I recently came across Amigos advert – I must admit I never really watch television. I thought you may be interested. Check it out.
Having a poor credit rating is no fun, and if you have found yourself with one, you’ll probably find that it’s closed a lot of doors for you. The problem with credit ratings is that we don’t tend to think about them until it’s too late, when they should be noticed and nurtured in order to keep things ticking along nicely. Of course, not everyone is fully in control of what happens to their credit rating – sometimes a poor rating is the fault of a credit/service provider, and sometimes payments are missed due to things beyond control, such as a job loss or illness. However it came about that your credit rating is less-than-favourable, it’s likely to prevent you from being approved for mainstream credit products, which can make things difficult.
Making sure it’s affordable
Guarantor loans are one of the cheapest ways to borrow money if you have a poor credit rating, and they can really help to boost your score if you have had issues in the past. One of the most important things to do when looking at borrowing in order to boost your score is to ensure that you can afford the repayments. A good guarantor loan company will run through your income and expenses with you to make sure that you can afford the payments, but you should also be happy that the loan is easy to repay. The more affordable it is, the less likely it is that you’ll default on the payments, and therefore harm your credit rating even further.
Choosing the repayment length
Looking at the length of time you’re expected to pay back the loan over is an important part of the process. The longer you repay over, the more money you’re likely to pay back in the long run, but it does have its upsides. One of them is that the longer the repayment term, the lower the monthly repayment (making it easier to manage) and the second is that the longer you can demonstrate an ability to meet debt payments in full and on time, the better your score will be at the end of it all. For this reason, payday loans are not such a good way to boost your credit score, not to mention the fact that many lenders will refuse to lend to those who have taken payday loans in the past as it shows a lack of stability. Guarantor lenders are happy to lend to those who have taken payday loans, whereas many mortgage providers will not.
Keeping an eye on your score
Checking your credit score regularly is a good way to keep on top of how your actions are affecting your credit file. You can do this online through any of the main credit scoring agencies – Experian, Equifax or Callcredit. Setting up a 30-day free trial and then cancelling it before the money is taken is a good way to get a look at your file for free. You can also see your score for free through a service called Noddle.
If you need to borrow money quickly, then you may not have time to shop around as much as you’d like to. Many people simply go on what they’ve seen on TV or heard about from their friends, as this cuts out the need to research their options. Trying to work out anything financial often takes time, especially if you don’t fully understand the jargon or what may be available to someone in your particular situation.
An area where many people struggle is knowing whether they’re going to be accepted for a loan or not. You may think that a loan from a high-street lender at a really low rate is a great deal, but if you’ve missed payments in the past it can leave you worrying that you’re never going to get approved. Do you apply or don’t you? You’ll need to check your credit score to make sure.
Unfortunately, there’s no way of knowing exactly what each lender is looking for credit score-wise. Some lenders will be happy to lend to people with tainted credit histories, whereas others (like the high street banks) will prefer to lend to people who have a good history of paying back their credit. You may find it difficult to get the cheapest credit if you’ve missed payments in the past or have never borrowed before. This is where guarantor loans can come in handy, as they are designed for those who would be turned down because of the strict lending criteria of the banks.
Thankfully, with a guarantor loan, you can still borrow higher amounts, typically from £1000 to £7500, which puts them on par with what the high-street lenders are offering. This is much more than you may be able to get from a logbook lender or a payday lender, and the APR (annual percentage rate) is lower than these alternative forms of lending too. The repayment period is typically between 1 and 5 years, which can spread the cost to make it more affordable to you.
The only ‘catch’ is that you must have a guarantor on board to be able to obtain credit from a guarantor loan company. The guarantor is simply a ‘back up’ to your application; someone who can vouch for you and will pay if you fail to make the repayments. Of course, anyone entering into such an agreement will need to trust that you can repay, and will also need to trust the lender.
Thankfully, guarantor lenders often have accessible and clear websites, and are easily contacted via phone, email, web chat or even fax. If you’re looking into a lender which doesn’t have any contact details readily available, then you may want to rethink using them for your borrowing needs. To better gauge whether a lender is going to be right for you, you may want to take a look at any online reviews of the company. This can help you identify what their strengths are, and will help you to see if there’s anything about the way they work that makes you uncomfortable.
Life has a way of throwing up surprises from time to time, particularly when it comes to the subject of your personal finances. Be it an unexpected vets bill, or a car breakdown perhaps, financial shocks like this can play havoc when your monthly budget is already stretched to breaking point.
Commonly, those who are seeking an injection of capital to cover such costs turn to Payday loans – as provided by house-hold brands like Wonga – to tide them over until next payday. Without question, the convenience of Payday loans is attractive if you are in the position where you need a near instant loan and have a poor credit history, which means you could have been turned down by high street lenders in the past. So easy is it to access money from a Payday lender, it is often the case that you can make a loan application, have your application assessed, and then have your loan paid directly into your bank within the space of an hour; without even having to speak to a person at any point. Sounds great on paper, right?
As with all things, the devil is in the detail. As convenient as Payday lending can be for accessing quick and easy money, it should also be noted that this convenience comes at a very high price! A study by Which? indicates that the average Payday lender is charged in the region of £25 interest per £100 borrowed on a month-long loan, which works out as a whopping APR of 1,737%; a quite eye-watering figure when compared with the APR of 18% that you can expect to pay on a typical credit card. Negativity surrounding the subject of Payday loans can also impact on your credit rating, and it is not unheard of for people to be turned down for a mortgage when a credit check has flagged up that an individual has taken a payday loan in the past, whether it was paid on time or not.
In light of such question marks hanging over Payday loans, it is of little surprise that those seeking access to credit are turning to alternative loans; and it is guarantor loans which many are increasingly turning to.
So what makes a guarantor loan different from a Payday loan? Firstly, the APR paid on a guarantor loan is much, much lower! For example, a loan of £3000 to be paid back over three years can be paid in monthly repayments of £143.98, which works out at 47.9%. Though this APR may vary, depending on the lender, it is still a great deal less than 1,737% APR.
The second major difference is the guarantor system, which requires a borrower to have a second person to act as a guarantor. Though the use of guarantor loans is very much on the rise at the moment, it is a far from new concept; for example, in the same way that a landlord or mortgage broker may ask an applicant for a guarantor today, once upon a time the mainstream banks used to issue credit and loans subject to an applicant providing a guarantor too.
As long as they are not financially linked to you (such as a partner), a guarantor could be a family member, friend or work colleague; in fact virtually anybody can act as a guarantor for you, provided they have good credit and own their own home. If your guarantor rents their home, then you could still qualify for a guarantor loan through the right lender. The APR may be a little higher than what is offered on loans for homeowner guarantors, but it would still be far cheaper than the Payday alternative.
So next time life throws a curve ball and you are reaching out again for instant credit, stop for a moment and ask yourself whether a more trust based system of borrowing might work better for you.
It is around this time of the year that two things are on everyone’s mind; getting fit and getting their finances in shape. January is by far the best month for gyms in terms of new memberships with tens of thousands of people vowing to improve their diet and implement a regular exercise plan to their daily routine.
Another popular new year’s resolution amongst us Brits is improving our financial situation. Many of us use the New Year as a time to reflect on the past 12 month’s finances and set some financial goals for the forthcoming year.
When you sit down and think about it, fitness and personal finance actually have a lot in common. Throughout this article we are going to outline how finance and fitness relate to one another.
You need goals
Walking into the gym on the 1st of January without a clear goal in mind is not a good idea. How are you going to track your progress if you don’t know how far you’ve come or how far you’ve got left to go? If you’re looking to lose weight then have a goal weight in mind, if you’re looking to change your body composition then have a physical image of your ideal physique and if you’re looking to get stronger have a target weight that you’d like to lift on the three main compound movements (squat, bench press and deadlift).
For the same reasons, it’s important that you have clear financial goals. Your goals will be largely dictated by your current financial situation, for example, it’s not worth aiming to pay off your mortgage if you’re currently shackled with credit card debt.
You need a timeframe
It’s great to have goals, but if you don’t set a target date by when you’d like to hit your goals it can be very easy to get side-tracked and track your progress. In terms of fitness, everyone wants to get in shape for summer so why not set your target as May or June. By setting a target date you can calculate how much weight you have to lose/ gain per week in order to hit your goal.
The same applies to your finance goals, by setting a target date you can then calculate how much you need to save on a monthly basis to hit you goal. For example, if you’d like to get rid of £1000s worth of Christmas debt in the next 5 months then you know that you need to pay off £200 per month in order to hit your goal.
You need to track your progress
Tracking progress is the ultimate motivational tool, whether you’re weighing yourself weekly, recording the weights you’re lifting or taking progress pictures of your physique. A fitness regime isn’t easy which is why the majority of people quit along the way, by consistently tracking your progress you can see exactly how far you’ve come since you first started out.
If you’re not tracking the progress of your financial goals then it can be very easy to lose motivation and subsequently go on a spending splurge, undoing all of your good work.
Progress will not be immediate
It is a well-known saying within the fitness industry that ‘it takes 4 weeks for you to see your body change, it takes 8 weeks for your friends and family and it takes 12 weeks for the rest of the world.’ Getting through the first 4 weeks will be the hardest because it will seem that all your hard work is in vain, however once you, and eventually your friends and family start noticing changes your motivation will be through the roof.
While the changes will be much more evident with regards to your finances, it will be a rough ride until you hit your goal. Much like in fitness you will need to make sacrifices if you are to hit your goal; you may have to cut out expensive nights out, give up your Sky TV subscription or even swap your car for public transport.
You need to treat yourself occasionally
A strict diet can be extremely tough to stick by both mentally and physically. Occasionally treating yourself to a ‘cheat meal’ or a food that wouldn’t be considered as healthy can be a great way of easing the mental pressure of a diet and get your head back in the right place. It’s important that you don’t go crazy and eat everything in sight; this will somewhat undo your good work. It’s also important that you only treat yourself when you feel you need to and deserve to, treating yourself to a meal out on a Sunday when you’ve not been sticking to your diet throughout the week is not the idea!
Sticking to a strict budget can be equally as tough which is why you need to occasionally need to treat yourself. You do however still need to ensure that you are spending well within your means and that it won’t have a long-term effect on your finances. You could for example go for a night out with your friends, go for a meal with your family or treat yourself to an item of clothing you’ve had your eye on. It’s all about ensuring that you do everything in moderation.
The great thing about the different types of credit available today is you can almost always find something to suitably meet your needs. Whether you need some money to tide you over until the next time you are paid, you are looking to consolidate some credit card debt, buy a new car, pay for a wedding or buy a house you will usually find a product out there that can help.
For relatively low cost purchases and consolidation guarantor loans are extremely versatile. With loan amounts available between £500 and £7,500 and repayment terms equally as flexible they are definitely worthy of your interest and attention.
Consolidating lots of smaller bits of finance can be a great way to regain control of your monthly income. Furniture, electronics and goods purchased through catalogues will often offer a period of time at a low interest rate (0% in some cases). After this period ends, if you have not paid off the balance then you will often find yourself paying a hefty chunk of interest every month (this is how these lenders make the majority of their money from).
Payday loans can also be a struggle to manage if they last longer than expected. Sometimes called the “payday trap” (and where they get their reputation for being a bit sharky). If you are stuck paying hundreds of pounds of interest a month on a pretty small amount of money, and not actually making any substantial inroads into paying off the debt, consolidation of this could be one of your best options.
The flexibility in loan amount offered by guarantor loans make them a great way to consolidate all types of debt. A lot of people will take £1,000 out to pay off there short term, high interest debts while others will need to take out more. Whatever amount you are looking to consolidate this type of loan could definitely be an asset, and is worth looking at.
From cars to holidays to weddings, purchases under £7,500 are often needed and if your bank won’t help, who can you turn to? This is another place where a guarantor loan could be a great option. They are readily available as long as someone is there to back you up.
You could even get yourself a new computer, or a new television, as long as you can afford the repayments then you can spend the money on anything you want!
Overall the adaptability of a guarantor loan is one of it’s most positive attributes. With a lot of lenders in the market only offering up to £1,000 at extortionate interest rates it is good to know there are other alternatives that may suit your needs.
You may not have given your credit rating much thought before you wanted to borrow money, but now that you’ve started shopping around for credit, you may find that it’s hindering you. Banks, supermarkets and other high-street lenders may well offer the best lending rates, but this is because they will only lend to those with a certain level of credit history. Lenders have a lot to lose by giving money to people who may not pay it back, so they use credit scoring as a way to see whether you have been responsible with credit in the past. For this reason, it’s very important that you take steps to improve your credit rating before you need to borrow, as it could make it much easier for you in the long run.
How can a guarantor loan help?
If you have a poor credit score, or if you haven’t borrowed before and you need the opportunity to build up your reputation to lenders, then borrowing money through a guarantor lender could be the ideal solution. Guarantor lenders are open to those with less than perfect credit histories, and to those who have already been turned down elsewhere. This is because the guarantor (someone who you nominate who is happy and who qualifies to stand as your ‘back-up’) adds an extra level of security for the lender. Basically, if you don’t pay your loan back, then your guarantor will be liable to make the payments on your behalf.
How will my credit rating improve?
Your credit rating will only improve with a guarantor loa if you make every single one of your payments in full and on time. The whole point of a credit score is to prove that you can handle debts responsibly, and that you are in a stable financial position to pay back what you owe. Good guarantor lenders will check that you’re able to afford your loan before paying it out to you – this is a very important part of treating the customer fairly, as lending to someone who can’t make the repayments is bad news for both the customer and the lender. You’ll need to demonstrate an ability to pay back money that you’ve borrowed over a good period of time. Paying something back in two or three months is fine, but paying back debts over a year or more will show that you can budget month by month.
Why are guarantor loans so well suited?
Most guarantor lenders offer between £1000 and £5000 over 1 to 5 years. The loan amounts are more than you’re likely to be able to borrow without a guarantor, and the longer repayment terms mean that you can build up a strong record of paying back credit. If your credit rating is poor, then you may find that guarantor loans are also the cheapest way to borrow money, as the annual percentage rate (also displayed as APR – this is the amount that you will pay back in addition to the amount you borrowed each year. It’s shown as a percentage of the loan amount) tends to be much higher in more alternative forms of lending.
Guarantor loans are an old-fashioned type of lending which have been reborn since the recession. The idea behind them is that you borrow money and pay it back in monthly instalments, much like any other loan, but during the application process you’re asked to provide someone who is happy to act as a ‘back up’ for the payments. This means that, should you stop paying back the loan for whatever reason, the back-up person (your guarantor) will be expected to pay them in your place.
This gives the lender an added level of security, which means that they can lend money to those who may have a poor credit history, due to not having borrowed before or by missing payments in the past. It allows lenders to lend more money to those with a poor history, and it means that the APR (annual percentage rate) is lower than other credit products aimed at similar people.
Higher amounts and lower rates are a good combination for those who want to improve their credit history, as long as they stick to the payment plan arranged with the lender. In order to make positive changes to your score, you need to show that you can pay credit back properly (this means in full and on time, and it always helps to pay off debt early, if you can). Of course, this means that you need to start somewhere, so having a guarantor on board to give you that initial helping hand can make all the difference.
The guarantor acts as a security for the loan, so unless you fail to pay one or more loan instalments, then they don’t have to do anything after the application. They don’t have to pay anything to the loan company unless you stop making repayments, so by asking someone to act as a guarantor you’re asking them to demonstrate their trust in you.
Most guarantor loan companies offer between £1000 and £5000 to borrowers, with repayment times of between 1 and 5 years. You can mix and match the amounts and repayment terms to find a combination that suits you. For instance, if you want to borrow £1000 but you want the monthly payments to be low, then you could pay this back over 3 years. If you want to clear the debt as quickly as you can, then opting for the 1 year repayment time would be advisable. It really is up to you.
You can access guarantor loan lenders online through their direct sites, through comparison websites or through loan brokers. There are a number of them trading at the moment, so you should compare APR to make sure that you’re getting the best deal. It’s also important to check the credentials of each company to make sure they’re legitimate. They should have a consumer credit licence and be registered in the UK. This information can usually be found at the bottom of their website. It may also be worth checking out reviews that existing and previous customers have written, as this can give you an idea of the strengths and weaknesses of each company.
Borrowing money is now easier than ever before, and is open to people from all walks of life, whether you’ve got a good credit history or not.
Your credit history can play a big part in how much you’re able to borrow and at what rate. If you have a very good credit rating, then you may be able to borrow a lot more than someone who has a poor rating, for instance. This is because in order to have a good score you need to show that you’re able to pay back debt in full and on time. You can really only do this by borrowing money, so the trick is to start at the bottom and work your way up.
If you’ve never borrowed before then you may find that you are refused credit by lenders who offer the lowest interest rates. This is because you need to show stability and that you’re responsible with borrowed money before you can get a good credit score. Even if you’re very sensible indeed, if you haven’t yet borrowed, then you may be refused credit by the cheapest lenders.
Asking for less money or applying to a company which offers a higher interest rate could help, as this acts as a security against loss for the lender themselves. Once you’ve borrowed money and paid back everything in full, then your credit file should show some improvement, which means that you’d be able to borrow more at a lower rate next time.
Looking for a loan over the internet (whether on a laptop, a tablet or a phone) has opened up a lot of options for anyone who needs some extra cash quickly. In the past, you would have had to go to your local bank branch and apply in person, manually fill out forms and hope that the bank manager agreed to your application. These days, you don’t need to wait until your bank is open in order to apply for some cash – you can do it anywhere that you have an internet connection. This could be sitting at a bus stop, whilst enjoying a coffee out and about or in the comfort of your own bed in the middle of the night. This has sped up the application process, so you shouldn’t have to wait long for your money once you’ve been approved.
Considering Your Options
Of course, rather than use this speed to apply for money on a whim, you should always think carefully about the type of credit you want, and whether you really need it. There are many different ways of borrowing cash: credit cards, unsecured instalment loans, secured loans, payday loans, guarantor loans and logbook loans are just some of the ways you can get money at relatively short notice. Of course, each different type of borrowing will offer differing amounts to be paid back over various repayment times. In order to find out which method is best for you, it’s important to consider your credit score, the reason why you want the money, how much you want to borrow and how much you can afford to pay back.