Do you check the small print on personal loan agreements?
January 27, 2011
Most people are well aware of the importance of comparing the various aspects of personal loans before deciding which loan to take out. It is important for those that are considering a personal loan to look at areas such as the APR, the repayment terms, and the borrowing levels. You also need to make sure that the loan is suited to your needs, so you should make sure that you choose one that you qualify for in terms of eligibility.
However, whilst many people have become far savvier when it comes to hunting out the most appropriate, suitable, and affordable loans many do not realise the importance of checking the small print on the various personal loans that they may be considering. The small print contains some of the most important information about any loan or finance agreement yet it is one of the things that a huge number of people fail to compare or even read when signing a loan agreement.
At this time of year many people may be considering taking out a personal loan, as competition between lenders has been heating up, and a number of lenders have reduced the interest rates being charged on their loans. Cheaper rates on loans won’t last long, and are likely to generate a lot of interest amongst consumers who want a good deal. Whilst the increased competition and lower rates will come as good news for those that want to take out a personal loan, it does mean that choosing between the different loans available may become more confusing.
This is where reading the small print can make a big difference to those that are confused or uncertain over which loan they should take out. The small print provides a lot of important information about matters such as early redemption fees, charges, payment breaks, exclusions and restrictions, and more. Failure to read the small print could result in you paying over the odds over the term of your borrowing, or getting a loan that is not as flexible or suitable as it may appear to be.
You can easily compare the terms and conditions of loans via the Internet, so it is just as easy to compare this important part of an agreement as it is to compare things like the APR, repayment periods etc. It is also just as important to do this, so always take the time to look at the small print before you make your decision.
Are you considering a packaged bank account?
January 25, 2011
Finding the right bank account is important for those that want to effectively run their day to day finances smoothly and efficiently. There are a number of different bank account options available to consumers these days, from the standard current account to a basic bank account or a packaged account. You should look into the details of each account and determine which is the most suitable based on your circumstances. This way you can be certain that your bank account will be well suited to your financial needs and personal situation.
One of the types of bank account that is available to consumers these days is called the packaged bank account, and it is known by this name because it comes with a package of benefits that accountholders can take advantage of. Different banks have different names for their packages bank accounts, but essentially they are the same thing with many offering benefits that are pretty standard across the board, although there may be slight variations.
Packaged accounts may be well suited to some people, but not everyone will benefit from this type of account. It really depends on whether you will use the benefits that come with the account. The reasons you need to ensure that you will use the benefits that come with these packages accounts is because you incur a monthly fee for these accounts. You therefore need to make sure that the amount that you save on the services that come with the account will outweigh the amount that you spend on the packaged account over the course of the year.
If you will use several of the benefits offered, and would have otherwise taken out the services yourself anyway on the open market, you may find that the amount you save by getting them as part of the package makes it worth going for the fee-charging packaged account. However, if you are unlikely to use the benefits that are part of the package then you will find that the packaged account could be a waste of money.
If you are considering a packaged bank account you should look into the benefits that you receive so that you can determine whether you will use them and save money before making your decision. Some of the benefits that you may get include car breakdown cover, travel insurance, mobile phone insurance, pet insurance cover, discounts at certain retailers, and a variety of other benefits.
Parents may be offered unsecured loan to help with kids’ deposits
January 17, 2011
These days first time buyers face a tough time when it comes to getting onto the property ladder. Apart from the high property values that they have to contend with there is also the fact that lenders are looking for huge deposits, which most young first time buyers simply don’t have.
In some cases parents are able to help their kids with a deposit, which allows that to get their foot onto the all important first rung of the property ladder. However, there are also parents that would like to help their kids to pay a deposit towards a home but simply don’t have the cash to do so.
One company, Hitachi Capital, thinks it may be able to help. The financial service group has got together with the house builder, Barratt Homes, in order to offer what it believes to be a solution. Some parents may be eligible to borrow £50,000 on an unsecured basis from the lender, which they can then give to their kids to help them with a deposit towards their first home.
However, there have been mixed reviews to the ’solution’ from many consumers, many of whom believe that this is just another scheme by lenders to increase borrowing again in what has become an already fragile financial climate.
One industry official said: “Parents keen to help their children with a deposit, but who don’t have spare cash available, could find this is the solution. The advantage of an unsecured loan is that it is separate from the mortgage, where your own loan-to-value is so important. The loan rate is competitive, plus payments are spread over 12 years. It is good to see innovation in the sector, with developers and lenders working together to find solutions to the problems facing first-time buyers struggling to get on the housing ladder.”
Loan rates drop to two year low
January 8, 2011
Over recent years the rate of interest charged on personal loans has been rocketing, even thought the Bank of England base rate has been at its all time low of just 0.5 percent for nearly two years. However, just as speculation has started to increase over when the base interest rate will rise lenders have started reducing the interest that is charged on their mid-range loans.
The rate of interest being charged on loans of between £7500 and £15000 is said to have fallen to the lowest level in over two years, with the last time the rate was as low as it is now being November 2008. This will come as good news for the many people that may be thinking about taking out a personal loan for purposes such as consolidation or to make purchases, as it means that they can enjoy an average rate of as low as 7.3 percent, which is the rate available from banking giant Santander.
A number of lenders have dropped the rates being charged on their £7500-£15000 loans, and this is due to increased competition in the market. However, the interest rates on smaller loans such as £3000 or £5000 is said to have increased in the past two years, which means that some borrowers may find that they are better off taking out a slightly larger loan so that they pay far less in the way of interest.
Some are concerned that the rates are being targeted at existing customers by some lenders.
One official said: ‘It’s welcome news for customers to see loan rates falling at long last and from some of the largest providers in the market. It’s a shame that the rate cutting has, apart from Tesco and M&S Money, been targeted at existing customers only. The other downside is that lower interest rates are not on offer for smaller borrowings, so for anyone looking to borrow a sum of say £2,000 to £3,000, the interest rate will be well into double figures and in some cases pushing 20% APR.’
Will mortgage interest rates increase in 2011?
January 1, 2011
For nearly two years now homeowners across the UK have enjoyed the relief that has come from the base interest rate standing at its all time low level of 0.5 percent. The base rate was reduced by the Labour party when it was still in power in the hope of boosting the economy and consumer confidence, both of which had taken a battering due to the financial crisis and the recession.
When the coalition government came into power it made a lot of sweeping changes, but one thing that it decided to leave well alone was the base rate, which the Monetary Policy Committee continuing to vote to keep it steady each month. As a result of this the base rate has been at its lowest level in over three centuries for nearly two years, and many homeowners on variable rate mortgages have been able to save money on their repayments.
However, all good things must come to an end, and the rock bottom base rate is no exception. Most homeowners have realised that they are now on borrowed time when it comes to interest rates, and many listen out for the Bank of England announcement with bated breath each month hoping that the base rate will not have been increased.
Industry official have already predicted that the base rate will increase this year, and a large number of these industry experts believe that it is most likely going to be in the earlier part of the year that the base rate will rise. Whilst the rate rise initially may not be a huge one, some do expect several increased over the next two years, which means that by the end of 2012 homeowners could be paying far more than they are now on their repayments unless they are on a fixed rate deal.
Some believe that now could be a good time to get a fixed rate deal, so that if and when the base rate does rise there will be no effect on repayments for a specified period of time. There are a number of fixed rate mortgage deals available, and if you think you would struggle to keep up with repayment increases over the next two years it may be worth seeing what is available, and whether you are able to switch to a low fixed rate mortgage before it becomes too late.
Mortgages being repaid with increased speed
January 1, 2011
It seems that these days homeowners in the UK cannot repay their mortgages fast enough, and concerns about the economy and job losses are driving homeowners to repay their mortgage with increased speed. Figures have recently been released by the Bank of England, showing that the speed at which homeowners in the UK are repaying their mortgage debt has continued to increase.
It is thought that many homeowners are trying to speed up their mortgage debt repayment because they face an uncertain future in the current climate, which has spurred them on to repay as much of their high risk debt as possible before anything goes wrong. Many have used the fact that the base rate has been at an all time low of just 0.5 percent for close to two years to their advantage, using the money that they have saved on reduced mortgage repayments to continue making higher mortgage payments thus overpaying on their mortgage debt.
In the third quarter of 2010 homeowners repaid a massive £6.1 billion worth of mortgage debt. This was up on the second quarter of the year, when £5.8 billion was repaid, and on the first quarter, which saw £5.3 billion worth of mortgage debt being paid off. The trend shows how people are increasingly paying off as much of their mortgage debt as possible, and this is the tenth consecutive quarter where repayments have been higher than borrowing in the mortgage sector.
One economist stated: “The tenth successive, and increased, net injection of housing equity in the third quarter indicates that there is an ongoing desire and perceived need of many people to improve their personal balance sheets given high debt levels and serious concerns and uncertainties over the economic situation.”