Huge Costs Mean Smaller Firms Face A Struggle To Secure Loans From High Street Banks?

While a rush of first-time buyers meant that the number of secured loans approved by British banks last December was double that during the same period in 2008, many small businesses are experiencing difficulties in finding a bank that is willing to lend without imposing unachievable administration costs and interest rates of up to 8%.

Despite the fact that Britain is emerging from recession, a growing number of small businesses are facing a battle for survival when securing loans from high street banks is not only proving to be prohibitively costly but also incredibly time consuming. Some firms are spending months searching for a loan, submitting numerous applications in the process, but for many the big name banks are not their ultimate source of funding even though some published figures suggest evidence to the contrary.

Other financial institutions are allowing smaller firms the chance to secure loans where banks have failed to provide a satisfactory solution. While potential home-owners may have the choice of high street finance providers, the same can not always be said for small businesses who are now discovering that the easiest way to secure a loan for their companies is often by approaching other lenders in the first instance.

Internet-based brokers are another popular consideration where loan applications are being turned down by banks, or their interest rates and charges are proving to be too big for small businesses to swallow. So for those in a position to allow their company the opportunity to expand, it may be more prudent in the first place to channel valuable time and effort into securing a loan through means other than the obvious high street banks.

Repayment Penalties : A Guide To Loan Repayment Penalties

With so many types of secured loans to choose from it is no wonder so many homeowners forget to overlook the small print and ask the question, "is this value for money in the event I can repay the loan earlier than the schedule".

If after having borrowed a homeowner loan from a lender you find yourself in the privileged position of being able to repay the secured loan early, have you ever thought that you might actually be penalised! Early repayment penalties are applied by some lenders. Why? There are a whole host of reasons why lenders charge early repayment fees and depending on the company concerned it could be to cover administration fees, encourage borrowers not to repay their loans early, or simply policy. Depending on the lender, there could be a fixed charge or extra interest to pay. Therefore, always ask the question regarding whether repayment penalties apply before you take out the loan.

There are of course secured loan lenders who do not charge early repayment penalties. The advantage here is that you can save money on interest and fees should you find yourself wanting to repay the loan early.

Remember, always seek independent advice when entering any type of financial agreement.

Loan Brokers : What Is A Loan Broker?

In the same way an insurance broker will attempt to find the most suitable policy from its selected panel of insurers, a loan broker is similar in that they act as financial intermediaries between the borrower and the lender. Some loan brokers are truly independent which means they can access many different types of loans from a wide variety of lenders. As with most types of financial intermediaries, successful loan transactions initiated by the broker between the borrower and the chosen lender usually means the broker will earn a fee or commission payable by the lender. The commission or fee may be paid to the broker for providing the lead or a successful application. This is applies to any loan protection insurance that maybe taken out with the loan.

The United Kingdom's growing debt problem combined with fierce competition from the banks, building societies, supermarkets and major high street brands such as Virgin means the number of secured loan offers available has never been greater. For those who are either looking for professional advice or are confused, independent loan brokers can offer a valuable service because of their knowledge of the market place. They will be aware of current secured loan offers through their panel of lenders and can offer expert guidance through the application process. Remember, all loan brokers are licensed and regulated by the Office of Fair Trading (OFT) under the Consumer Credit Act. In addition, brokers will usually build up a complete picture from the borrower regarding their needs and affordability.

As with most types of financial services intermediaries, there are some brokers who choose to specialise in offering certain types of loans, these could be for bad credit or secured for the self employed, or buy to let as well as straightforward secured loans. These niche brokers are especially helpful to borrowers who are self employed or have county court judgements (CCJ's) or are deemed high risk because of their market knowledge and the services they provide.

In recent years, many loan brokers are able to offer their services online. The applicant simply fills out the online application form which includes the amount they are looking to borrow. It is worth noting that some online loan application forms are simply fact finding and others are full loan applications involving credit checks. As with any type of borrowing, the application process should be explained before this is entered into. Usually the lender contacts the applicant by telephone or email once the online application has been received to discuss the next stage. Each lenders loan application process will vary accordingly.

Loan Payment Protection : A Guide To Loan Payment Protection

There continues to be a lot of press surrounding payment protection insurance (PPI), and considerable interest from the regulators and Government appointed organisations.

What is Loan Payment Protection Insurance?

The concept behind this product is to cover loan repayments in the event that the borrower is unable to pay back the personal or secured loan, if an homeowner, if they fall seriously ill and are unable to work, or they become unexpectedly unemployed.

What are the advantages?

For those who borrow for the first time or exiting borrowers who wish to increase their debt, there is always the uncertainty that should circumstances change will future loan repayments, secured or otherwise be met? Payment protection insurance products in principle are designed to reassure borrowers that should certain life changing events occur as described above loan payments will be covered.

What the disadvantages?

There are always pros and cons with regard to such products, for example, taking out a PPI from some providers can be almost as expensive as the loan itself. In the course of 2005 and 2006, there has been a great deal of media coverage regarding alleged mis-selling of this type of product to unwary customers. Some complaints made to loan companies and the regulators alleged that the loan quote automatically included payment protection when in fact this type of product is optional and not mandatory. Other criticism of this type of insurance dwelt on the fact that the terms and conditions of some policies are too restrictive and don’t offer value for money, for example, some PPI’s exclude the self employed and will only pay out 6 months after the initial claim is made.

Summary

As with any type of insurance, a personal, or secured homeowner loan, always seek professional financial advice and establish whether or not this type of product provides you with the level of cover required for a reasonable payment. It is worth noting that it is not obligatory to take out the lenders recommended policy and in the same way many of us shop around for vehicle cover, there are plenty of independent Payment Protection Insurers happy to offer quotes. For more information consider visiting the Association of British Insurers.

Personal Loans : Credit History Check

Credit History information is available from Credit Reference Companies such as Experian who provide this information to lenders and the public.

Where does the information come from?

Quite simply, credit reference agencies source information from public databases such as the electoral roll, court judgments and voluntary and involuntary bankruptcies supplied by the Insolvency Service. In addition, there is a scheme operated on behalf of loan lenders called Credit Account Information Service or CAIS. Provided consumers have given permission, lenders can upload information about their customer regarding how much they owe, loan repayment history and current and past credit agreements. To safeguard consumers interests the scheme is run in accordance with the 1988 Data Protection Act.

Why would the Public require this information?

Checking your own credit history can be a useful way of finding out your profile before applying for a secured loan or if you have been refused credit. In addition, this information may also help if you have been a victim of identity fraud. Several companies provide this information to consumers which is accessible online usually for a small fee. If there are errors with your credit history some of the companies providing this information maybe able to offer free advice on what steps to rectify the problem.

Personal Loans : Credit Scoring

During the process of applying for a secured loan either online, filling out a form, or over the telephone, the homeowner is asked a series of questions. The answer to each question maybe scored or a value. Depending on the lender, each score or value will either be taken into account or the total score will be used to help decide the credit risk.

It is possible that the lender may also incorporate other information into their credit scoring system such as sourcing information from a national agency such as Experian (http://www.experian.co.uk/) or Equifax (http://www.equifax.co.uk/) using internal data such as looking at bank accounts and existing loans that may already be held with the lender.

Loan company credit scores are confidential and are never divulged to the applicant or anyone else. The Office of Fair Trading (http://www.oft.gov.uk) monitors credit scoring to ensure lending is responsible and ensure standards are upheld.

Once a credit score is performed, there are several outcomes, either the homeowner will be accepted for the secured loan either on the existing terms, or new terms, or they may decline your application altogether.

UK Housing Market : A Guide To Secured Loans And The UK Housing Market

Secured loan lending is intrinsically linked to the UK housing market. Why? Some homeowners who take a secured loan do this on the basis of large amounts of equity in their property which in turn is fuelled by rising house prices. It is worth remembering however that property prices can go and up down as was the case in the boom and bust years of the 1980’s and early 1990’s.

If you are thinking of cashing in on the equity in your home consider embarking on some research regarding future house price trends and informed opinions of the time. Before the emergence of the internet this used to be difficult, however, more resources than ever before are at your disposal.

Some useful sites include the Governments Land Registry (http://www.landreg.gov.uk/default.asp) where for a small fee you can ascertain the price that a house was actually last sold for. In addition you can view the latest quarterly Property Price Report Publication. Other notable sources of information include the Halifax Price Index (http://www.hbosplc.com/economy/housingresearch.asp) and the Nationwide Building Society’s House Price Index (http://www.nationwide.co.uk/hpi/) Both the Halifax and Nationwide monitor house price movements and regularly publish results which are released to the media and public alike.

Personal Loans : Loan Calculator

Feel free to use our interactive secured loan calculator. Before deciding to apply for a loan some homeowners find it useful to understand the approximate cost of borrowing in terms of the monthly cost and the interest which is being charged. This is especially useful for homeowners who work to a monthly budget by knowing what their outgoings are such as household bills and mortgage payments versus income received.

To use the loan calculator simply enter the amount you wish to borrow and select a repayment period using the drop down menu. Then enter the interest rate and press the calculate button. The results are calculated using the generic compound interest formulae and show the monthly repayment and the monthly interest charged by the lender. For comparison purposes, which some find useful, an alternative monthly repayment figure is displayed below assuming an interest rate of 5.5% is charged.

Remember, this online calculator tool should be used as a guide only and some lenders will often build in Payment Protection Insurance or (PPI) in addition to possible secured loan application fees. Therefore, the actual monthly repayment amount in reality could be higher.

Personal Loans : Compare Secured Loans

This market is extremely competitive, therefore, it is not surprising some homeowners are confused regarding who to choose. There are of course newspapers, magazines, and internet sites that offer comparisons between secured loan lenders and some can be quite useful.

Before deciding which lender and product is best for you, consider reading our guide below which contains hints and tips on what to look out for when comparing secured loans; Remember all UK lenders are now regulated by the Financial Services Authority. (http://www.fsa.gov.uk)

Borrowing a small or large amount of money is a big step, therefore, always be sure that is the correct thing to do and try to anticipate circumstances in the future which may affect your ability to meet future loan repayments. Consider seeking independent financial advice. There is a wide choice of reputable organisations, banks and building societies and regulated Independent Financial Advisors who will often provide free advice.

Compare each lenders interest rate or Annual Percentage Rate (APR). A homeowner loan is secured against your property, therefore, your home is at risk if you do not keep up the repayments, and failure to do so could result in you getting a bad credit record. Investigate whether fees are charged to either take out the secured loan or for early repayment of it. Most loans are offered along with Payment Protection Insurance or (PPI). An extra premium will be charged. Consider reading the policy to understand what you are covered for and any exclusions that apply. More information on finding secured loans.

Personal Loans : Debt Management

There are many reasons why individuals, partners or families often end up in debt. For those who are unfortunate enough and find themselves in the situation that they can no longer afford repayments on existing loans and credit cards, there are some options worth exploring. It is worth noting however, that the law is different in Scotland as opposed to England and Wales and independent financial advice should be considered from organisations such as the National Debt Line

(http://www.nationaldebtline.co.uk/ or Citizens Advice Bureau)

(http://www.adviceguide.org.uk/index/life/debt/help_with_debt.htm)

Depending on the applicants circumstances some organisations offer Debt Management plans or (DMP’s) as they are otherwise known as. So what are these? In simplistic terms a debt management plan calculates what you can afford to pay creditors each month based on your income, outgoings and expenses. The new repayment amount based upon what you can afford is then paid to the Debt Management company who negotiate with your existing creditors to accept the lower repayment and freeze the interest.

This approach to tackling debt is not appropriate to everyone and the disadvantages are that some Debt Management Companies or IVA practices (Individual Voluntary Arrangement) charge fees for this service, creditors are not legally forced to accept the terms offered by the debt management company. In addition it could take many more years to pay off the debt.

Personal Loans : Bad Credit Secured Loans

There are many reasons why lenders refuse loan applications. For those homeowners who apply for an unsecured personal loan and are subsequently rejected this can be extremely frustrating, especially as the lender is not required to inform you regarding the reason for the failed application.

Bad Credit is often a loosely used phrase to describe someone who has either defaulted on previous loans, incurred CCJ’s (County Court Judgements) or who has a poor credit score.

Some secured lenders and brokers however, are willing to lend money to those homeowners who are classed as a bad credit risk on the basis that any loan is secured on any asset or property that is owned by the applicant. The disadvantage of course is that your home is at risk if you default on future loan repayments.

It is worth noting certain lenders specialise in bad credit secured loans and other lenders do not. Therefore, consider researching each company's lending policy, interest rates, and any applicable early settlement charges before applying for a loan. Remember, it is the case that each application for a secured loan is sometimes noted on your credit record and some Lenders will take this information into account when assessing applications from homeowners.

Personal Loans : Right To Buy

The UK Government currently offers a variety of schemes to different groups of people to encourage home ownership. HomeBuy which is the Governments latest initiative consist of three elements, New Build HomeBuy, Open Market HomeBuy and Social HomeBuy. All of the aforementioned schemes involve part ownership with the applicable housing association.

In addition to this there is the established Right to Acquire scheme for housing association tenants and Right to Buy or Preserved Right to Buy scheme for those tenants who now occupy former council houses that are now run by housing associations. Terms and conditions apply and will differ according to where you live in the United Kingdom.

Another scheme available to those who wish to get on the housing ladder is the shared ownership scheme. The scheme is operated by housing associations and works by allowing those to participate by buying a share of the property and paying rent for the remainder. There is an option available to buy the remaining share from the housing association, again terms and conditions apply.

There are of course lenders who specialise in offering secured loans to those who are eligible. For more information consider visiting the Housing Corporation (http://www.housingcorp.gov.uk) which is the government agency that regulates housing associations in England and funds new affordable housing.

Personal Loans : Home Equity A Guide To Home Equity Release

The continued rise in the housing market has contributed enormously to the rise of the home equity release scheme. Why? Quite simply, for those pensioners who are have a large equity in their property or homeowners who own their property outright, there is potentially a large sum of money just waiting to be unlocked either to provide a regular income or to spend on how the homeowner sees fit. In the current climate, it is fair to say that some pensioner’s disposable incomes are lower because pensions have not kept up with inflation and private or company pensions are less than previously envisaged.

What is the home equity release scheme?

Most such schemes work on the basis that the lender will provide the homeowner a monthly income or a lump sum provided there is sufficient equity in the property and you continue to reside in the home. Upon the homeowner's death or if you sell your property to move into a nursing home, the loan company will recover its share or all of the property. Although not guaranteed, the Home Equity Release Loan Company will usually benefit provided you live to your expected life expectancy because of the rising housing market.

As with any home equity schemes, there are advantages, disadvantages and of course other alternatives to consider. The main disadvantages are that it is unlikely that your family will benefit from any inheritance, any partner would be forced to find alternative accommodation and there is the possibility of losing applicable means tested benefits.

Personal Loans : A Guide To Secured Personal Loans

Lenders are finding new ways of soliciting loans to the general public. Marketing communications containing the words “Personal Loan” is a phrase often used. So what does this actually mean? In general terms most personal loans are regarded as unsecured i.e. no fixed assets are required to apply.

The borrowing amounts are generally smaller than secured loans and are sometimes used to buy luxury items such as holidays, cars, boats or for home improvements or even debt consolidation. The loan company or broker will assess an application on its merits in line with its lending policy. This usually means the prospective customer income, credit history, current outgoings, the amount required and most important the ability to repay the debt in full are assessed.

Some personal loans however are actually secured and are marketed by those companies who wish to lend amounts to those who maybe ineligible for an unsecured loans or consumers who are looking for the lowest Annual Percentage Rate (APR) interest rates. There is a perception that secured personal loan interest rates are lower because the lender is taking less of a risk. Always be aware that a secured loan is where a fixed asset such as a homeowner's property is used to guarantee the debt. Your home of course is at risk if you do not keep up repayments.