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Which Loan Is Right For You?

Which Loan Is Right For You?

Which Loan Is Right For You?

There are many different types of loans available on the market today. Each one has its pros and cons, depending on your personal circumstances. Creditwindow works closely with a wide range of loan and credit card providers who offer various different financial products. In addition to this, many of our lenders will even consider applicants who have a poor credit history.

  1. Payday Loans
  2. Personal Loans
  3. Guarantor Loans
  4. Logbook Loans
  5. Credit Cards
  6. Debt Consolidation Loans

1. Payday Loans

A payday loan is a fast, short-term solution to a temporary financial problem such as car repairs, unpaid bills, etc. You only borrow the money for a few weeks, so you’re not being faced with long-term debts, as you would with a longer term solution such as a guarantor loan.

Most payday lenders offer loans between £80 and £1000, as long as you meet their lending criteria and can demonstrate that, when payday arrives, you will be able to repay the debt plus the amount of interest charged. Payday loans are easy to apply for and the money is paid direct into your bank account the same day (with few exceptions).

2. Personal Loans

A personal loan is a way of borrowing money over a fixed period at an agreed interest rate. You repay a fixed amount each month (or each week, with some loans), which includes part of the capital borrowed plus interest. Personal loans are usually taken out for periods of between one and five years.

Most personal loans are for larger sums than that offered by payday loans, between £5,000 to £15,000 is common. There are two types of personal loan; secured and unsecured. With a secured loan you use an asset, such as your car or your house – as security on the loan, and if you don’t repay the loan you could lose that asset. With an unsecured loan you do not need to provide any form of security. Personal loans have much lower interest rates than payday loans, logbook loans or credit cards.

3. Guarantor Loans

A guarantor loan is another form of personal loan – usually up to £3,000 (but some lenders can offer more). Unlike secured loans you are not asked to provide any collateral as security. Instead, you are asked to provide a guarantor; somebody who knows you and who is willing and able to pay the loan if you are unable to do so.

The guarantor should be someone who knows you very well, a close friend or even a member of your family, for example. If they agree to act as your guarantor, they trust that you are able to repay the loan but they accept that there may be a risk that they will need to pay it if you fail to do so.

4. Logbook Loans

Logbook loans are a short-term solution without the need for credit checks. Instead, the logbook loan is secured against your car or van, which you can still drive throughout the loan period.

Depending on the value of your vehicle, logbook loan providers can lend anything between £500 to £100,000 (in very few instances) which you repay over an agreed period, making regular repayments on a weekly or monthly basis. Logbook loans are usually paid out on the same day that you apply, which is perfect in an emergency. If you fail to repay the logbook loan, you run the risk of the lender repossessing your car.

5. Credit Cards

When used responsibly, a credit card is a really useful, easily accessible way of borrowing money, as well as being a secure way to pay for items. If you repay the balance in full each month you could use your credit card to borrow money interest-free for an extended period, and some credit card providers offer a range of other benefits,
such as cashback, air miles, points for loyalty schemes, product discounts, etc.

Credit cards are accepted by many different types of online and offline retailers, including shops, pubs, petrol stations, cinemas, etc. Credit cards can often be used all over the UK as well as abroad. In addition to this you also have the option of using credit cards to withdraw cash from cash machines.

6. Debt Management Loans

A debt management loan consolidates numerous debts into one manageable cost. It covers the total cost of all your other loans and debts, including early settlement charges that you may incur. Essentially all your other loans are settled by a debt management company and you pay that company each month rather than each of
the individual lenders.

If you’re juggling a number of debts, with differing interest rates, to a
variety of lenders, then having just a single payment is much easier to handle. In addition to this, depending on the interest rates you are being charged by those original creditors, a debt consolidation loan could prove to be a much better option, as the rate could be much lower.

Guarantor Loans – what are they and how can they help?

With the introduction of Guarantor Loans, finding an unsecured loan despite a poor credit score has become even easier than ever before.

Guarantor loans are a specialist form of personal loan that allows borrowers with a weak credit history to get a loan of between £1000 – £3000. As long as you can find someone to act as a guarantor and back your application then there is a strong likelihood that you will be accepted and allowed to borrow an agreed amount.

Since Guarantor loans are effectively an unsecured loan, meaning that the loan isn’t secured against property or some other asset, they are particularly well suited to the following types of individuals:

  • Homeowners – with equity or without in their property
  • Tenants – either private of local council authority
  • Borrowers co-habiting with members of their family

Most importantly credit scores are not used to underwrite a guarantor loan application and, in each case, many lenders will review each case. This is always carried out by a financial expert who understands the lending industry and issues faced by many consumers, especially in the current economic climate.

Alternatives to Guarantor Loans:

Payday Loans

Logbook Loans

Guarantor loans – what are they and how do they work?

What are Guarantor Loans?

Guarantor loans are essentially unsecured loans that are backed-up by a third party, who promises to pay back debt on behalf of an individual should they be unable, for whatever reason, to continue making payments.

In some instances banks will act as guarantors on behalf of select client, however, it’s not unheard of private individuals to serve as guarantors and promise to repay debt on unsecured loans should the borrower default in their payments. Guarantor loans are the most ideal form of borrowing for people with a poor credit history as they are unlikely to qualify for loans by themselves, based solely on their credit rating.

So who can be a Guarantor?

Pretty much anyone can be a guarantor – from friends and family to complete strangers. As long as their credit rating, references and expenses all add-up they can qualify to be your guarantor. As soon as the guarantor is approved the borrower can receive the credit. However, should the borrower fail to pay the loan the guarantor automatically becomes liable for the debt.

If you are thinking about taking out an unsecured guarantor loan then it’s vitally important that you take many of these factors into consideration, however, it’s also an excellent way of improving your credit rating if you can keep up with the monthly repayments.

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

Poor Credit Rating? Consider A Guarantor Loan

Poor Credit Rating? Consider A Guarantor Loan

Have you got a poor credit score and need money to start a business, buy a car or something else entirely - consider a guarantor loan to help get you started.

A lot of the personal loans or short term loans available for people with a bad credit rating tend to have high interest rates (APR).

Fortunately, the likes of guarantor loans have interest rates that are around the same as standard high-street bank loans. However, guarantor loans are for people with poor credit scores, unlike a standard unsecured loan from a bank.

Guarantor loans are growing in popularity, especially since they can offer larger loans over a longer period than standard short-term or payday loans. They’re especially good for young adults who want to take out a loan but don’t have the hottest credit rating. Essentially a parent or guardian can act as a “guarantor” for them so that, if they’re unable to repay the loan, the parent or guardian takes on the debt and repays it on their behalf.

This is probably the only significant downfall of a guarantor loan – you have to rely on the fact that your parent, guardian or friend will repay the loan if you can’t. You should only really consider this type of debt if you’re reasonably confident that you will be able to repay it or that your loan guarantor will be able to repay it if you’re unable to.

Its worth remembering that, unlike a payday loan, a guarantor loan can pay anything up to around £10,000 or more in some instances. It’s merely reliant on the good-word, financial status and credit history of your guarantor…

It probably sounds like quite a lot of hard-work – and it is, it’s no online payday loan application that’s for sure! But, if you need to improve your credit score and you need a large sum to buy a car, start a business or simply need to get yourself out of a rut then it might be worth considering.

Get A Guarantor Loan >>

A Quick Guide To Personal Loans

A Quick Guide To Personal Loans - unsecured loans, secured loans and guarantor loans.

A Quick Guide To Personal Loans - find out more about unsecured, secured and guarantor loans.

Unlike payday loans, personal loans are larger sums of money that you borrow over a long period of time.

The interest costs for personal loans can vary from lender to lender and will depend on whether the loan is secured or unsecured.

What is a Secured Loan?

A secured loan is a loan that is secured against an asset, such as your car or even home. If you are unable to repay the loan, the lender can sell your asset as a way of getting it’s money back. Whilst the APR interest rate on a secured loan tends to be less there could be additional fees and charges.

What is an Unsecured Loan?

Unlike a secured loan, an unsecured loan does not need an asset to guarantee the loan against. However, like any form of borrowing, you will need to repay the loan in full. If you fail to repay it the lender could take legal action against you in order to get its money back. It’s vital that you repay an unsecured loan in full as, if you default, your credit score could be severely damaged – meaning that you could be barred from taking out credit cards or personal loans for a number of years.

However, there are alternatives to unsecured loans, such as guarantor loans.

The only difference with guarantor loans is that they are secured against the word of a “guarantor” (a person who promises to repay the loan on behalf of the borrower). Whilst this tends to be a good form of borrowing, if neither you or your guarantor are unable to repay the loan then there could be serious implications.

In spite of the obvious advantages and disadvantages of each form of borrowing mentioned here, the main advantage is the positive affect they could have on your credit score if you repay them in a timely manner.

As a consumer you have a duty to protect your own interests and understanding the benefits of pitfalls of different types of lending is a significant step in the right direction.

To find out more about borrowing money and finding the right product for you, check out our other financial guides:

Book Your Way To a Cheaper Summer Holiday With a Prepaid Mastercard

Pre-paid debit cards could help cut the cost of summer holidays.

Pre-paid debit cards could help cut the cost of summer holidays.

With people struggling to cope with rising bills for everything from food to electricity, many will probably be thinking of having their holiday at home this summer. But getting away from it all can be very important, and if consumers play their (plastic) cards carefully, they might enjoy a holiday for less than they thought.

It’s possible to start saving with a MasterCard® prepaid debit card from the moment a flight is booked. For example, the Ryanair £5 each way booking fee can be avoided if a prepaid MasterCard is used to pay for the airfares. So straightaway there’s a saving of £40 for a family of four booking return tickets straight-away.

Some prepaid cards, such as the Cashplus Prepaid Gold MasterCard, even provide access to a Cashback site with some truly amazing offers – for example up to 25% Cashback on flights booked through TravelSpec.

Prepaid cards can also help travellers to avoid the risk involved with carrying large amounts of cash around. The customer just loads up a prepaid card before they leave the UK and then uses it at cash machines abroad to withdraw their money in the local currency. A traveller could use a prepaid card with a GBP account anywhere around the world that their card is accepted, or they could choose a card already in the currency of the country being visited. For example, Cashplus offer both a Euro currency card and a US Dollar card. These cards are linked to the cardholder’s GBP account, making it easy to move money to and from their currency card(s) online – at home or whilst abroad.

As well as saving money, prepaid cards can help prevent people from losing money. After all, if you lose cash it’s usually lost forever! But if a currency card is lost or stolen whilst abroad, the cardholder can just phone the card provider to cancel the card. As long as the card has been used sensibly, in line with the providers’ Terms and Conditions, the money on the card when it was lost can simply be transferred onto a new card, or into their GBP account.

Prepaid currency cards aren’t just a convenient way to carry travel money, they can also offer a good foreign exchange rate. Some currency cards, such as those offered under the Cashplus brand, can save you money by not charging a foreign exchange (FX) fee, and the card is even provided for free!

A prepaid card could also help travellers to stick to their budget by reducing the risk of overspending. Cardholders just top up their card with the amount that they can sensibly afford to spend whilst abroad – the cardholder can’t start spending money that they don’t have.

Finally, it’s worth considering that over the last couple of years, over 60 airlines and holiday companies have gone bust, leaving many people stranded or out of pocket*. But booking with certain prepaid cards can save an awful lot of money and worry as they can offer Free Purchase Protection, designed to help consumers get their money back if the worst happens – from holiday companies becoming bankrupt to buying something that turns out to be faulty. This type of protection is rarely offered with debit cards.

So people wanting to enjoy a cheaper holiday, with travel money at a great exchange rate and with protection from ailing airlines should give their wallet a break with prepaid cards.

If you’re looking for a pre-paid card to suit your needs why not compare pre-paid debit cards with Creditwindow.

*Source: www.themoneystop.co.uk/052010/are-you-protected-if-your-airline-goes-bust.html

Guest Author: MyCashPlus

Ten Top Tips When Getting A Guarantor Loan

Top ten tips for getting a guarantor loan

Top ten tips for getting a guarantor loan

If you’re considering taking out a guarantor loan take a read of our ten top tips beforehand – always make sure you understand what you’re signing up to before applying.

1. Ensure that you have someone who is ready and willing to act as a
guarantor for your loan before you apply.

2. Always make sure that your guarantor is a reliable candidate and they would be in a position to pay back the loan should the unthinkable happen and you’re unable to pay it back yourself.

3. Check that your guarantor has a good credit score with no recent history of bad debts or CCJs (county court judgements).

4. It’s vital that your guarantor understands the risk involved when acting as a guarantor for your loan. They have to fully appreciate that, should you be in a position where you can’t pay the loan back, they will be asked to re-pay the amount in full.

5. A guarantor loan is essentially an unsecured loan that is based on the guarantor’s credit score, not the applicant. As a result guarantors with a good credit score should be able to obtain the borrower a low rate of interest, potentially making the re-payments lower than with other forms of lending.

6. Make sure that you, the borrower, has the funds to pay the guarantor loan back once the lending period expires. Never rush into obtaining a loan if you feel that you may find yourself struggling.

7. Some loan brokers may demand an upfront fee for looking for a loan for you. If you find this to be the case then avoid applying through them at all costs – remember a fee is NOT A GUARANTEE that you will get a loan. Only pay a fee to a loan broker after you have the loan confirmed and you have taken it out.

8. Always give your correct contact details. Whilst this may sound silly it’s surprising how many people give out false details. Without accurate information you will be unable to obtain a loan and this could potentially leave you out of pocket – especially if you pay for a service you never receive!

9. Failure to repay a guarantor loan will impact your personal credit score so it is in your best interests to ensure that you are able to re-pay this as it will open up other ways of borrowing in future.

10. Guarantor loans are NOT quick, short term solutions and therefore they may take a little longer to process (it can take around a week to receive the loan). If you’re looking for a short term loan then you may want to consider a payday loan or credit card as an alternative.

Finally we strongly encourage you to thoroughly read through any loan agreement/contract before signing anything (digitally or otherwise).

Get a Guarantor Loan >>

Image: renjith krishnan / FreeDigitalPhotos.net

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Credit Much Harder To Obtain

Credit cards and secured loans are proving a lot harder to obtain

Credit cards and secured loans are proving a lot harder to obtain - but there are alternatives!

Recently many financial researchers appear to be indicating that the rules surrounding credit cards and secured loans are becoming increasingly strict. In addition to this a number of lenders are increasing their interest rates – most notably the average APR on a credit card sits at 18.9%. This is the highest it’s been in 13 years!

Unfortunately this is understandable – with the economy being the way it is and unemployment still rising, there is an increasing danger that customers will default on their credit card payments.

As a result a number of consumers with poor credit scores are finding it a far harder to obtain the finances they need. But are there other options available to them? Let’s take a look:

• Payday Loans

Advantages
• Usually you can apply for the payday loan and have it in your bank account the same day.

• You only borrow what you can afford to pay back at the end of the month.

• Most payday lenders won’t ask you to supply them with documents as they want the process to be as quick as possible.

• No credit checks – they take other factors into account such as – how much you earn and whether you work regularly.

Disadvantages
• Loans are relatively small and can range from any between £80 – £1,000. Usually first time borrowers can only borrow a small amount.

• You may be unable to pay it back at the end of the month, in which case you can defer it over a period of a few months, however, interest rates go up month-on-month.

• Interest rates on a payday loan can appear very high, however, it’s worth bearing in mind that the lender calculates an APR (annual percentage rate). The APR does not apply to a payday loan as the customer (usually) pays the loan off at the end of the month. In effect you end up paying around 20 – 25% interest on a loan.

• Payday Loans will not help re-build your credit score.

• Guarantor Loans

Advantages
• Many guarantor loan companies will not credit score, instead they base their decision on whether or not the loan applicant can provide a guarantor (somebody who promises to pay the loan back if the borrower is unable to).

• Interest rates tend to be quite reasonable on a guarantor loan – usually around 20 – 25% APR typical.

• The borrower can usually borrow a substantial amount (it can be in excess of £10,000 or more if they wish) over a period of time.

Disadvantages
• The loan applicant needs to find a guarantor willing to pay the loan back if they are unable to.

• If the borrower is unable to pay the loan back the debt falls upon the guarantor who promised to on their behalf.

• Borrower requires a bank account and debit card.

• Can be time-consuming to obtain a guarantor loan.

• Guarantor Loans will not help re-build your credit score.

• Pre-Paid Cards

Advantages
• You “top-up” your pre-paid card with your own money – therefore you aren’t actually borrowing any money and have no obligations to pay them off at the end of every month.

• You only top-up the cards with what you can afford – a very good way of controlling your cash-flow.

• Very useful for teenagers or students – the parent can set the balance on the card so that they never go overdrawn, owing money, etc.

• Can be used abroad in the same way as a credit card as they are usually Visa or Mastercard.

• Bank accounts and debit cards are not required to take out a pre-paid card.

Disadvantages
• Pre-paid cards will not help improve your credit score.

• Has to be topped up with your own money before you use it.

• They may include “load fees” for each time you add money to your pre-paid debit card. However, having an employer deposit money directly into these cards could help you avoid these fees.

• You may get charged a fee for withdrawing money from an ATM (cash machine).

Related links:

To find out more about the credit issue you may also be interested to read:

Credit Card Interest Rates Sky-Rocket

Welcome to the Creditwindow blog

Hi and welcome to the official www.creditwindow.co.uk blog.

Creditwindow was originally setup as a consumer finance price comparison website. However, as time has gone on we have developed into something else entirely!

So, just what is Creditwindow and what is it’s point?

Creditwindow is being developed as a reliable source of financial news, advice and guidance to the British public, whilst still being a great place to search for financial products, from credit cards and bank accounts to guarantor loans, debt management services and more…

To find out more about some of the financial products we offer check out the following sections:

Personal Loans
Credit Cards
Guarantor Loans
Payday Loans
Debt Management
Credit Rating Services