If you’re struggling to manage your finances, have mounting debts or have received letters demanding payments then you may have looked at the different debt solutions available to you.
From IVAs, to debt management plans and consolidation loans, there are so many different solutions out there that it can be difficult to know which is right for you.
With that in mind we look at some of the different debt solutions that you might have heard mentioned and explain a little more about them.
Consolidation loans are perhaps the most common debt solution available and one that you may have heard the most about.
A consolidation loan is a form of borrowing that is used to repay all of your existing creditors leaving you with only one repayment to make each month – making it easier to manage your finances.
A new flat rate state pension of £144 per week as part of government reforms has been revealed as part of the Queens speech. The Pensions Bill will come in to effect in 2016 and would create a ‘simpler state pension system that encourages saving, and provides more help for those who have spent years caring for children’ the Queen said.
The rate is worth £144 in today’s money and expected to be worth £155 by 2016. To get the new single rate pension will that will replace the current two tiered pension system people with have to contribute up to 35 years’ worth of National Insurance.
The bill also features a change to the age that UK residents can get a state pension, which will rise from 65 to 67 years old between 2026 and 2028. Married couples will no longer be able to claim a married person’s allowance worth £66 per week based on their spouses National Insurance contributions, but the time when people who are unable to work when looking after children or sick relatives will count towards them.
At times, when you are unable to find a way out financially, loans can play a huge part in saving you from imminent bankruptcy. However, when it comes to borrowing, most people do not really set any precedents for themselves before they take the money.
Remember, whenever you take a loan, you have to return it back too, with interest. Therefore, rather than borrow unnecessary amounts of money which will become difficult to pay back, it would be a wise idea to only take as much money as you can borrow.
In order to get a better idea of the amount of money that you can afford to borrow, here are a few precedents that you need to keep in mind before apply for any type of a loan:
The depression in financial market for last several years has made the monetary condition very tight for common people. Saving money is now of real challenge due to constant inflation and ever increasing price of everyday commodities. It is really difficult to arrange instant money during crisis. The urgent financial need can be for medical emergency, for settlement of an unpaid bill, college fees for children, sudden breakdown of car, a wedding ceremony to be arranged in short notice or can be for any other reason. Before people could collect money from their closed acquaintances but because of recession everyone is facing financial contingency and is not in position to help their near and dear ones. Personal loans and money borrowed against credit cards were popular option once, but those might take some time and not instantaneous. To solve this problem many money lender companies have come up with different offers of instant loans and this kind of financing is gaining much popularity now a day. Modern pay day loans or instant loans are helpful to get rid of sudden economic burden in following ways.
Recent figures from the Financial Services Compensation Scheme (FSCS) have revealed that the number of claims submitted in 2012 for mis-sold payment protection insurance (PPI) was almost double the number from 2011. Just over 11,000 claims were submitted in 2011, whilst the number jumped to more than 19,000 in 2012.
A lot of this is thought to be because of the Financial Services Authority (FSA) ruling that third party companies could become involved and make claims for people, rather than the banks only being able to deal with the customers they have defrauded directly. With people not needing to worry about the claims themselves and instead able to enter their details into a website, then have somebody else contact the bank on their behalf, many more people are coming forward to claim the money that they are entitled to.
The banks were utterly opposed to the idea of third parties getting involved, claiming that it would be unfair and that the consumers would benefit more if they went through the process themselves. However, the rocketing number of claims paints a different picture.
We are led to believe that traditional high street banks offer the best rates for customers who need to borrow. This may be true for borrowing larger amounts of money, but if you need access to smaller amounts of cash quickly, then banks don’t always offer the best terms. So is it better to borrow from a bank or an online lender? We look at the facts.
If you are short of money, and are waiting for your next pay cheque, then dipping into your banks overdraft facility might be necessary. However, to do this you will have had to organise an overdraft facility with your bank, which basically gives you permission to borrow. You pay an average annual interest rate of almost 14 per cent for using an authorised overdraft facility, and the bank can withdraw it any time, but it allows customers to dip in and out of it when funds are short. For customers with poor credit, however, who are denied an authorised overdraft facility, this may not always be possible, and that’s when the danger can occur. Spending money you don’t have by using an unauthorised overdraft can be very expensive indeed.
If you write a cheque or make a card payment when you have insufficient funds in your account, then you will be charged. However, it is also possible to fall into the red without an authorised overdraft facility in place, and that’s when things get expensive. Recent research reveals that spending money with an unauthorised overdraft can cost more than even a payday lender. Charges for using an unauthorised overdraft very according to the bank, and can be complex, but the independent Money Advice Service has calculated that you can be charged more than £100 per month.
It is more than apparent that having a good credit record is becoming more and more important. Low rate lenders such as banks, supermarkets and mainstream lenders have tightened their lending criteria’s meaning only those with immaculate credit histories will be able to get their hands on the best deals on loans and credit cards.
As part of the processing of a loan or credit card the provider will carry out a credit search on the applicant. If there are any inaccuracies such as missed payments or defaults, then this will heavily dent your chances of being approved for the best rate credit.
Prior to applying for credit it is definitely worth your time to check your credit record and there are a number of reasons for doing so:
Most items of credit will stay on your file for at least six years, so while you may have forgotten about that missed payment back in 2007, credit reference agencies won’t.
The annuities market is one that can be incredibly overwhelming, especially if you are looking at the number of different options which are available. Finding the right type of annuity can be a challenge and in many cases enlisting the help of a professional financial advisor is a great way to start this process. If you are looking to get a little bit more back than you would from a traditional annuity then you might want to look at the options that are on the table. For most people considering an annuity, an investment-backed annuity is a very real opportunity to make a little extra cash and help your annuity fund grow over time.
What types of Investment-backed annuity are available to me?
The Unit-Linked Annuity offers the potential for the highest return of all annuities, but they also involve the greatest risk and rarely have a base level for investment. If you are keen to take a risk with your investments then this could be a good option for you, but you also need to be aware and prepared to realise that with this element of risk comes the possibility that your investments could significantly drop as well.
We all do our best to save money on essentials, and one that is often overlooked for years on end is the cost of home insurance. It’s one of those things that you rarely think about, unless you’re unfortunate enough to need to put in a claim following some kind of damage or theft from your home.
So, when the renewal letter arrives, for the most part, we just file it away and the premium keeps coming out of our bank account. However, if you actually take time to look at the renewal information, you’re most likely to find that the premiums have gone up during the last year. They may not have changed by very much, but if you can spend a little time shopping around for a better quote, you may be able to make considerable savings.
When you’re getting a set of house insurance quotes from different companies, it’s important to make sure that you ask for the same level of cover each time. You should also make sure you know what optional extras have been included in the quote, otherwise you may not be getting exactly comparable quotes.
Being in debt is not the end of the world. Although large amounts of debt can make you feel as if you are no longer in control of your finances, there are options available to you that will help you to take back the reins, consolidate your debt and allow you to be free of the anxiety that can come with debt.
There are several different types of debt management, and finding the one that is appropriate for you will depend largely on the quantity of your debts and your current financial situation. The first is the least drastic and easiest to undertake: a debt management plan.
One of the chief advantages of a debt management plan is that it does not require any legal action to be taken and so is a much faster process than the two main alternatives. It simply involves you contacting a company who will then negotiate on your behalf. Because they will have an established reputation and a history of representing clients that are able to pay, these companies carry more weight and authority with the people you owe money than you, as an individual, will be able to.