home buyer schemes in the UK

The UK has government-backed home buyer schemes that are perfect for first-time home buyers. For instance, you can use Equity loans that allow first-time home buyers in the UK to borrow 20% of the total cost of a home interest-free for 5 years provided you raise a 5% deposit. First time home buyers in London are eligible to borrow up to 40%. The scheme lasts until 2021. You can also consider the Starter Home Scheme which has made 200,000 newly built homes in the UK available to first time home buyers aged below 40 years. Under the new scheme, home buyers are only required to raise 20% of the cost of a home as the deposit.

Summary

The information discussed above is adequate enough to guide you on the perfect path to home ownership in the UK as a first-time home buyer. As long as you get your deposit, ensure you can meet your repayment obligations, consider additional costs of home ownership, understand the best type of mortgage for yourself, you should expect to have a seamless first-time home buying experience. Furthermore, you can always consider home buyer schemes to increase affordability.

Loan and Debt Tips You Should Take Advantage Of

Loan and Debt Tips You Should Take Advantage Of

Introduction

Swift Money doesn’t advocate for any kind of illegal activity on all matters regarding finances. There is however nothing wrong with using financial loopholes at your disposal. The wealthy 1% use a majority (if not all) financial loopholes at their disposal to get ahead. Everyone should do the same provided it’s legal. If you’re interested in discovering some loan/debt loopholes to get you ahead of the pack, below are some good tips to consider.

a. Get rid of your loans/debts using zero-interest credit cards

Did you know there are 0% interest credit cards? These cards exist to entice people to transfer their balances on old credit cards to the new card. This debt loophole is readily available to individuals who have a good credit score, however, very few individuals know, let alone use this loophole. Getting zero-interest credit cards offering an 18-month interest-free period is possible. If you have a huge loan, you can use multiple credit cards. The secret to using zero-interest credit cards is making sure you pay your debt before the interest-free period is over otherwise, this loophole can easily turn into an expensive endeavour. If you use this loophole like you should, you will be able to get rid of your debt interest-free and enjoy other benefits such as a better credit score.

b. Use your home’s equity

Your home’s equity is calculated as the difference between your home’s appraised value and what you owe your mortgage lender. If you have home equity, use it to borrow instead of getting a typical loan. The rich use this loan loophole all the time. There are many benefits of doing this. First and foremost, it’s easier to borrow using your home equity when you already have a mortgage. Although your lender will need to appraise your home, very little needs to be done for you to get a home equity loan.

Also, the interest payments made on home equity loans are usually tax deductible unlike interest payments made on personal loans. Home equity loans are by far the cheapest types of loans available to homeowners. Depending on the equity in your home, you can get 75% of the total equity as a loan. The loans are great for homeowners whose homes have appreciated greatly.

c. Get reward credit cards

You shouldn’t get a typical credit card if you want to get the best short term loan/debt deals available. Reward credit cards are better because they offer you rewards you wouldn’t otherwise get if you were using a typical credit card. Banks earn a lot of money in fees when you use your credit cards instead of typical debit cards, and most banks are willing to share some of the extra money with their clients in the form of cash backs among other rewards. This loophole is great for cashing in on debt. If your bank doesn’t offer reward cards, it may be time for you to start shopping around.

d. Pay your premiums once

If you have insurance policies i.e. car insurance, life insurance, etc., you should consider paying the premiums once to save a lot of money. It is usually possible to get installment payments, however, the total cost of making monthly repayments usually exceeds the cost of making a lump sum payment by a huge margin (usually 8-9% of the total cost of premiums). It’s worth noting that installment payments resemble miniature loans extended to you at interest. When you consider the fact that the average person has multiple insurance policies, the cost of paying premiums in installments is very high. Unless it makes financial sense to pay your debts in instalments, avoid doing it at all costs.

Summary

Incorporating the above loopholes in your day to day activities can help you avoid a lot of unnecessary borrowing costs legally. You shouldn’t pay for any loan/debt expense if you don’t have to so, get a zero-interest credit card, use your home’s equity to get cheap loans, get reward credit cards to get rewarded for using debt and last but not least, avoid instalment payments when you can especially for all your insurance policies.