Author: George

Who Are Guarantor Loans for?

There are all sorts of loans available and some of them are there for specific purposes of specific things. You may be looking at guarantor loans and wonder who they are actually for. Although the lenders will not specify this and will be happy to lend to anyone there are features of the loan, which mean that it is aimed at certain types of borrowers.

Those with a Poor Credit Record

With a guarantor loan, the borrower does not need to have a good credit record. This is quite different to many other types of loan where a credit check is needed and anyone that does not have a good credit record will be rejects. This type of loan therefore allows those people that cannot normally borrow significant sums of money to be able to.

Those Wanting to Borrow Between £1,000 and £10,000

If you want to borrow thousands of pounds, it is not always easy to do so. There are lenders available, but when you want this much money you will need to go through quite a rigorous credit check normally. However, if you do not have a good credit record then this will not work for you and you will need to find an alternative way to borrow the money and the guarantor loan will provide that.

Those Who Can Find a Guarantor

However, if you want a guarantor loan, you will need to find a guarantor. This is a person who has a good credit record and will be prepared to pay any repayments that you cannot afford. How easy it will be to find someone that is willing to do this for you will depend on how well off your friends and family are and how likely they are to want to help you out. It can be tricky knowing without asking people as well as normally people do not tend to be that open about their financial situation and so you may have to ask them for help.

If you fit these criteria, then it is still worth having a good think before getting out this sort of loan, as you should with any loan. You need to consider your reasoning for the loan and think about whether you feel that it is a good one. Find out how much the loan will cost you and that will allow you to decide whether you feel it is good value for money. Consider that cost and the item you are buying and whether you really think that it is worth that extra money. You should also compare different loan types and think about whether there are any others that better suit your needs. There are lots of loan options available to us and checking them out and comparing them is important as it will mean that we will be able to work out which one will most closely fit out needs. It is also really important to make sure that we compare the lenders as well. You will find that there are a lot of lenders offering this sort of loan and it is a good idea to compare them. You do not want to pay more than necessary, so compare the costs of the loan but also compare other features and then you should be able to find the one that offers you the best value for money. It might seem like a lot of work, but it will be worth it if it means that you can have a better borrowing experience as a result of it. So consider setting a bit of time aside to fit in this research.

How Can I Choose a Guarantor?

Choosing a guarantor can be a bit of a tricky process. This is because you will find that you will not always know many people that fit the criteria. It is good to be aware of the criteria and then you will be able to choose the right person to help you.

Good Credit Record

Your guarantor will need a good credit record and this means that they will be good at handling money have a good income and things like this. There are different factors though that lenders will use when they are considering someone’s credit record. The different lenders will have different criteria and this means that you can never be completely sure as to whether they will be happy with your choice of guarantor. However, if you know someone that seems good at handling their money, then they will be a good choice. Of course, this might be something that people keep very private and so you may have to ask them.

Be Able to Afford Repayments

You will also need to make sure that you pick someone that will be able to afford to cover the cost of the repayments if you are not able to. It is wise to find out how much they will have to pay if they do need to make a payment. You may know whether they will be able to afford this, but it could be a good idea to actually make sure that you let them know as well. This is because only they will know the specific details of their finances. It is wise to tell them to assume they have to pay every month and whether they can afford that. Of course, you will not want them to have to do that and it is probably very unlikely, but it is a good idea to prepare them just in case.

Will be Willing to Help

You will also need to pick someone that is willing to help you. You will need to think about who you think might do that for you. It will need to be someone that you are really close to as they will be happy to help, whereas someone that you are not that close to is far less willing to. It could be more likely for most people that it will be family members that will help them rather than friends. However, each of us is different and you will need to think about who you might ask. It could be good to have a list and move through it, asking different people so that you can hopefully find someone that will be willing. It is a good idea to make sure that they are fully aware of what they are letting themselves in for. It can also be wise to discuss with them what will happen if they do have to make a repayment for you. Come to an agreement with them with regards to whether you will need to repay them or not and if so when they want you to do it. The reason for this being so important is that you and them may have different expectations. It could mean that you will expect that you do not have to repay them, but they might expect you repay as soon as you can. Therefore, it is a good idea to make sure that you have an agreement about this before you take out the loan. Even if dealing with payday loans in the UK. It can even be good to have something in writing and then you will not be able to have a disagreement with them about it, if they do have to make a repayment on your behalf.

Should I Swap Banks to get a Better Overdraft Rate?

Most banks will offer an overdraft with their current account. The rates that they charge for those overdrafts will vary wit many having an interest rate of between 35% and 40%. If you find a bank which has a lower overdraft rate than the one that you are with, then you might be tempted to switch to it as opposed to the one that you are with. However, there might be consequences in doing this and so it is a good idea to check it out thoroughly before you make the decision.

Interest Rates

The interest rates are probably something which is really obvious and you will focus on them. If you have a rate that is significantly higher than other places then you will be thinking about swapping to them. This is a good idea if you use your overdraft regularly. This is because your overdraft will be costing you a lot of money and if you can reduce the amount that you are spending then you will be able to pay it off more quickly and save money. Therefore it can be better to consider moving your account to one that has a lower rate if you use your overdraft a lot. If you never use your overdraft, then this will not be such an issue unless you feel that there might be a chance that you will need your overdraft at some point and then it could perhaps be useful to consider getting a cheaper one.

Other Features of the Current Account

Before you change though, you will need to think about the other benefits that you get for having this particular account. It could be that you pay some money for your current account and that means that you get all sorts of benefits for doing that. It could be worth thinking about whether that makes it better value for money despite the interest rates. You also need to think about other features that you might get as part of your account. Perhaps you get online banking, you have a local branch you can use, you can print statements on a machine in branch, you get higher interest on your savings account because you have a current account and things like this. It is good to think about what the worth of these things is as you might want to use them and if they are not available in the account you are considering switching to then you may decide that in the end it is not worth switching to them.

Bank

You may also be concerned with the reputation of the bank. It is a good idea to think about whether you are interested in this and what the bank is like. You will need to think about the features of a bank that might be important to you. For example, you might be concerned about whether they have a good reputation, whether people you know recommend them, whether you have heard of them, if you have used them before and things like this. There are lots of different possibilities that you might feel are important when you are choosing a bank and it is a good idea to think about what you feel is important to you. You may not worry about any of it, you may just have a few requirements or there might be lots of things that are really important to you. It is well worth considering this and then you will be able to put these factors together with what you want form the account and then compare the interest rates to see which account you think will give you the best value for money.

How Expensive are Overdrafts?

Many of us have an overdraft associated with our current account. These allow us to get our hands on more money than we actually have if we need it. So, we will be able to use a cheque, direct debit, transfer or cash withdrawal to get the money from our overdraft. This can sound pretty handy but there are costs. It is a good idea to have a think about the costs to make sure that you make wise decisions when you are thinking about whether you use your overdraft facility or not.

Interest

The way overdrafts are charged for in the UK has recently changed in order to make it easier to compare the different banks. It used to be the case that there were different types of overdrafts (authorised and unauthorised) with different costs but this is not the case anymore. Due to a change in the law to make things easier for borrowers all overdrafts have just the one cost and that is the interest that is charged on them. There are no fees and charges to confuse matters, you just have to pay interest. This interest rate will vary between the different lenders but it tends to be between 35% and 40%. This sounds high and this is because it is. It is the interest rate for the year, which means that if you have a £100 overdraft for a year, you will be charged £40 across the year which would be £3.33 a month. It seems pretty small when you look at the monthly figure, but you can see also, what the impact is of keeping the overdraft for a long time.

Repaying

Overdrafts do not have a repayment schedule. They will be repaid when money is put into the current account that the overdraft is on. This means that whether you get paid a salary, benefits or some other money goes into the account, it will repay some or all of the overdraft. This means that if you are operating a normal current account, that you are likely to repay some or all of what you owe when you get paid, which will probably be monthly. This means that it is quite easy to repay and not something that you will need to remember to do. However, it also means that it is easy to forget to pay it off as well.

There are some people that will not repay their overdrafts and use them like a personal loan. They will take out a second current account for their salary to be paid in to and leave the overdraft just accumulating interest all of the time. This might seem like an easy way to get some money but it is something that you should think very strongly about. You will be paying that interest all of the time and it is a really high amount. There are ways to borrow money which have much cheaper interest rates and so it can be a good idea to look into these rather than trying to keep an overdraft for a long time. You will usually find that a personal loan will be cheaper than this and a credit card might even be a cheaper way to borrow.

With other methods of borrowing you are encouraged to repay some of what you owe. This can help you to make sure that you do not stay in debt for too long. With an overdraft this does not happen and that means that you could keep owing the money for a very long time and building up those interest charges. It can cost you a lot of money and is therefore not a wise idea.

Easy Ways to Repay Credit Cards

Many of us have credit cards and most people actually repay their credit cards in full each month. However, there are some of us that will only repay the minimum amount and therefore have an outstanding balance. It is wise to repay this balance though, because you will otherwise be paying interest on it and interest on credit cards can be pretty high. Luckily, there are easy ways to repay it and there is a simple step by step method that you can use.

  • Ensure you repay the minimum – it is wise to start by making sure that you repay the minimum amount each month. This is something that card issuer will require and otherwise you will have higher interest than that already charged. Therefore, it is sensible to set up a direct debit so that this happens automatically. This will ensure that you are always covering that minimum. It will not be that much money either, just the interest and a small repayment, but it is still wise to check carefully to make sure that you have enough money to cover it in your account each time. If necessary, change the payment date so that it is just after you are paid and then you will be sure that you have the money available.
  • Stop using the card – if you want to repay the card, then you will need to stop using it as much as possible. If you keep using it then it will get more and more expensive to repay it. Therefore, try to keep it for emergency payments only for a while until you have paid it off and are back in control of the situation again. It can be wise, to repay it in full each month once you have repaid it, to prevent this situation happening again but you will need to monitor your spending carefully to make sure that you can afford it. 
  • Start paying off chunks when you can– it is worth knowing that you can make repayments on a credit card whenever you want to. This means that you will be able to pay off a chunk of what you owe whenever you wish. This can be well worth doing, because the less you owe, the less interest you will be charged and the more money you will have available to repay it. However, you will need to find the chunks of money to repay it.
  • Spend less elsewhere – it can be good to look at your spending and generally try to reduce it and then you will be able to put more towards repaying the credit card. The first thing to look at is whether you are paying too much for things. It can be easy to overpay without even realising it. For example, things such as utilities and insurance are often more expensive than we realise and if we do a quick price comparison, we could end up paying a lot less for them that we do now and we will not notice any difference in the service that we get. The same could be the case for other things that we buy. We may buy an expensive brand thinking it is better quality, but this may not always be the case and it is a good idea to check whether we are actually paying more than necessary. Cutting down on the amount of things we buy can make a big difference as well. Try to prioritise spending on essentials and see if you can cut back on things that are not necessary for a while. Once the card is repaid, you will not have to worry about this so much, but while you are trying to repay, it can help if you reduce spending where you can.