Finance and Loan Guide

Those who have taken out a loan or some other form of borrowing should take the time to think about their ability to manage their finances, an industry expert has commented.

Lisa Taylor, analyst for Moneyfacts, reported that personal loans and various types of credit have become more popular over recent years as they have helped consumers to manage their finances through various peaks and troughs in their spending and allowed them to make purchases that they may not have been able to. In addition, Ms Taylor asserted that when “used wisely” products such as credit cards and loans can be a “great budgeting tool”.

However, the price comparison representative advised borrowers, if possible, to make more than the minimum repayments on their lending as otherwise they will only find their debt difficulties increasing as it takes longer to complete paying back their loan. Pointing to a fall in the level of minimum payments made, in addition to the effect of the five interest rate rises since August 2006, she reported that a rising number of Britons are on track to witness the time spent paying back their debts being spread “over a much longer period”. And by only contributing a minimal amount of money each month, Ms Taylor suggested that some consumers may not be able to cover the interest bill accrued on their borrowing.

She said: “During the last generation, we have moved from an era where credit was hard to come by, where people saved up to make large purchases and where many more people lived within their means, to now where we see credit being used by many as an essential tool to meet day-to-day living costs and to make those more expensive purchases. But by relying on plastic to supplement our income, rather than to manage our cash flow, it’s easy to see how some people can be caught in a debt cycle, facing a lifetime of debt”.

Accordingly, the Moneyfacts analyst reported that borrowers need to “take control” of their borrowing. Ms Taylor stated that by making more than the minimum repayments each month on personal loans and credit cards, consumers “can knock years off [their] debt”. It was advised that setting up a standing order could help people to manage their finances more effectively as the level of money taken out if their account each month can be set at a level with which they feel comfortable.

For those looking to supplement their spending, seeking out a cheap loan could well be an advisable option for borrowing money competitively. However, after taking out a loan consumers should look to plan their finances carefully and be aware that they need to be in a position to meet demands for repayment. Earlier this year, Susan Hannums, savings manager for AWD Chase de Vere, claimed that while borrowing via personal loans and credit cards is an attractive option for many consumers, there is a need to be “totally sensible” as they should remember that they will eventually have pay back their credit. She also advised those who are struggling with their money management to seek professional guidance as early as possible.

Tom Dawson writes for Essentially Home Loans where visitors can apply for secured loans online, we also specialise in bad credit loans for UK residents. Visit Today: http://news.essentiallyhomeloans.co.uk

Not having insurance could leave those consumers on low incomes at greater financial risk, it has been suggested.

The news comes as research carried out by the Association of British Insurers (ABI) reveals that just over a third of people (35 per cent) living in low-income homes – those households which earn less than 10,000 pounds per year – do not have any form of insurance. And with the firm suggesting that such consumers are more at risk from crime, flooding and fire than their higher-earning peers, not taking out cover may see them struggle more to meet demands on their finances such as utility bills and personal loan repayments.

In addition, the ABI revealed that 44 per cent of the poorest households have purchased home contents insurance, in comparison to the 82 per cent of Britons on median incomes (earning between 15,000 pounds and 30,000 pounds) who have the product. Overall, a third of people on low incomes have motor cover, while only a quarter have taken out life insurance.

Research from the association also showed that those consumers with an annual income of less than 5,000 pounds are 71 per cent more likely to have their homes burgled at least once, in comparison to households earning at least 30,000 pounds. Meanwhile, arson rates are some 30 times higher among people living in the most deprived communities. It was also suggested that consumers making the least amount of money per year are more susceptible to flooding.

Speaking at a seminar on financial inclusion and insurance, Stephen Haddrill, director general of the ABI, said: “Insurance provides valuable protection to people on all income levels. The poor are least able to deal with financial loss and depend most on insurance. We need to address the issue of low take-up in low-income groups. A lack of spare cash is the biggest factor holding back the purchase of insurance by lower income households.”

The association also asserted that when those on low incomes and who are without insurance have items either damaged or stolen, they have to meet the costs of replacing such goods themselves, which in turn may put pressure on their day-to-day money management. Consequently, a third of such consumers are shown to borrow, whether this be through a secured loan, credit card or other means, in a bid to meet such costs and in turn are “increasing their indebtedness”.

As a result, for those consumers looking to replace damaged goods or to get repairs on their property carried out, applying for a personal loan could be an effective way of meeting such costs. In addition, taking out a loan could also help consumers organise their finances and free up disposable income, as they could be able to pay off various debts quickly – potentially leaving them more money to buy a sufficient insurance policy. Earlier this year, Chris Tapp, associate director of Credit Action, stated that by taking the time each month to review their finances, consumers will be able to identify where their money goes and so could make payments on personal loans and other types of credit with greater efficiency.

Tom Dawson writes for Essentially Home Loans where visitors can apply for secured personal loans online, we also specialise in bad credit secured loans for UK residents. Visit Today: http://www.essentiallyhomeloans.co.uk

Spending on a loved one may see consumers developing financial difficulties, it has been suggested.

In research released by Abbey, typical Britons splash out hundreds of pounds on their partners every year. However, with an average of 1,569 pounds being spent per annum those who do not plan their budgets wisely may well see their ability to manage their money come under strain as they struggle to meet other demands on their day-to-day spending, for instance credit cards, personal loans and overdrafts. The study also indicated that 5.9 million people believe that their partner does not spend enough money on them, with 792,000 splitting up for this reason.

According to the firm, a “staggering” 1,040 pounds is taken up via eating and drinking, both out and at home, while some 224 pounds per year is spent on dates such as trips to the cinema, theatre and day excursions. Meanwhile, Christmas and birthdays – perhaps obvious times for spending on loved ones – account for 133 pounds and 95 pounds respectively.

Commenting on the figures, Steve Shore, head of banking for Abbey, said: “Love doesn’t come cheap. It costs over 1,500 pounds a year to be in a relationship and love keeps on getting more expensive as you get older.”

Research from the financial services firm also revealed that those living in the south-east of England could be set for the most pronounced difficulties in meeting loans and other borrowing repayments as a result of spending on their loved ones. Consumers from this part of the country were revealed to be splashing out the most at an average of 2,031 pounds. This compares to people living in the north of England, who with a typical expenditure of 1,285 pounds per annum, are spending the least amount of money on their partners. Meanwhile, money management problems may be rising for men as they are paying out 1,830 pounds every year. Women, on the other hand, have a typical expenditure of 1,307 pounds for their loved ones.

As a result, those people who are worried that their loved ones and other demands on their spending are causing them to struggle in managing their finances may wish to consider opting for a personal loan. Earlier this year, Sean Gardner, chief executive of MoneyExpert, advised that although few Britons are likely to get into debt difficulties due to spending a high amount of money solely on presents, “it’s worth considering whether it’s really necessary to buy expensive gifts when a small gesture can go a long way”.

And with consumers said to be “coughing up more than ever before” he urged them to take a moment to ponder their capacity to manage their money when considering buying a gift. His comments come after research from the company showed that the typical Briton spends 3.5 per cent of their salary on their partner. Watches, computers, digital cameras and jewellery were revealed to be some of the most popular gift choices. Once again, men were revealed as potentially having the greatest difficulty in servicing their finances due to gift buying, as they splash out some 71 pounds per month, with a low-rate loan one way of helping them to manage their spending.

Steve Smith writes for 1 Stop Finance Shop, where our visitors have access to all types of finance from payday loans and unsecured tenant loans, to self employed loans for homeowners.

Women are taking a greater interest in their finances, it has been suggested.

The news comes as research carried out by Sheilas’ Wheels reveals that females are becoming evermore involved in money management within the household. According to the insurance company, about two out of five women (41 per cent) take sole responsibility for handling finances, which may include areas such as utility bills, credit cards and personal loans. Meanwhile, 43 per cent of respondents split such matters equally with their partners. This compares to the 16 per cent who leave managing the household purse-strings solely to their other half.

Findings from the company also showed that women are becoming savvy when searching for motor insurance. Before picking an insurer, the typical woman is now spending two hours and seven minutes looking for the right policy. With this figure some 23 minutes behind the time taken selecting a Christmas party outfit, Sheilas’ Wheels asserted that women are starting to lend more time to thinking about finances as they do towards fashion.

Commenting on the figures, Jacky Brown, spokesperson for Sheilas’ Wheels, claimed that “women are becoming more discerning customers – they want well-priced and good quality car insurance”. Ms Brown also reported: “In terms of interest, we know that fashion will always win over finance, but it is interesting that women are now giving serious time and consideration to their insurance purchases and effectively ‘window shopping’ policies via company websites and, increasingly, price comparison sites.”

Meanwhile, just over a third (37 per cent) spend less than an hour choosing the insurance cover, although it was suggested that this could be due to the increasing use of time-saving price comparison websites. But with only half of respondents taking the time to check the small print of the policy to make sure what they are covered for, many consumers could come under financial pressure in terms of making repayments on loans and other areas of their finances, if they suddenly find that having an inadequate policy means they have to meet the cost of repairs to their vehicle.

Research from the company also showed that when researching car insurance 41 per cent of women ask their friends on their experiences and recommendations about buying cover. Some 24 per cent, meanwhile, visit money websites and read personal finance sections from newspapers.

As a result of having a more active role in both their household spending and selecting car insurance, a rising number of women could be more prepared to put their finances in greater shape for later life. However, recent research carried out by Prudential has shown that females may be on course to develop difficulties with money management in later life. The news comes as some 60 per cent of women who are currently of working age are not saving into a pension scheme with such a lack of contributions meaning that they may struggle to make payments on personal loans and utility bills as they get older. Gary Shaughnessy, managing director of retail, life and pensions for the firm, reported: “Women are the underclass when it comes to pensions.”

Abbi Rouse writes for All About Loans where visitors can apply online for personal loans. We also specialise in bad credit loans, and debt consolidation loans.

Millions of households are coming under increased financial pressure, one member of the Conservative party has suggested.

Philip Hammond, shadow chief secretary to the Treasury, reported that more consumers are beginning to struggle with their money management as they begin to feel the full impact of the 1.25 percentage points being added to the base rate of interest since August 2006. And with tax moves by prime minister Gordon Brown also claimed to have a negative effect on their disposable income, people could well see their ability to make payments on utility bills, secured loans and other demands on their finances curtailed.

He said: “Millions of hard-working families are feeling the financial pinch as the effects of higher interest rates begin to bite and their pay packets are plundered by Gordon Brown’s stealth taxes.” As a result, Mr Hammond added that it is “no wonder so many families are finding it so hard to make ends meet”.

The shadow secretary’s comments follow recent research carried out by Ingenious Securities revealing that Britons are set to face further difficulties in managing their finances over the coming months. Findings from the firm showed that in six years leading up to 2006, personal incomes rose by some 37.1 per cent. However during the same period, the level of disposable income witnessed slower growth at 30.1 per cent. It was suggested that this was due to a surge in interest payments – which is likely to incorporate areas such as secured loans and mortgages – and “escalating” social contributions.

And with these growth rates being adjusted for the effects of inflation, the typical year-on-year increase of “real” personal disposable income stands at 2.4 per cent. This in turn could see some Britons struggling to manage their capacity to make loan repayments as this figure is lower than household consumption (2.7 per cent) and the rise noted in GDP (2.5 per cent) over the course of the six-year period.

Meanwhile, the amount of borrowing Britons have outstanding, via loans and other means, surged by some 87.8 per cent between the fourth quarter of 2000 and the same time last year. However, during this period interest payments made by consumers only increased by a “comparatively modest” 42.5 per cent, this coming despite the base rate falling from six to five per cent over the period.

The company intimated that following the five interest rate increases since August 2006, consumers are set to see a greater proportion of their money go towards servicing demands for payments on personal loans and other types of borrowing. It was suggested that unless the Bank of England’s monetary policy committee reduces rates before the end of this year, a tenth of households’ annual disposable income will be spent paying loans. Consequently, Ingenious Securities asserted that “rising interest rates are putting a considerable squeeze on household cash flows”, with Britons particularly set to struggle over the course of next year.

And as the firm claims that consumers’ financial difficulties are set to rise, those worried about their ability to manage their money over the next few months could be well advised to take out a debt consolidation loan. By opting for a consolidation loan, borrowers could be able to pay a number of debts that they have built up quickly, which in turn could leave them with more disposable income. However, Peter Tutton, social policy officer for Citizens Advice, told the Observer those considering debt consolidation loans should make sure that they choose the product which is most suitable for them.

Abbi Rouse writes for All About Loans. Our visitors are offered advice and information all about loans, they can also apply online for tenant loans and secured loans for any purpose. Visit today: http://www.allaboutloans.co.uk