Author / Kevin

Debt Management

How Guarantor Loans Can Help You Improve Your Credit History

Your financial struggles naturally impact your credit history. You know it is bad and so do the creditors. You are reminded of it whenever you request an online loan quotation, whereby your request is either rejected or results in stringent terms. The situation will likely be a lot worse due to the rigid lending criteria since 2008’s financial crash – that virtually bars anyone with average credit history from securing a bank loan at all (or to be offered one at exorbitant rates).

Of course, there is a solution to this problem, so long as you are not bankrupt or in an individual voluntary arrangement (IVA).

The solution is called a guarantor loan which lets you borrow at competitive rates and improves your credit history, provided you repay on time. Specifically, you need two years of timely loan repayments to get your credit history in functioning order. This type of a loan is classified as an unsecured loan and you can borrow anywhere in the range of £1k to £15k for a period generally lasting between 1 to 7 years.

Since the 2008 financial crisis, there has been an abrupt growth in a broad range of personal loans such as guarantors, which may be classified as an alternative loan option. Guarantor loans can be obtained through loan brokers; however, you may find that some of these companies charge extra fees. Alternatively, you can find direct lenders who don’t have any hidden charges. One such company I’ve found through research is TrustTwo whom are renowned for their transparent approach. Always check with your guarantor loan provider first that no fees will be added on if you make late payments.

The primary reasons why people are gearing towards bad credit guarantor loans are the cost and a lack of other options.

Fundamentally, a guarantor acts as a co-signatory on the loan agreement, thereby pledging his or her own funds if you are unable to repay the amount borrowed. Almost anyone can be your guarantor, so long as they are not financially associated with you (e.g. your spouse). Therefore, a guarantor could be a close family member, a trustworthy friend or even a loyal colleague.

More specifically:

Your Guarantor Must

  • Be in the age range of 25 to 74 years.
  • Be a resident of the country where the loan agreement is made.
  • Not be your spouse.
  • Have detached finances.
  • Have a sound credit history.
  • Provide proof of identity as well as relevant bank statements.
  • Be a property-owner/have a mortgage, be a reasonable tenant or be living with parents.
  • Agree and give written agreement to make repayments if you default.

 

Before You Process the Application

  • Forecast your income and expenditures for the length of time you intend to borrow funds. Moreover, use an online monthly loan repayment calculator to get further clear headed.
  • Sit down with your relative or friend who is going to be your guarantor and have a detailed conversation. They should completely understand that they will be accountable for offsetting your liabilities if you default.

The Process

Hypothetically speaking, thanks to the written assurance of your friend or relative, you successfully obtained a guarantor loan and are now required to repay in fixed monthly instalments. Every month after the repayment date, your lender sends a report to the relevant Credit Reference Agency.

The monthly report showcases the repayment status. If made successfully, the borrower’s credit score would exhibit a marginal improvement. Otherwise, even a guarantor loan cannot save your credit history if you persist with irregular repayments.

Lastly, your mark-up would depend upon the severity of your credit history, but the loan is not cheap and rates typically are about 50% or an APR range from 39.9% to 59.9%. At such a rate, borrowing £5,000 over four years would mean repaying a sum of £10,300 which is not attractive, but gets your life out of a rut.

Frugality

Use Coupons To Beat The Recession

When you’re trying to manage on a tight budget, it is often life’s little luxuries that are first to be sacrificed. After all, when you’ve got bills to pay, a mortgage to keep up and quite possibly a family to care for, you can’t be splashing the cash as freely on shopping and going out as much as you might like to – especially during a recession.

While we all have to make concessions during these difficult economic times, there are a number of ways you can allow yourself to indulge in little extras without breaking the bank.

One such strategy is to use promotional codes to obtain money off your favourite products. Also known as voucher codes, these coupons are readily available on the internet. Retailers love to put them out there, as the codes drive customers to their online stores, increasing what is known as ‘footfall’ – the number of people entering the shop, as it were. The promotional codes are great for consumers, as they entitle the user to discounted rates.

Promotional codes can be found carrying money-off deals for a wide range of different consumer products, so you really are spoiled for choice if you choose to use voucher codes to save a bit of money. A particularly useful strategy is to search the internet for voucher codes that apply to products you already buy, in order to avoid missing out on the benefit of the voucher by spending money on something you do not really need.

For example, say your mobile phone provider is Vodafone and your contract is almost up. Perhaps you don’t wish to leave Vodafone but you’d really like a cheaper tariff. A quick search for a Vodafone promotional code on the internet will tell you whether or not there is a code out there that could save you some money on your new contract. If there is, you can simply enter that promotional code when you order your new phone deal online to get your discounted rate, free talk time or whatever the promotional code entitles you to.

Another great time to use promotional codes is when you are doing your weekly grocery shopping. During the recession, most of us have had to take luxury items off our shopping lists to save money. But with promotional voucher codes that save you a certain amount of money off your bill, you may just be able to treat yourself to that favourite cheese, a good bottle of wine or something sweet for the kids.

Simply search the internet for voucher codes and the name of your local supermarket. For example, if you usually do your shopping at Tesco, a search for Tesco vouchers may well give you money off your bill when you order your groceries online rather than in store.

Voucher codes might not seem like a big deal if you use them just once or twice but used over time the savings really add up and make a positive contribution to your budget.

Voucher Seeker

Insurance

Top tips on buying Income Protection Insurance

Income protection is an insurance policy that will protect you against accident, sickness or unemployment that prevents you from working. 

Compare to other insurance policies, income protection can affordable and you can protect yourself for as little as £10 a month. 

Income protection can pay you a tax-free monthly benefit should you be unable to work due to illness or injury or if you have been redundant involuntarily. 

Income Protection Insurance Top Tips 

When you are considering income protection insurance there are a few things to look out to ensure you get the best deal that is right for you. 

Recent figures have shown that most leading income protection insurers have a higher than 90% successful claim rate. 

1)      Long or short term 

There are two main types of income protection and you can choose either a long or short term policy. A long term policy can cover you up until you are fit or healthy enough or work, retirement age of death. 

Short term policies will cover you up to a period of 12 months from the time you are unable to work. You should think about how long you would want to be covered for. Short term policies are more affordable but long term policies offer more benefits in the event of a claim. 

2)      Choose your waiting period 

There is period of time after you cannot work until you are paid your monthly benefit known as the ‘deferred period’. By choosing your preferred waiting period you can reduce your monthly premiums. 

For example, if you know you will able to support yourself financially for three months without working you may consider a deferred period of three months. You can choose a deferred period up to a year if you wish. 

3)      Decide how much benefit you want 

Insurers will let you decide how much of monthly benefit you want to be paid in the event of a successful claim. 

You can choose to cover as much as 70% of your gross income in your protection policy but if you feel you could pay your mortgage, utility bills and maintain your lifestyle for less then choose a lower percentage. By choosing a lower amount to be covered you can reduce your monthly premiums. 

4)      Compare quotes online now 

Looking for the right policy can be time-consuming and there are many different income protection insurance providers on the market.  You may find it easier to compare income protection quotes online now from the leading insurance providers at ActiveQuote.com. 

ActiveQuote.com is the UK’s leading comparison site for income protection, health insurance and life insurance. To compare quotes visit www.activequote.com or call us on 0800 862 0373.

Money Management

5 Ways To Cultivate Your Retirement Savings – Infograph

Entitlements such as retirement are a hot-button issue! How are you planning for your future? The key to a comfortable retirement lies in just five simple steps. Start early, take advantage of tax breaks, maximize your employer’s retirement savings plan, manage your risk, and keep tabs on your portfolio throughout the years. Though none of these moves is difficult, the trick is to leverage each to your advantage. The sooner you get started, the bigger the payoff down the line.

 

Saving for retirementImage via: Online Stock Trading Academy

Investing

The Advantages of an Annuity over a Certificate of Deposit

When it comes to your money, you have a ton of options. Should you invest it? Should you choose to invest in an annuity? Should you invest in a Certificate of Deposit? Here’s an explanation of what they are and a few reasons why you should invest in an Annuity over a Certificate of Deposit.

What They Are

A Certificate of Deposit, or CD, is a time deposit. They’re similar to a savings account because they’re insured and risk free. They’re different from a savings account in that the CD has a fixed term (monthly, quarterly, annually, or longer) and a fixed interest rate. It’s held until maturity and can then be withdrawn along with the interest accrued.

An annuity is when an individual pays a life insurance company a single premium. That premium will later be distributed back to the party over time. You can set the annuity to be distributed over a specific amount of time via fixed payments, until your death, or until the contract’s final date.

Interest Rate Bonuses

annuity

Image via Flickr by 401 (K) 2013

Annuities and Certificate of Deposits have similar interest rates, but fixed-annuity accounts offer a first-year bonus rate. It may not sound like a lot initially, and that’s the truth. However, your the interest compounds over the year of the annuity. Fixed-annuities also offer a minimum rate of return, which helps you budget future income. Certificate of Deposits are subject to whatever the rates are at that time.

Emergency Access

Sometimes, the unexpected happens. In times like that, it’s nice to know that you have options. With a Certificate of Deposit, you don’t have that option without incurring penalties. With tax-deferred annuities, that’s not the case. Depending on the type of annuity and the provisions, there may be some options that allow you to withdraw a portion of your funds completely free of any sort of penalties.

No Impact on Social Security Benefits

With a Certificate of Deposit, the interest income is included in the calculations used to determine taxation on your Social Security benefits. Taxable and tax-free earnings are both reportable and must be included in this calculation. With a tax-deferred annuity, the interest income isn’t reportable until it’s withdrawn. It’s not included in the calculations for Social Security crossover taxation, which preserves the value of your Social Security benefits.

Taxing and Reporting

Certificates of Deposits are reportable and taxable as it’s earned, regardless of whether it’s received or you’re leaving it there to build up. The interest income from tax-deferred annuities is not required to be reported and is not taxable until it’s withdrawn. The advantage here is that when it’s withdrawn, the account holder is likely no longer in their peak earnings years, so they’re in a lower tax bracket.

Multiple Types to Fit Your Needs

Unfortunately, there’s only one type of Certificate of Deposit. You’re extremely limited with your options. With annuities, that’s not the case. As you might imagine, it’s important to know the Fundamentals of Annuities. There are multiple types of annuities:

  • Immediate Annuities – These begin payments for life or for a specified amount of time. Payments can be received monthly, quarterly, semi-annually or annually.
  • Deferred Annuities – These can be funded through a single premium or through flexible payments distributed over months or years. These can help you accumulate money for retirement.

For premium payment methods, there are several options:

  • Single Premium Annuities – These can provide you with a way to turn a large amount of cash into guaranteed income. This option is great for those with cash from a legal settlement, a business sale, or money that has been inherited, and can fund either an immediate or deferred annuity.
  • Flexible Premium Annuities – These are funded over a period of time and allow you to pay premiums of different amounts, either on a schedule or randomly. These can fund fixed or variable deferred annuities.

When assets are invested, there are several options:

  • Fixed Annuities – These guarantee you a specified rate of interest for a certain amount of time and can preserve your assets and protection from market volatility.
  • Variable Annuities – These provide you with a greater opportunity for asset growth through multiple investment choices. Of course, with greater growth comes greater risk.

In many ways, it’s plain to see that annuities hold a clear advantage over certificates of deposits. If things come to a pinch, you’ll be able to get the money you need. Annuities won’t impact your social security benefits, you’ll get interest rate bonuses, and the interest isn’t required to be reported until you withdraw it later in life. What has your experience been with these two financial products?   

Author Bio: 

Author Jane is a freelance writer who loves to write about anything from tech to mommy stuff. She is featured in many blogs as a guest writer, and can write with authority on any niche or subject.