Lions and Loans: Why Finance Should Always be Personal

Different types of loans are available for almost every aspect of your life: personal loans, car loans, secured and unsecured loans, home loans, homeowner loans, student loans, graduate loans and career development loans (CDL). If you've suffered from credit problems in the past and now hold sub-prime characteristics, then you will be eligible for adverse credit and adverse loans.

You can always borrow money these days, but it is crucial to read the small print as the difference between interest rates is enormous and stories of people forced to pay off amounts which are five times the amount of their original loan are not uncommon.

There are also numerous stories on unemployed couples being sold loans, such as the case of Julie and Kevin Davies, reported by the BBC. The couple were already experiencing difficulty in paying off their existing debts of £4,000, when they were sold another £20,000 loan by Lloyds TSB.

Loans of £1,000 to £25,000 can be taken out and repaid over a period typically varying between six months and 10 years depending on your credit history and available finances. Loans are usually secured or unsecured. Secured loans are tied to your house, so you can be forced to sell the house if you are unable to make the repayments. Unsecured loans do not impose the same restriction, though a default on repayments may result in being "credit blacklisted". Once blacklisted, you may get future credit card, mortgages and hire purchase applications rejected, as well as face a potential higher rate of interest for all existing debts.

It is absolutely crucial that you shop around for a loan and not just through the high-street banks. The internet offers a wealth of information available and there are many sites which compare the prices of products, and to really ensure you get a good deal - compare the different comparison sites. In the UK moneyfacts, moneyextra and ( moneynet ) offer price comparison services for a wide range of loans, amongst other financial products. These sites also offer consumer information guides, which you can either print directly off the website or download on to your computer.

Do read all the terms and conditions carefully and ask friends, family and your financial adviser / bank adviser if you don't understand a particular statement. The annual percentage rate (APR) is particularly important and can make a difference of thousands of pounds over the term of the loan.

Unsecured loans can be purchased from building societies and banks, as well as certain high street shops. Unsecured loans may be taken out for something specific or simply to make life more 'comfortable'. The process usually involves:

* Requesting a typical amount for the loan

* Discussion of interest rate (APR) and possible loan payment protection insurance

* A credit check, you may wish to get one of these first, so you know what to expect

* Reading the terms and conditions and then signing the agreement

* Money can then be transferred into your account

In the discussion of secured versus unsecured loans, moneynet explains that although secured loans can offer lower interest rates and repayments, many people do not wish to jeopardise the potential loss of their home in the default of a repayment of a secured loan. In unsecured loans, pay attention to the difference in APR, term of the loan and any additional charges such as an early settlement charge or redemption penalty.

Resources:
Mortgage and loan comparisons - Moneynet
Personal finance blog Cashzilla

About Rachel Lane:
Rachel writes for the personal finance blog Cashzilla:
Rachel is a disillusioned, disaffected and broke graduate, exploiting new media for financial therapy.

E-mail: rachel@positiveinterest.com or online@moneynet.co.uk

Phone: 0131 561 2251

Latest News


The Star-Ledger - NJ.com
General Growth gets 2-week reprieve on loans
Chicago Tribune, United States - 1 hour ago
The real estate investment trust said it and the syndicate of lenders "are continuing their discussions" on a longer-term extension to the loan, ...
GGP Gains Two-Week Extension on $900M Loans GlobeSt. com
General Growth gets 2-week extension on $900 million in loans Chicago Daily Herald
General Growth Properties gets loan extension Bizjournals.com
The Associated Press - Reuters
all 121 news articles

Wall Street Journal Blogs
Restoring the flow of credit to entrepreneurs
Los Angeles Times, CA - 10 hours ago
A Treasury Department program aims to make it easier for lenders to find buyers for the loans they make. By Cyndia Zwahlen The credit crunch looks like an ...
Forbes: Let the Small Business Administration work Austin American-Statesman
SBA Applauds Treasury Action to Bolster Secondary Market for Small ... MarketWatch
Feds hope to unfreeze SBA, consumer lending Bizjournals.com
Wisconsin State Journal - FOXBusiness
all 123 news articles

Straits Times
Government plans new credit, mortgage programs
O Jornal, MA - 28 minutes ago
The Fed program for consumer debt will lend up to $200 billion to the holders of securities backed by various types of consumer loans such as credit cards, ...
Lenders Become Proactive New York Times
Mortgage relief gets stuck Cape Cod Times
Partisan blame for financial crisis not so easily affixed Las Vegas Sun
TheStreet.com - Washington Post
all 2,138 news articles

New York Times
Turning Around the Idea of Student Loans
New York Times, United States - 11 hours ago
“This is a five-year loan, and that helps ensure a certain amount of longevity for this project.” Justin said he first became interested in poverty issues ...

Ottawa Citizen
The Fed boosted emergency loans to banks and firms
The Associated Press - Nov 28, 2008
The report also said investment firms borrowed an average of $52.4 billion from the Fed's emergency loan program over the week ending Wednesday, ...
Fed Commercial Paper Holdings Rise to $295.1 Billion (Update2) Bloomberg
Bailout Report Card--A Failing Grade and a Frightening Outlook for ... The Cutting Edge
"Oops, We Meant $7 TRILLION!" What Hank and Ben Are Up to and How ... OpEdNews
Examiner.com - CNNMoney.com
all 454 news articles

Student debt levels portend rising loan default rates
Indianapolis Star, United States - 8 hours ago
They were aiming to win big so they could pay off their student loans. "If you don't try, you can't win," said Brown, a 26-year-old marketing consultant. ...

Hedge Fund Manager Hendry Bets on Deflation With UK War Loans
Bloomberg - 2 hours ago
The “Jolly Long Bond,” as Hendry calls the war loan, will be the most reactive to deflation because not having a maturity means it has long duration, ...

Loss of college loans lender may have little effect
Spartanburg Herald Journal (subscription), SC - 3 hours ago
The financial aid director for Spartanburg Community College stressed that these types of supplemental loans are separate from the Stafford Federal Student ...

Detroit's Big 3 Will Try Again To Get Federal Loans
NPR - 4 hours ago
They're going to try, again, to convince Congress to give them federal loans. They say they need the money to avoid an industry collapse. ...

Boston Globe
Problem-solver
Boston Globe, United States - 8 hours ago
Bair's plan to systematically modify 2.2 million loans for defaulting borrowers has drawn widespread support - except from the Bush White House. ...
Avoiding your own mortgage collapse The News Journal
Efforts are under way to head off foreclosure Philadelphia Inquirer
all 4 news articles

Resources