Is it Worth Getting a Guarantor Loan?

A guarantor loan is offered to someone who has a poor credit record but can find someone who will be willing to cover their repayments should they not be able to make them. These loans are growing in popularity with first times borrowers, who have not yet built up a credit record and those that have been in debt trouble before and therefore have a poor credit record. However, are they a loan that is worth getting?

Cost

The first thing to consider when looking at any form of borrowing is the cost. Obviously you will see the percentage of interest, but this does not always tell the full story. It is wise to calculate how much you will actually be paying back over the term of the loan as well as finding out about any fees and charges on top of the interest. This is not always that east to find out or calculate, but if you get in touch with the customer services department of the lender, they should be able to work it out for you. If they can do this, then you will be able to get a figure to tell you exactly how much money, in real terms you will be paying for the loan. Then you can think about whether you think that it is giving you good value for money. Consider what you are spending the money on and whether you think that it is worth this extra money, the cost of the loan, in order to get it. Another way of looking at it is to imagine the item you are buying is the cost of the loan repayment and see if you think it would be worth it.

Repayment

It is good to think about whether you will be able to manage the repayments on your loan. Obviously you will have a guarantor in place to pay if you are not able to, but this is not an ideal situation. It is likely that they will not want to pay it really, they have probably just agreed on the assumption that you will make the repayments and their name on the loan will just allow you to borrow the money that you need. You therefore need to find out, before you sign up to the loan, how much the repayments will be. Then you will be able to work out whether this is something that you will be able to afford. If you are not sure then you will need to be able to make the repayments, then you need to see whether there are any changes that you could make that would help you to be able to afford it. It may be that you can find a way to make more money or to spend less money. You will need to look at your bank statements and work it out.

Guarantor

It is also wise to think hard about your choice of guarantor. Imagine if they did have to make some repayments for you, would it be something that they would be happy to do. They may agree to be your guarantor because they feel that you will not miss a repayment and they trust you. However, there is always a chance that you could miss a repayment and you need to think through the consequences of this. If they have to pay one or maybe more for you, will it have a bad effect on them. Could it leave them short of money and struggling and if so, will they blame you or will you feel guilty as a result? It could even mean that your relationship with them suffers if they struggle financially as a consequence of helping you out. They may also then expect you to pay them back at some point and this could be difficult for you especially if they put pressure on you to repay it really quickly. If you have been struggling anyway then having to think about making your loan repayments and paying them back could be extremely difficult. It could lead to disagreements between you and even have a detrimental effect on your relationship and this could be something that you really do not want to happen.

When to turn to a Payday Loan

Many of us have heard of a payday loan and we may have also seen stories in the press about how people have had trouble with them. This can be very off putting and you may have vowed that you will never take one out. However, it is possible to get into trouble with any type of borrowing that you decide to use and there can be a place for payday loans in some situations.

When to Borrow

Borrowing money is always going to be expensive. There will always be interest to pay and fees and therefore you should always think very hard before you borrow any money. You need to consider whether the money that you will be paying out for the loan will be worth it. Obviously we pay money for things all of the time and make these judgements, but we need to make sure that we are aware of the full costs of the loan when we decide and then we can think whether it will be worth it or not.

It is also good to think about the repayment of the loan. Consider how you will go about repaying it. Think about whether it will be something that you are likely to find easy or struggle to do. If you think that it will be difficult to pay back then before you take out the loan, come up with some plans on how you will afford it. Consider whether you can get more income from anywhere to help out or whether you can reduce your spending in other areas so that you can manage more easily. You will find that different loans have different repayment plans and so it is important to choose one that will suit you too.

Choosing the Type of Loan

There are many types of short term loans available from companies like Omacl.co.uk and it is wise to choose the one that is most suited to your situation. A payday loan tends to be available for those people that do not have a good credit record. This is because they do not do a credit check, unlike other lenders who will not lend to those with a poor record. As these loans as for those with a poor credit record it means that the lenders is taking on a big risk by lending and this means that they will charge more money as a result. Their interest rates are therefore high compared with some other types of lending. However, the debt will be short term and therefore will not be hanging around for very long. It will be for a small amount of money, which means that you will not borrow more than you need and therefore will not be in debt longer than necessary and for more than necessary. If you repay on times, the rates are not massively high, but if you miss the repayment date then you will be charged fees, which could add up and be expensive which is why it is important to have a repayment plan in mind.

Speedy Borrowing

A payday loan can be arranged very quickly. If you apply early in the morning, it can be possible for you to have the money that you need the same day or the next day . This is significantly quicker than other forms of borrowing. This means that if you need money really quickly, they can be a good option for you. Most forms of borrowing will take a long time to arrange and by then it may be too late. If you need to pay a bill to stop you being cut off, need to pay for food or need to replace a broken fridge, you may not be able to wait for a week or so to get the money. Only if you have a loan already arranged, as with a credit card or overdraft, would there be a quicker option than a payday loan.

So a payday loan is suitable for someone that needs money quickly in an emergency. It is necessary to know how you will repay it though and to be aware of the costs. It can be arranged very quickly, which means that it is great for borrowing in an emergency. A credit check is not done either, which means that you can use it even if you have a poor credit record.

How to Ensure you can cope with a Mortgage

If you are looking at getting a mortgage then you are on the edge of making a big decision. Taking out a mortgage is a big commitment as you will have a loan that is likely to last 25 years. This means that you have to think about how you will cope with it immediately as well as in the future.

Coping in the short term

When you first get a mortgage, you may find that the payments make up a huge part of your outgoings. If you have been renting before and the amount that you will be paying out is about the same, then it is easy to think that you will be able to cope with a mortgage. Hopefully this will be the case but it is important to be cautious. Owning a home comes with more expenses than renting, even if the actual amount you are paying out in mortgage repayments is less than you were paying in rent. You will need to pay out for maintaining the property, servicing the boiler, keeping it decorated and repaired and updating it where necessary. You will also need to have life insurance and buildings insurance which you may not have had already. Hopefully you will not have big expenses when you first move in, but it is always possible. One way to check is to pay for a good survey on the property, which will identify any major problems that will need fixing right away.

It is also wise to make sure that you are careful with your spending so that you can save some money each month. By doing this, you can build up a fund which will help you if you need to pay out for any repairs, decorating or updating. It can be easy to think that insurance will cover costs of damage, but it does not cover everything and making lots of claims can lead to your premium being increased significantly and therefore making your costs of being a homeowner greater still.

Coping after 10 years

After ten years of owning a home, it is likely that you might have a family or be planning one. This means that you could have a big increase in your outgoings and possibly a reduction in your incomings as well. Hopefully your salaries will have gone up, so that the mortgage repayments are more easily manageable, but this may not be the case. It is wise to think about whether it is worth switching lenders in order to save money. If you think that you may find it harder as your children grow older, then think about whether a flexible mortgage might be worth investigating, where you can overpay when you have the money but pay less when you do not. It could help you if you do find it harder to cope in later years.

The house may also be ready for redecoration and possibly even some more major updating and repair and so you will also need to think about how you will cope with the cost of this. Some people might decide to borrow extra money against the mortgage as the value of the home may have gone up enough to do this. However, repayments will go up a result and you will need to think about whether you think that you will be able to afford this and how risky taking on a higher mortgage will be.

This may also be a time when you consider moving. You may feel that you want a bigger home and so you will need to think about whether you can afford this. Consider how much your mortgage repayments, as well as your other expenses will go up and whether this is something that you feel that you could cope with.

Coping after 20 years

After twenty years you should hopefully find that your household income has gone up enough so that the mortgage repayments are easier to manage. However, if you have a growing family this could be very welcome as you may have a lot of expenses going out. However, it could be that both parents can now work and children may even be bringing in a wage as well, which could really help. It may be a good time to think about paying the mortgage off early as there may just be a small balance left to repay and you may be able to make larger repayments or even have a lump sum saved up to pay it.