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Understanding Debt Consolidation Loans and Finance Industry in the UK

Debt consolidation is unavoidable when you have too many debts or debts that you are struggling to repay. Many people wonder if debt consolidation is worthwhile, if one should consider it or just try to repay the debts as they are trying now. Truth be told, debt consolidation is the only option one has. Debt settlement is certainly an option but it can ruin your credit score. Also debt settlement is unpredictable and not a very easy solution for most people. After all, you don’t get an easy repayment plan. Every creditor or lender will not come together when you wish to settle. You would still have to repay the mutually agreed amount for settlement of each loan individually. Here is how debt consolidation loans and finance industry in the UK work.

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Don’t Underestimate the Impact of High Rates of Interest on Short Term Loans in the UK

There are times when financial challenges become overwhelming. It is in duress that people make poor decisions. When you have a financial liability that is difficult to manage, when you are failing to come up with a solution that works and when you need to resort to short term loans in the UK, you have only one thing in mind and that is to get over the financial hurdle. Most people are conscious of their decisions and do weigh the pros & cons of short term loans in the UK. However, there are many who tend to look at the prospect of using the money to resolve a crisis and in the process sign up for more than they can manage.

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Always look for the Simplest Payday Loans in the UK

Banks and traditional financial institutions are infamous for having complicated processes. Whether you are investing in some managed fund or you need a home loan, the process is painstakingly long and tedious. Most banks are trying to shed that image and some have succeeded to evolve and transform. Fortunately, private lenders and especially short term loan providers don’t have complicated processes. They are more upfront, flexible and considerate. One may point out to the fact that banks have a conservative or orthodox way of working, they have very stringent regulations to follow and they don’t like taking risks which is why discretionary powers are almost nonexistent in the best banks. However, as a borrower, you would want a simple process to get some money and not bother about the compulsions of institutions.

Payday loans in the UK are among the simplest to get. There is very little paperwork. Some lenders don’t have any paperwork requirement. The unsecured loans are readily available and you may even get approved in a few hours with some lenders. But these advantages are not a given. Despite easy procedures, there are some payday loans in the UK which will be complicated to get. There are definite reasons and you must understand them to make a better choice.

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There’s More to Loans and Finance Industry in the UK than Rates & Loan Amounts

Whenever we think about loans and finance industry in the UK, we tend to focus on relevant propositions, the loan amounts, eligibility and rates of interest. The four are indeed the most important factors. Eligibility is quintessentially relevant, the type of loan is a precursor to everything, the loan amount will make it suitable and the rate of interest will make a loan more favourable than other options. But beyond these, there’s more to loans and finance industry in the UK.

Let us explore some of the very important aspects of any loan, be it a home loan or a payday loan.

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When should you opt for Short Term Loans in the UK

There are many people who don’t like the idea of taking loans. They would rather access their savings, look for options to borrow money without paying interest and they may even deal with their financial problems in ways other than remedying them. Then there are others who would not hesitate to apply for some short term loans in the UK whenever they have a financial challenge. Loans exist to offer some financial help from time to time. We are not talking about home loans or business loans which would be enormous amounts. We are talking about short term loans in the UK, which mostly are a few hundred or at the most a few thousand pounds. Opting for short term loans in the UK is a perfectly reasonable way to remedy financial problems. However, they can backfire at times. It is necessary that every borrower takes a holistic view and makes a rational decision.

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A Few Words on Payday Loans in the UK

Occasionally you may find yourself in the position to need to take out a payday loan. Although this can be frustrating and worrisome payday loans in the UK are easy to find and easy to apply for.

Payday loans first originated in the United States. Since their introduction in the UK the amount of citizens taking out these loans has, according to recent studies, quadrupled. In 2009 the amount of money lent totaled £1.2 billion.

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Study the Diverse Loans and Policies of the Finance Industry in the UK to Make Wise Choices

Compare two home loans and you would have a very tiny difference in the rates of interest. The difference may not appear to be much but when you factor in the ten, fifteen or twenty years you would be repaying the loan, the difference in interests will be substantial. Now, compare all the home loans available at your discretion and you would find a wider difference. Even if it is just the rate of interest, the difference will be consequential and decisive. As you explore the terms of repayment, the qualifying criteria and processing protocols, you would notice more differences. To make wise choices, you must understand loans and the finance industry in the UK. The only way to do that is research. You must indulge in firsthand research and study as much as possible. Don’t blindly endorse a particular proposition simply because you have heard it is a better choice. Do the math yourself, assess your options and only choose a loan whose pros outweigh the cons. Let us consider the various realities you would come across so you can make a wise choice.

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Accessing Savings vs. Applying for Short Term Loans in the UK

Most people have a threshold for expenses, which many call a budget. Actually, it is not a budget but just a capping of how much you can spend given your income and financial liabilities. The capping does get breached every now and then. There would always be sporadic and unforeseen expenses so it is not always possible to have a foolproof threshold. When you do breach the cap and end up spending much more than you should, you may ebb into financial strains. Some financial issues are short lived and they are manageable. Others are not. When you have an unmanageable financial problem, you need a solution. The solution to any problem that involves money is money itself. If you need some money, then you would either ask a friend or break your bank, you dispose a certain asset or you borrow some money from a lender. There is no dearth of short term loans in the UK. You can consider secured or unsecured loans. You can consider payday loans or some other kind of short term loans in the UK. Should you have some savings in your bank, must you use that to resolve your pressing financial issue or should you go for short term loans in the UK?

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Are you Eligible for Payday Loans in the UK?

No one but the lender can say for certain if you would be approved for payday loans in the UK. However, there are indicators that you can use. There are two sets of indicators. One pertains to the criteria set aside by the lender. The other pertains to your eligibility. There are some people whom payday loan companies will love to lend. They would do so ardently. There are many whom payday loan companies will be a little suspicious of. It all boils down to what the lenders look for and what kind of financial profile you have as a borrower.

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Payday Loans in the UK Vs Credit Unions, Loan Sharks and Peer to Peer Lending Network

There is no alternative to home loans. You have to go to the banks and they have the best home loans to offer. Private financial institutions may appear to be more efficient with their mortgages but it is the old school banks that have better rates of interest. Even their approach to collections is more considerate. The type of loan you need and the lender you can consider are correlated. But there will be choices when you need unsecured short term loans in the UK. Just as you would want to choose the best loan, you must also choose the best lender.

There are many types of lenders offering payday loans in the UK. One of the first payday loans in the UK was devised by companies as cash advances. If you think of it, cash advances from the company you are employed with are nothing but payday loans. The difference is the repayment period and the lack of interest or very low interest. Today, you can get payday loans in the UK from credit unions, peer to peer lending networks and loan sharks among others. Then there are payday loan companies.

Here is an assessment of payday loans in the UK against credit unions, loan sharks and peer to peer lending networks.

  • Credit unions require you to be associated with the organization to be eligible for any kind of grants from them. If a credit union that you are a part of doesn’t have any provision for payday loans in the UK then you don’t have much of a choice. Even if they do and you don’t qualify, it is just futile. If credit unions that you are associated with have payday loans then you can compare the rates and repayment term, eligibility and loan amounts to make a wise decision.
  • Loan sharks are often the same as payday loan companies. The difference is getting increasingly blurred. The main difference that still holds is the way loan sharks operate and how credible payday loan companies treat their borrowers. You don’t want collections breathing down your neck or a rate of interest that is brutally high. Payday loans in the UK can have rates of interest anywhere from less than 15% to almost 30%. Loan sharks are likely to charge you in the higher range.
  • Peer to peer lending networks are unreliable. You may not get to raise the funds you need. Also, the effort, time needed and the complications make matters worse for any borrower who is already in financial trouble.