Monthly Archives: November 2011

Regulated Payday Loan Firms – What To Look Out For

Regulated Payday Loan Firms - What To Look Out For

If you're thinking of getting a payday loan here are a few tips on what to look out for when applying online.

Did you know that payday loans are one of the only forms of unsecured loan that is not regulated by the Financial Services Authority (FSA)?

In spite of this payday loans have undergone a certain amount of regulation over the last few years with many short-term lenders obtaining a consumer credit licence (CCL) and answer directly to the Office of Fair Trading (OFT). The likes of PaydayUK is actually a member of the Consumer Finance Association (CFA), a well recognised authority and governing body that ensures it’s members practice responsible lending and treat their customers fairly.

Whilst there have been a number of so-called payday loan “cowboy firms” in the past few years, the likes of Wonga.com and PaydayUK, who are probably the longest running UK payday lender, are committed to dealing with their customers in a fair and responsible manner.

Here at Creditwindow we only offer payday loans through the lenders we know and trust in the market, payday lenders who have their customer’s best interests at heart.

But how can you know which payday loan firms to trust?

This is a fair question – when looking to take out a payday loan there are a number of things to watch out for when applying online:

1. Does the lender display a representative annual percentage interest rate (APR) clearly and prominently? This tends to be quite important as it is a requirement by the OFT to display payday loan APRs, no matter how badly they misrepresent the actual interest you repay on a payday loan*

2. Trusted payday loan companies will always be honest and up-front about what they charge their customers – the likes of Wonga.com, for example, actually have a sliding bar loan calculator on their home page that will automatically calculate the interest for you. All you need to do is state how much money you want to borrow and how long you want to borrow it for.

3. Payday lenders will only lend an amount to a customer who they think are able to repay the loan in full with interest at the end of the month, or over a number of months. As long as you are over the age of 18, in permanent employment, earn over £750 a month and have a valid bank account with debit card you will be able to take out a payday loan.

4. Decent payday loan companies will not promote a payday loan as a “frivolous” product. Payday loans are intended as a last resort – an emergency short term loan that will cover the cost of emergencies, such as a last-minute unexpected bill, car repairs or a burst pipe. However, a payday loan firm will not ask you what you need the loan for – that’s your business and what you spend it on is your business.

The Slice

Secured Loans – A Few Thoughts

Secured Loans – A Few Thoughts

Find out more about secured loans and why they might be the right loan for you.

A lot of talk is spoken about unsecured loans and credit cards, however, there appears to be less information with regards to secured loans.

This post will touch upon some of the key differences and benefits of a secured loan over traditional unsecured lending.

Like any form of credit, secured loans have their pros and cons, however, you may find that the benefits simply outweigh the negatives, especially if your credit score isn’t up to much but you need to borrow a significant sum of money.

A secured loan is essentially credit that is secured against the borrowers asset, for example a house or car. So, in the event that you, the borrower, are unable to repay the secured debt then the creditor will take possession of the asset and may sell it to regain the amount lent, however, this is only done in very extreme circumstances.

In spite of this secured loans are ideal if you need a large sum of cash – for example, in excess of £25,000. The likes of banks and building societies are actually more willing to lend you a large sum of money over a long period of time (25+ years) if you have an asset to back the the loan.

If you are looking for a sum between £10K – £100K then a secured loan would be ideal, however, if you simply want a smaller amount, between £750 – £5,000 then you may be better off considering a payday loan or an unsecured guarantor loan as a cheaper alternative. In addition you won’t have to put up any of your assets to take out a loan.

Check out our secured loan section and find a loan to suit you.

Image: vichie81 / FreeDigitalPhotos.net

Credit Cards – Back To Basics

Credit Cards – Back To Basics

Simplifying credit cards - bringing them back to basics with Creditwindow

Let’s bring the whole credit card concept back to basics…

Simply put – a credit card is a form of loan. The credit card company / bank basically provides you with the credit card sets a limit on the amount you can spend on the card – known as your credit limit.
The credit limit is based on your annual income and credit score. You are entitled to use as much or as little of the available amount as you wish. The credit card’s interest is charged on the amount you have used, not on the credit limit itself (unless you have borrowed right up to that limit).

Whilst you could simply apply for a credit card through your bank you can also apply for a credit card online, and a credit check will be carried out as part of the application process.

It’s worth remembering that when you use your credit card to purchase something or to take out a cash advance you are basically borrowing money from the credit card company. Just like an unsecured loan, you have to pay back any money you borrow back as well as pay the necessary interest and associated fees on the loan for the convenience of using the card and the benefits it offers.

Every month you will receive a credit card statement that shows you exactly what you have spent and where. The statement will also tell you how much you need to repay by the due-date. It’s worth bearing in mind that, although the statement will show you the minimum amount you need to repay, you do have the option of paying more and should repay back what you can, especially since this will help to improve your credit score.

You have a set period to make the necessary repayment on your credit card (usually two to three weeks). If you do choose to repay the outstanding amount in full, you will not accrue further interest on the amount you borrowed. Otherwise, you will be charged interest on the amount left unpaid, and that interest will appear on your next statement along with the unpaid balance and any additional purchases you have made on the card since the previous payment date. It can prove risky to allow your credit card to build up interest and you could end up paying back far more than you originally borrowed – this is why it is so important to stay on top of your credit card debt.

All credit card firms and banks have a duty to make their terms and conditions clear. It is extremely important to go over the small print before you commit to taking out a card.

Here at Creditwindow you will find a range of credit card providers and can click through to learn more about each one.



Loan Confusion – Keeping Things Simple

Loan Confusion - Keeping Things Simple

Find out more about the types of lending available in the UK and how to find the best loan for you.

When it comes to choosing which loan suits your needs it can be tough, especially with the ever growing variety of unsecured loans, credit cards, short-term payday loans out there.

Then, you have to also consider interest rates – and let’s face it, with the launch of payday lending, APR (annual percentage rates)* have become even more confusing.

Let’s keep things simple by taking a look at the main types of lending available:

Unsecured Loans

Unsecured lending can take a number of different forms, including:

Guarantor loans – available to people regardless of their credit history. As long as you have a family member, close friend or simply someone who is willing to guarantee loan repayments if you are unable to pay it back, then you may be able to take out a guarantor loan. The loan is simply secured against the good word of your guarantor.

Standard unsecured personal loan – just a straight-forward unsecured loan that allows you to borrow money without the need to provide security against it. The loan is secured against your good word (and the fact that you have a reasonable credit score).

Short Term Loans

A short term loan is better known as a payday loan – a form of clending that you can borrow with a fixed rate of interest that is due on your next payday. Payday loans are also known as 1 month loans as a result. It doesn’t matter what your credit score is as long as you are over 18, in full-time work, paid monthly, have a bank account and earn over £750 per month. It’s really as straight-forward as that.

Secured Loans

Secured loans really take two main forms. Standard secured loans are essentially loans that are secured against property so is only really available to people who have a mortgage and equity in their property. Since it tends to be a higher amount the repayments can be spread out over 30 years (if necessary), however, this is subject to your ability to repay the loan.

Logbook loans are another form of secured lending, however, you do not need a sqeaky clean credit rating to take out a logbook loan. In addition you could get the loan within a few hours. All that is required is that you own a vehicle that is in your name and finance free (i.e. you’re not still paying for it) then you could get the cash the same day.

Check out these related articles:

Which Loan Is Right For You?

Alternatives to Credit Cards

* Check out Understanding Payday Loan APR

Understanding Payday Loan APR

Understanding Payday Loan APR

Payday loan APR can be pretty confusing - check out Creditwindow's quick guide to annual percentage rates and find out more.

Did you know the payday loan annual percentage rate (APR) is probably the most controversial thing about payday loans? Well this is the one thing the back-bench politicians focus on because they want to further their careers by starting another pointless crusade…

Let’s take a minute to really take a look at the thing they’re all moaning about.

What is payday loan APR?

An APR or “annual percentage rate” is basically the interest payable on the amount borrowed and other related charges.

Payday loan companies are compliantly obliged to display what’s known in the industry as a “representative APR” or “average APR” – essentially a rate that applies to at least 51% of succesfull loan applicants.

What is included in a payday loan APR?

  1. The interest you have to pay.
  2. The length of the payday loan agreement, timing and frequency of repayments, as well as the amount of each payment.
  3. Certain fees associated with the loan – such as administration costs.

An APR assumes the rate of charge over a 12 month period and therefore shows interest and fees as an annual rate and all lenders, regardless of whether they’re payday loan companies or banks are required by law to tell you what the APR is before signing what’s known as a consumer credit agreement.

So – what’s the problem with showing the APR for a payday loan? Well it’s not really representative… at least not in the same way as a standard bank loan.

A payday loan is a short-term solution that can be taken out for any financial emergency, unexpected bill or if you simply need a cash top-up before payday.

Payday loans tend to have a life-span of 1 month – hence why a 12 month APR doesn’t really apply to this form of lending.

If you think about it – a loan that you pay back after a month only requires a fraction of the 12 month APR displayed when you succesfully apply for a payday loan. For example, if you take out a Payday UK loan over a month then, for every £100 borrowed you only pay back around £25 in interest on top of the £100. Granted you’d be paying back £300 on top of the £100 you borrowed if you repaid this back over a year – but who in their right mind would want to do this anyway?! This is why payday loans have a bad reputation and why you see APRs of 1000%+.

So – ask yourself, if I need a small, quick loan are payday loans as bad as they say?

Could A Payday Loan Make Or Break Your Credit Rating?

Could A Payday Loan Make Or Break Your Credit Rating?

Find out how a payday loan could help or hinder your credit score.

Did you know that a short term loan or payday loan could make or unmake your financial future? Well maybe not… but it could help.

It’s incredible when you think about it – did you know that a payday loan can actually benefit your credit score? Well… as long as you pay it back in time and don’t default on your payments.

Payday loans are useful if you need money quickly as you never really know when you might have a financial emergency and need cash fast.

The problem is – it’s not really your money, it’s the lender’s money and, like anything you are lent – you have to give it back. In the case of a loan – that’s paid back with interest. An important point but funnily enough it’s not something that’s touched upon by credit or loan companies enough.

I guess the real question you need to ask yourself before taking out a payday loan is – “can I pay it back?” If the answer is an unquestionable “yes” – then great, however, if it’s a maybe or a flat no then my advice is – really don’t risk it. the likelihood is you’ll just end up getting in debt and harming your credit rating even more than it already is.

If you harm your credit score you will only end up harming your chances of taking out a mortgage (if you want to buy a house) or getting credit for that car you want or, in some instances simply paying for your shopping with that credit card when you’re low on funds.

This author recommends that you sit down and have a long hard think before you make a decision on whether you should consider a short-term loan or not. You have to decide whether the risk is worth it or not – the lender can’t give you that advice.