Which payday loan is best for
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Which payday loan is best for people with bad credit?
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Taking a closer look at Debt consolidation loans and how they can help ease your finances
Clearing all your debts can be a daunting task especially if they come in an assortment. If you have credit card balances, cash advances, and other credit obligations that have become quite a handful to manage, debt consolidations could be the answer to your problem. Through a debt consolidation loan, you can transform any and all existing debts into one, more affordable, and easy to pay off loan making your finances a whole lot easier.
How debt consolidation loans work
Debt consolidation loans are designed to make managing debt a lot easier and more efficient. This is because instead of covering multiple small loans with different payment terms, you will only be dealing with one large loan with a single payment term. This also means that you will only be working with a single lender relieving you from all the stress and anxiety in catering numerous calls and letters from companies demanding payment for the money that you borrowed. On top of this great convenience, you can also save more money if the overall cost of your debt consolidation loan is cheaper than the combined costs of your existing debts.
Two types of debt consolidation loans in the UK
There are plenty of reputable lenders in the UK that offer debt consolidation loans to qualified borrowers, from traditional institutions like banks and credit unions to more recent ones like online lenders. There are also several options that you can consider, from personal loans to home equity loans, but all in all, these options fall into two categories:
- Unsecured debt consolidation loans – Majority of loans designed for consolidating debt are unsecured wherein there is no asset or collateral that is tied to the credit agreement. However, this means that you will need to be credit worthy to become qualified. For people with problematic credit histories, they may struggle securing unsecured debt consolidation loans especially if they come from banks and credit unions.
- Secured debt consolidation loans – Secured forms of debt consolidation loans are tied on one of your assets like your home, vehicle, or bank deposit. This provides security to the lender in the event of a default and this in turn will help you unlock large amounts of credit for the lowest interest rates available. The most important thing to consider with this type of option is to make sure that you can maintain the proper repayments so you won’t risk losing the asset that you offer as collateral.
Benefits of debt consolidation Loans
There are also several benefits that you can expect to enjoy with debt consolidation loans. When you take out the financial products, you can help yourself and your finances through:
- Lesser overall payments – You can take out a debt consolidation loan with a longer payment term that is easy to budget. Majority of borrowers generally clear the minimum amount permitted on their present debts which means paying off the interest rate payments and leaving the principal amount so it won’t incur more costs. This gives you enough time to come up with money and budget needed to pay off all your debts minus the possible fees and penalties involved in late and missed payments.
- Better credit score – Taking out a debt consolidation loan to clear off all your existing debts will paint a positive picture in your credit history and consequently add more points on your overall credit score. And so long as you manage to stick to the agreed payment terms and conditions of your new loan that you use to consolidate your debts, you are well on your way to enjoying a healthy financial life.
- Save money – There are plenty of debts that have high interest rates and if you are currently shouldering them, then relying on cheaper and more manageable debt consolidation loans will allow you to save money both in the short-run and in the long-run.
Some drawbacks that you might want to consider
There are certainly a number of advantages that you can expect to enjoy with debt consolidation loans. But just like any other type of loan or product, there are also a few drawbacks that you might need to be aware of and they include:
- A more expensive interest rate – Debt consolidation loans can be cheap if you have a stellar credit rating or have a high value asset to secure your credit agreement. If you neither have both however, then it would be difficult to secure a low interest rate loan for debt consolidation.
- Potential advance payment fees – Debt consolidation loans are quite flexible in a way that many lenders are willing to allow you to pay off the money that you borrowed in advance so you can save money from reduced interest rate payments. However, it’s not always the case as there are also lenders who allow this feature for a certain fee or charge. Be sure to review the terms and conditions of your loan agreement so you will know if there are indeed charges for making early repayments.
- Longer terms – Debt consolidation loans tend to have longer payment terms and this means years of shouldering debt. If you are not comfortable with such a scenario, then it might be best to stick with your debts especially if they are all short-term forms of credit.
Obtaining debt consolidation loans in the UK
Before you apply for debt consolidation loans in the UK, it might be best to check if you are qualified first to ensure that your application won’t become rejected. To determine your eligibility for a debt consolidation loan, the lender will typically review all the present debts that you have and evaluate your overall credit worthiness as well.
For borrowers with poor credit histories, lenders may only cater their loan requests if there is security in place like collateral or a guarantor. If you are someone who has an excellent credit standing however, you can become eligible for numerous types of unsecured debt consolidation loans.
Overall, when you apply for a debt consolidation loan, the lender will normally check:
- How much you want to take out
- Your personal credit score and history
- The payment term that you choose
If you manage to pass all these three aspects, getting qualified for debt consolidation loans would be easy.
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Representative Example: £160 loan for 15 days at a fixed interest rate of 290% pa. Total amount payable is £179.07 in one single repayment. This is based on the amount of credit plus interest, no other fees apply. Representative APR 1449%
Employees are the drivers of the global economy. They comprise a large percentage of the workforce, and the world will stop without them. If you’re going to analyze deeply, you’ll realize that all of us are employees. We are working for someone else – be it a boss, an organization, or a contractor. Employees are good demographic points because they tend to experience financial troubles more often. It could be that employees are also parents, or they need quick cash to survive until the next payday. In fact, the borrowing habits of employees empowered payday loans (that’s why they called ‘payday’). Employee-centric payday loans don’t have much difference from the cash advance programs of the past, though some lenders have made adjustments. Employee payday loans probably have a smaller interest rate stretched over a manageable repayment period. Lenders can also work hand in hand with employers to increase awareness for employees.
Freelancers on A Budget
The global freelancing community is starting to gain important traction this 2017. In fact, thousands of people are now resorting to freelancing because of the awaiting opportunities in the market. Freelancers are like hunters – they’re actively chasing big game, occasionally hitting and, oftentimes, failing. New payday lenders have understood the need for freelancer-specific loans, though only a few of them are following suit. Perhaps freelancing still needs to be recognized as a tangible income source in the payday lending arena. Another angle is the way people are tagging themselves as ‘freelancers’ even though they don’t have any jobs or income sources. This is why some lenders will look for additional income proofs whenever they encounter freelancers applying for payday loans. Nevertheless, we’re going to see lots of payday loans geared towards freelancers on a budget this year.
Being an entrepreneur today is no longer a side path – it’s necessary for the betterment of your life someday. Once you have a winning idea and transformed it into a plan, you can focus on acquiring capital. If your startup business is not that big, you can settle for a payday loan. Payday lenders can release your money in just minutes. They won’t care about your credit rating or the nature of your business (somehow). What they want to know is if you’re capable of repaying the loan within the agreed time frame. Once you got your payday loan, your business operation can be ignited and you’ll start raking profits in no time. Just remember to allow some of those profits towards your loan repayment. An unpaid payday loan can bring too much stress.
You may think that big-time investors are going after large, bank-issued loans. Well, you’re right. A stock investor, for example, needs big loans if he wants to participate in a growing market. The same can be said for antique collectors and coin enthusiasts. However, we can’t deny the fact that investors also start small. In this sense, small-time investors can use payday loans to fund their investments. Whether they make a killing or not, investors can see potential attention from new payday lending companies.
Once you understand all of these demographic points, you’ll know how lenders are adjusting their operations strategically. At one point, they may pursue better marketing efforts while compromising other areas. Despite this, it’s still important to find a lender that attains a great form of balance among all of these demographic areas.
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