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01/27/16 Debt

Top Five Benefits of a Guarantor Loan

contract-945619_640Whether you need some emergency funding for car repairs, home improvements or to tide you over until the next payday, there are many financial options available. From secured loans ideal for homeowners looking to borrow large amounts to getting financial help from friends and family, the best method will depend on your circumstances.

Guarantor loans are one possibility and offer a range of advantages, especially for those who feel they have nowhere else to turn for financial help. Read on to learn more about the benefits of considering such an option.

Easily Accessible

Guarantor loans were designed for people struggling to borrow money from other sources due to having a poor credit score. As long as you can find someone over the age of 25 with a good credit rating to be your guarantor and you yourself are not bankrupt, in an IVA or debt management plan, then getting a guarantor loan is an option for anyone to consider. You do need to be able to afford repayments but the chances of being successful are much higher.

Borrow High Amounts

Due to having a guarantor who is used as a kind of safety net by the lender in case you cannot meet the repayments, these types of loan allow you to borrow large amounts. If your guarantor is a homeowner the amount able to borrow will be larger than if they are a tenant, making it a better choice if you need the money for expensive purchases.

Quick Approval

The process of taking out a guarantor loan is relatively quick, with most processed and the amount deposited in accounts less than 24 hours after a successful application has been made.  If you’ve sourced a guarantor and are in need of an unsecured loan, this offers a great solution.

Longer Terms

The repayment terms will depend on how much you borrow and how much you can afford to repay over the coming months. They are usually very flexible, with some guarantor loans lasting up to seven years where required, as opposed to payday loans usual 30-day deadlines.

Low Default Rates

Compared with its main rival of payday loans, guarantor loans generate far fewer problems. According to Citizens Advice they received just over 500 problems with them from April 2012 to 2015, compared with 29,000 regarding payday loans during the same period. While it is a smaller market this still shows a significantly less problematic area for borrowing.

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10/22/15 Debt , Insurance , Personal Finance # , , , , , ,

25 Worst Financial Mistakes Anyone Can Make

25 Worst Financial Mistakes Anyone Can Make

Anyone can make a mistake. They’re part of everyday life. Financial mistakes, however, can lead to problems for years to come if not corrected soon.

After talking to financial experts and others who have either experienced or seen other people make the worst financial mistakes of their lives, we compiled the following list of 25 of them. Many are common after graduating from college and starting a financial life on your own, but they can still happen to anyone at any age.

We should also note that these worst financial mistakes aren’t listed in any order. We’ll leave measuring their importance to you:

25 Worst Financial Mistakes

 

1. Not going to college

The average starting salary for a high school graduate is about $28,000. That figure almost doubles to $48,127 for college graduates in the class of 2014 with bachelor’s degrees, according to a salary survey by National Association of Colleges and Employers. Starting your working life by being that far behind in pay is one of the worst financial mistakes you can make.

2. Not paying off student loans fast

The average student loan debt for a college graduate is $28,400, according to the Institute for College Access and Success.

For a college grad who is earning some real money after four or more years of living like a student, it can be tempting to spend much of their new income before paying off debt. That’s one of the worst financial mistakes a graduate can make, says Alfred Poor, a college speaker and author of books about problems young people are having in the workplace.

“If college graduates tighten their belts and lower their expectations, and live like they only have the high school diploma, they will rapidly pay off their average $27,000 in student loans,” Poor says. “If they spend their whole salary on a more comfortable lifestyle, they could be struggling to pay off that debt for decades, and end up paying much more in interest.”

3. Paying off student loans too quickly

Paying off student loans quickly can also have a downside, says Steven Fox, a financial planner in San Diego with NextGenFinancialPlanning.com. If they use all of their extra income paying off student loans, they could be in financial trouble if they don’t put some in an emergency fund and lose their job or get in a car accident and have unexpected medical expenses, Fox says.

“They should really think about whether they should pay off their student loans as fast as they possibly can once they get their first job if it means that they’re doing so at the expense of not saving or investing anything,” he says. “Ending up with zero debt is good, but ending up with zero savings is very bad.”

An emergency could lead to borrowing money at a higher rate than what they were paying on student loans, says Fox, who reminds graduates that student loan interest is tax deductible for up to $2,500 for individuals making $80,000 or less without having to itemize. Continue reading

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10/13/15 Debt , Personal Finance # , , , , , ,

Comparison Shopping Not So Popular for Big Ticket Items

Comparison Shopping Not So Popular for Big Ticket Items

Years ago when I was a business desk copy editor at a newspaper, I was amazed at how often the paper wrote about gas price increases and the best places to shop for gas. Long before the GasBuddy app was available, the newspaper put out a regular graphic on where the lowest gas prices were in the area, and regularly interviewed shoppers about comparison shopping for gas.

We didn’t do as much reporting on the changes in milk prices, showing readers where the best prices for a gallon of milk were. Milk and other groceries were regular household expenses, but they didn’t warrant the attention that gas prices did.

Comparison shopping for everyday expenses such as gas is common among American shoppers, but not so big for big ticket items such as buying a new car or taking out a personal loan or mortgage, according to a recent survey by LendingTree.

Shopping for gas, but not auto loan

More than 80 percent of people surveyed said they’d go out of their way to save 10 cents per gallon on gas, but only 17 percent of car owners negotiated the interest rate when financing a new vehicle, the survey found.

More than 67 percent use comparison shopping websites for electronics and airfare, while 14 percent do the same for loans. Continue reading

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09/22/15 Debt , Saving # , , , , , ,

3 Financial Habits to Start Before Fed Raises Interest Rates

3 Financial Habits to Start Before Fed Raises Interest Rates

Predicting if and when the Federal Reserve will raise interest rates is a fool’s game, though plenty of people try doing it.

Last week’s inaction by the Fed to hold interest rates where they are may prolong global uncertainty, though it’s a global uncertainty that has been around since the last time the Fed raised interest rates in 2006. Its main interest rate has remained practically zero since then.

The Washington Post reported that some Fed officials expect interest rates to be raised sometime this year — which leaves only four months. Its top officials are scheduled to meet twice more in 2015: October and December.

3 ways to beat the Fed

If interest rates do rise this year, there are some financial habits worth starting now in preparation for the rise. Here are three: Continue reading

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13/01/15 Debt , Personal Finance #

Put Your Debt Resolution in Writing

Put Your Debt Resolution in Writing

debt resolution

I’m not a big fan of contests, but The Debt Myth has a simple giveaway around the topic of a debt resolution that resonates so well with me as a personal finance writer that I wanted to share it here.

As part of her “Debt is Not Forever” movement, Jackie Beck is giving away $25 in a random drawing to people who write down their debt resolution. I wrote my debt resolution on a post-it note.

The chance to win only $25 isn’t what appeals to me (though that’s a nice lunch out with my wife), but the idea behind putting such a resolution in writing. I’ve shared my note on Twitter, which is one way to enter. You can also share it on Pinterest or Instagram with the hashtag #DebtIsNotForever. Her website also has a widget to enter a photo in the contest. Beck will share them later in a collage.

Living up to your words can take a lot of effort. Writing them down can make them a lot easier to remember and follow through on.

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Hi, I'm Aaron Crowe. Welcome to CashSmarter. I'm a personal finance freelance writer who enjoys spending my money wisely and using minimalism to make my money last longer while increasing income.