As a result many people may find that they have still not managed to sort out their Christmas and New Year debt, and with the recession in full swing and fears over job losses this is something that people need to look at sorting out as quickly as possible.

Whilst last year was a financially turbulent one for many people there was little evidence that people cut back on their spending over the festive season, and officials from one debt charity have estimated that many people ended up spending even more than they thought they might, leaving them facing a real financial hangover for the first few months of this year. Moreover, whilst many people may have run up debts and credit cards this Christmas just gone, the charity states that many of these people had still not finished clearing debts from the previous year, which has resulted in debt being piled on top of debt.

Industry officials are now urging consumers that are still struggling to et their finances in order to be as pro-active as possible and try and reduce or streamline the debt if they cannot get rid of it altogether, particularly given the financial difficulties that many will face in months to come as the recession bites harder, the financial climate become more difficult, and job losses continue to soar. Taking action now and doing something about this debt could mean one less thing to worry about over the course of what is set to be a volatile year for many.

For those that are still in need of a credit card to fund various purchases it is advisable to ditch the high interest credit card and opt for a 0% purchase credit card, where you can enjoy a far longer period of interest free credit on purchases. If you still have an existing balance on your high interest credit card you should look at transferring this to a 0% balance transfer card, which means that you can avoid paying interest on the remainder of the balance providing you repay it in full within the interest free period specified. Measures such as these can help you to save a fortune in interest over the course of the year.

If you have dipped into your overdraft over Christmas and money is a bit tight at the moment it can be all too tempting to keep using your overdraft rather than repaying it. However, this means that you may incur costly charges each month, and if your overdraft is close to its limit you increase the chances of exceeding the overdraft limit, which can mean even higher charges. Even if you cannot clear your overdraft in one go, try repaying a small amount of it each month by making the odd sacrifice so that you clear it over a period of time.

If you seem to have accrued debts all over the place, such as several credit cards, overdraft debt, and even small loans, then it may be worth considering a consolidation loan, which will enable you to repay all of these debts and replace them with just one loan. If you are able to get a good rate on a debt consolidation loan, which should be easier now that the base interest rate has fallen to just 1 percent, then you could also cut your monthly outgoings significantly as well as cutting the number of debts that you have to deal with.

Have you managed to streamline your New Year debt? is a post from: Glitec Loans

A consolidation loan is basically used to pay off your existing debts such as credit cards, smaller loans, catalogues, store cards, and other debts. Consolidating your debts offers a number of benefits, and this includes easier financial management and the chance to really cut back on your monthly repayments, which has become increasingly important in the current financial climate. Instead of paying a range of different higher interest debts you can enjoy just one loan repayment each month, and hopefully this will come to far less than your combined existing debts.

When you take out a consolidation loan you will need to qualify in terms of eligibility criteria, just as you would with any other loan. Depending on your circumstances, needs, and preferences, you can take out a consolidation loan on either a secured or an unsecured basis. If you are able to get a loan for the full amount that you owe on other debts then you will only have to worry about repaying one loan each month rather than several, which can save you time, hassle, and even money.

Before you apply for a consolidation loan you should first get exact balances on your outstanding debts, so that you know just how much you need to repay and how much you therefore need to borrow. Avoid the temptation to take out more than you need to by way of a consolidation loan, as this will mean that you are getting into more debt than you need to, and will drive your monthly repayments up. Often, the lender will take details of the amounts you owe and the details of other creditors, and will settle the debts on your behalf.

One very important thing to consider when taking out a consolidation loan is that the purpose of the loan is to clear your other debt. It is vital that you therefore avoid the temptation to run up debts again on credit and store cards, or take out further loans, as otherwise you could end up with all of your original debts again and the consolidation loan on top. Instead, once your debts have been paid off with the consolidation loan close any store and credit card accounts, and avoid running up further debt. Aldo, make sure that browse and compare a number of consolidation loans, as there can be a big difference in interest rates and monthly repayments.

Recent additions:

• House prices have plummeted since last year
• Should you take a secured loan or an unsecured loan?

Making the most of a consolidation loan is a post from: Glitec Loans

Experts have urged those in debt to remember that burying your head in the sand is not the answer, as the situation will only get worse until you end up in court, and in the meantime your physical and mental health could suffer, not to mention your home life, your relationships, and other aspects of your life. It you are finding it increasingly difficult to keep up with your repayments then you need to address your debt problems right away so that you can find the best solution.

There are a number of options that are available, which could help you to clear your debts more effectively. Simply going through a debt counsellor to learn how to better manage your finances could help, as these counsellors are trained to provide financial and debt help. You could consider a debt management plan, where you can make one affordable monthly repayments to be distributed by your case officer to each of your creditors on a pro rata basis.

You may prefer to handle the situation yourself and contact each of your creditors with a view to coming to an informal arrangement about the amount you pay each month and over what period. By coming to an arrangement with your creditors with regards to reducing your repayment and extending your term to accommodation the reduction you could effectively ease your debt problems.

If you want to clear your existing high interest debts, ease financial management, and reduce monthly outgoings you may find that a consolidation loan will do the trick, and this will not affect your financial future or credit. You can use the loan to repay your current debts, and enjoy one lower rate loans with just one convenient repayment to make each month.

There are also other possible solutions for those looking to get help with their debts, and those in serious debt may wish to consider an

or bankruptcy, which – whilst not encouraged because of the long term effects on your future – may be the only option for some people because of the level and severity of their debts.

No matter which solution you decide to opt for, it will be a positive move in helping you to deal with and clear your debts. The worst thing that you can do is to bury your head in the sand and hope that the problem will go away, as it will simply continue to get worse, and can affect all areas of your life.

Related Articles:

• Will IVAs become more transparent?
• Is A Secured Loan The Right Choice?
• IVA homeowners face soaring interest rates [news March 2008]

Options That Can Help Clear Your Debts is a post from: Glitec Loans

Below you will find a description of some of the most popular loan types:

Secured loans are loans that are available to homeowners, and these loans are secured against the home. Secured loans are often available to those with bad credit as well as those with good credit, and in order to qualify for one of these loans you need to be a homeowner ideally with some level of equity in your property. Secured loans offer greater borrowing power depending on your equity levels, as well as longer repayment period enabling you to reduce your monthly outgoings. It is important to keep up with monthly repayments on a secured loan otherwise you could risk losing your home.

Unsecured loans are available to both homeowners and non-homeowners, but you will generally need good credit to get one of these loans. These loans are not secured against any asset, and are based on contract and trust. The borrowing levels are not as high as with secured loans, and repayment periods are shorter.

Consolidation loans are designed to reduce monthly outgoings and reduce the number of debts that borrowers have to deal with. These loans are available on a secured or an unsecured basis, and are used to pay off smaller, higher interest debts, leaving the borrower with just one lower interest loan to repay rather than a range of higher interest debts.

Payday loans are short term loans that are usually offered for a one month period. These loans do not usually involve a credit check, but are subject to proof of employment and income. These are short term loans offered to tide you over until payday, and are ideal for emergencies where you need to raise cash until payday comes around. By way of interest you will be charged a set amount per £100 borrowed, and borrowing levels are low – usually up to around £1000 subject to income and eligibility.

Car loans are loans designed to finance the purchase of a car, and these loans can often work out cheaper than taking finance from a dealership. Some lenders offer additional perks with car loans, such as free HPI checks and reductions on breakdown cover or insurance.

These are just a few of the different types of loans available these days. No matter which type of loan you decide to go for you should make sure that you compare the market in order to find the best deal and the most competitive rate of interest.

Different Types of UK Loans is a post from: Glitec Loans

When Should You Consolidate?

As the size of the debt consolidation market continues to expand, the importance of debt consolidators and the business they undertake will grow and grow. Debt consolidation is usually used when people have a very high amount of short term debts. These debts usually come from credit cards, store cards and bank overdrafts. These are highly convenient and flexible forms of credit and are probably the fastest growing area of the market, but they are very expensive and this is the main reason why debt consolidation has come about.

There’s a Tree In My Letterbox!

These days, pretty much every morning in the mail there is another credit card offer waiting to be opened, and every high street store you enter seems to be offering some form of store credit offer attempting to entice you into spending more and more. The amount of outstanding short term credit continues to grow monthly, and currently, the national consumer debt mountain is growing at an alarming rate.

However, people continue to borrow and spend and lenders show no sign of slowing down the rate at which they hand out these forms of credit. In many ways, it is extremely attractive for lenders. This is because of the very high interest rates that they can typically charge. Most credit cards calculate interest monthly, and therefore lenders get a fast and high return on any money they lend. Current interest rates on credit cards can often average in excess of twenty-five to thirty per cent.

What Can Debt Consolidation Do For You?

What debt consolidation offers is a chance to get this borrowing under control and offers a route to clearing the debt in a reasonable time frame. What you do is borrow a fixed, usually secured, loan of enough money to pay back all your various short term credit balances.

For example, if you owe five thousand on various credit cards, another three thousand on store cards, and two thousand on a bank overdraft, this will represent a total balance of ten thousand. If this is being charged at twenty five percent annual percentage rate, then you will have to pay two and half thousand pounds on this year on interest alone. That means that even if you put two hundred a month aside for repaying your debts, then you will not have repaid a single penny on what you owe. All of what you have repaid will have been sucked up by interest. In fact, you will owe even more than when you started as the interest will be higher than two hundred a month.

Advantages of Consolidating Your Debts

So if you found yourself in the above situation, and you only had two hundred a month to spare on credit repayments, you would literally be forced to consolidate the credit as your two hundred each month would not be enough even to hold the debts steady. This is where debt consolidation companies would step in to offer you their services. They will lend you the ten thousand you need to pay back all your other loans, but this will be by way of a fixed loan over a fixed number of years, and charging just seven percent per year. This means that your interest over a year will only be seven hundred, already saving you almost two thousand pounds in interest.

If you continue with the same level of repayment of two hundred a month, you will be reducing your debt by over one and a half thousand pounds. Compare this to the non-consolidated scenario where your debt would actually increase over the same period, with the same repayments, simply because of the high amount of interest you would be paying.

You Will Need Some Security For The Loan

The one thing that you have to consider when consolidating your debts is that the debt consolidation companies will generally be seeking some sort of security for the loan. This will be usually provided either by a personal guarantee from a family member, or securing the loan over your house if you are a home owner. If you are considering securing the loan over your home, you should be very aware of the risks involved with doing so. Secured loans give the lender a direct right to step in and take possession of your home and sell it in satisfaction of the debt. Therefore, consider the risks of securing the loan over your home carefully before committing to any agreements for debt consolidation loans.

More Information:

• National Debtline – Registered charity to help with many debt issues
• Pitfalls to avoid – tips from the FSA site MoneyLaidBare
• What will happen if I get into debt? – FSA advice

What is the Role of Debt Consolidation Companies? is a post from: Glitec Loans

To get an understanding of the consequences that may arise from being unable to repay a consolidation loan, it is important to look at how the loans work and what they do. Debt consolidation loans are used by people who already have a fairly high amount of outstanding debt.

This debt will be predominantly be composed of short term, high interest borrowing such as credit cards, store cards, overdrafts and other similar types of borrowing. These types of debts are among the most expensive on the market, with interest rates currently exceeding 25-30 per cent. This is an incredibly high price to pay for any kind of debt. However, they also have advantages. They are incredibly flexible, which means you can borrow as much or as little as you like, so long as you remain within your credit limit. You can also repay this debt as and when you like. Finally, these debts are generally unsecured which means they are not attached to any of your assets such as your home.

Debt consolidation loans will be far cheaper forms of borrowing, with interest rates often as low as 5 or 6 percent. So if you have a couple of thousand in outstanding loans, a debt consolidation loan can save you hundreds every month in interest charges, and may be the only feasible way of ever repaying the debt and clearing your balance. They will also be attractive because you can reduce all your outgoings into one, convenient monthly repayment which makes managing your finances and making repayments on time a far easier job. However, debt consolidation loans do lack the flexibility of these other forms of debt such as credit card balances. You cannot vary the amount you borrow as and when you like. The loan will be a fixed loan, for example, you can borrow £5,000, over 5 years at 7%. You cannot increase this to £6000 or pay it off earlier without calling the lender and specifically arranging to do this. And then, it may not be possible, or you may have to pay extra fees to do so. Therefore, debt consolidation loans do lack some of the advantages of the more expensive, more flexible forms of debt consolidation.

There is another major disadvantage of debt consolidation loans. You may have noticed in advertisements from debt consolidation lenders that they are only available to home owners. This is because the loan will be secured over your home. What this means is that if you fail to make the repayments, the lender can directly get the amount the lent you back by calling up your home, selling it, and taking what they are owed from the proceeds. This is a very serious consequence of failing to meet your repayments and the reason why you should consider very carefully whenever you are taking out any kind of secured loan.

Generally speaking, you will only have your mortgage secured over your home, which means if you fall behind on your repayments, the mortgage lender can sell your house to get the money they are owed. However, if you secure another loan, such as a debt consolidation loan over your home, then the same procedure can be used if you fall behind on these repayments.

If you think there is any chance that you will be unable to keep up with the repayments of the debt consolidation loan, then the best advice is not to take it out. It is putting a high risk on your home, and especially if you have children or other family obligations, this is a risk that you probably cannot afford to take.

However, there is another issue to consider in this regard. While credit cards and other short term debts may not be secured over your home, this does not mean that your home is entirely safe if you fail to keep up with all your repayments. While the process is slower and less convenient for the lender, it is the case that your home will be at risk with any debts that you cannot keep up with. This is because at the end of the day, if you cannot repay them, the lenders can go through the process of taking you to court and having you declared bankrupt, which will clear you of the debts, but you will lose your home and all other assets in the meantime.

Therefore, if you think you can meet the terms of a debt consolidation loan, and it will enable you to keep up with all your payments and commitments, then, after careful consideration, you may well decide that it is still the best way to go in your circumstances.

More Information:

• Managing your debts – It is easy for debt to get out of control. Student loans, losing your job, becoming ill or any number of other unforeseen events can easily cause debts to mount up.
• Consolidating Debts with a Loan – If it seems advertisements for debt consolidation loans are everywhere, it is because consolidated loans are big business. The primary reason for people taking out personal loans over the next year will be for debt consolidation.
• Debt consolidation under OFT spotlight
• Knee Deep In Debt – US government advice on debt consolidation

What Happens if I Can’t Pay the Debt Consolidation Loan? is a post from: Glitec Loans

Reasons for staying with their lender include:

• Easier
• Not aware of alternatives
• Trust their current lender
• Fear penalties for switching lenders

Study after study shows that if consumers stay up to date on alternatives, they can save an average of almost £2000 per year. This is a good reason to shop around. Also, as consumers demand more and more from lenders, competition increases and terms and rates improve.

If you are curious as to which loans are worth refinancing, the answer is that almost all of them are. From credit cards, to personal loans, to mortgages, shopping around is likely to get you substantially better rates thus saving you thousands of pounds. Recent polls show that most consumers are willing to consider switching credit card issuers, consolidate their debt with a personal loan, and move, which means a new mortgage, within the next 12 months. All of this translates into considerable refinancing.

Take the following examples as illustrations:

• Transferring a credit card balance from 20% to 0% for 12 months.
• Consolidating credit card and auto finance debt to a lower rate personal loan over three years.
• Refinancing your mortgage to take advantage of better rates.

While many people simply do not bother to take the necessary steps, making these changes can save you tens of thousands of pounds in interest over your lifetime.

The most basic advice anyone can offer you is always shop around. There are huge variations in terms and rates, and only by shopping around will you find them. If you have a good credit rating and steady income, lenders will be lining up to give you credit, so don’t be afraid to demand good terms. The chances are you are going to repay them and they know this. This is not to say that those with less than perfect credit scores can’t save money. Deals are open to everyone who is willing to shop around and find a better rate. Also, if you are finding your current payments difficult, shopping around makes all the more sense as lower payments will be easier for you to keep up with.

Refinancing Debt is a post from: Glitec Loans

The offer can be very attractive. You get to pay off all your various high interest debts and instead, you owe one tidy lump sum to one lender at a much better interest rate. Caution is advised however. Often, the payments can last for years, and the debts seem to just stay as they are rather than getting paid off. If this is the case, debts that could have been paid off in months, end up being drawn out over years, with all the interest this entails. Another concern about debt consolidation is the false sense of security it offers. Many people who have been worried about their various debts often feel a huge relief at getting the whole lot transformed into one sum, and feel like they can continue to rack up more debts. Debt consolidation does not, in any sense, mean that the debt has been paid off. It is a fact that many people who consolidate their debts get into more debt once they can afford it again.

Most debt consolidation takes the form of a personal loan repayable at fairly good rates over a number of years. The most common items to be repaid are credit cards, followed by car payments and home improvements. In 2006, over one third of all loans will be for debt consolidation.

When deciding what personal loan to opt for, consumers must do their homework. Rates vary significantly from lender to lender and a slightly lower rate can have a large impact on the total amount repayable. There are many personal loans to choose from these days and rates are very competitive so you should be able to find a loan with a good rate that suits your needs.

Many people do not realise that they can take advantage of any bank or lender’s loan offers. They do not have to take a loan from their existing bank. If you see a better rate from another bank or institution, and the rates are good, and you trust the lender, that is the loan you should go for. Every year, consumers could save over £2,000 on a £10,000 loan simply by opting for the most competitive rates. Many people stick to their bank for personal loans even though the rate is poor. The evidence of this is that the high street banks have over half the market in personal loans while offering generally higher rates than some of the alternatives.

Debt consolidation trends is a post from: Glitec Loans

The promise is a good one–you pay off all your high interest bills, such as credit cards, for a lower monthly payment than you pay now. However, consumers need to be wary, as the payment terms may be for much longer than anticipated, which leads to years of interest payments. Consumers need to ensure they are not being taken for a ride.

Another serious issue with debt consolidation is a false sense of security. Once multiple debts are consolidated into one, it can seem as though the debt has been eliminated, which is far from the truth. It is estimated that most people who take out a consolidation loan actually end up in more debt; that paid-off credit card is just too tempting.

Most personal loans are debt programs used to pay off high interest credit cards, with car payments and home improvements following. Nearly one in three loans taken out in the UK in 2005 will be to consolidate existing debt.

When considering a personal loan, consumers need to shop around for the best rates. A low rate could make a significant impact on the amount paid in interest over time–literally thousands of pounds. With the popularity of this type of loan, however, competitive rates are available, and shopping around can be worth the time and energy. Shopping around also helps customers find a loan that best fits their needs.

Debt consolidation loans are not “one size fits all,” and as more consumers become aware of this, the better rates and terms they will be able to obtain. Some banks offer personal loans starting at 5.7 percent. Many potential loan customers erroneously believe that they have to be a current client of a bank to secure a personal loan through that institution. This is incorrect, and this belief alone leads to many customers paying too much in interest on their loans.

For example, on a £10,000 loan, consumers could save up to £2,291 in interest payments by using a market leading loan provider as opposed to a high-street bank. As a result, high street banks have approximately half of the market while offering some of the least competitive rates.

Debt consolidation loans are often secured by personal property (such as a home) with variable rates. This means that you run the risk of losing your home with a fixed or variable rate loan if you are unable to make payments. It is wise to calculate monthly payments over the length of the loan and determine if this is the best option for you. If so, careful research into all the options can be very cost effective.

More Information

• Managing debt – information from the DiredtGov site

Consolidating Debts with a Loan is a post from: Glitec Loans

Income Verses Expenditure

How does somebody get into debt? Few do it intentionally, but many of us find ourselves unable to pay off the loans and credit cards we have run up. Credit cards are usually the worst, because they allow us such easy access to money.

To avoid debt in the first place, always work out exactly how much you are spending each month and what you are spending it on. That includes all the cash withdrawals that you make. One thing is for sure when you first list out your expenditure you will be surprised at just how much you spend and what it goes on!

Think Twice Before Spending

Work out from your monthly income exactly how much you have got coming in. Very few people have any spare and this is why things called “savings” are also very rare. But that is what you want to aim for: to run your finances in the best way possible you want to aim to have a little to put away in a savings account each month.

Once you’ve got over the shock of how much you spend, you will need to go through the next month making another list this time write down exactly what you spend your money on as you spend it. This is a useful exercise as it will vary from the list you made when you were simply thinking about what you spend that money on.

• Saving Advice — Advice on your savings from a resource that your can trust, the UK government

Getting Familiar With Your Habits

Now that you’ve become a bit more familiar with your spending habits and you can see where you money is going you can start to work out ways to cut back on your outgoings.

If you are having trouble actually covering all your current debt repayments then a debt consolidation loan may be the answer. This will tidy up your debt repayments into one and if you take out the loan over a long enough period you should be able to substantially reduce your monthly spend on your debt each month.

Cost

Clearly a debt consolidation loan may cost you more in the long run, but this is an exercise in debt management, not saving money. If you are really struggling then you may have to talk to the companies that you owe money to and come clean about the fact that you are in trouble. You can then agree a figure with them that you can pay each month perhaps a little lower than their standard minimum repayment figure.

• Take the debt test – from the new FSA site, money laid bare

Don’t Lose Your Rag

Don’t be scared about talking to these companies, the person you will talk to won’t be overjoyed that you are having the conversation but they won’t shout at you and neither will they insult you. It is their job to speak to people that are having financial trouble and they do so everyday. It is also their job to make sure that something, no matter how small, is paid to the company they work for. Above all, don’t lose your temper out of frustration when speaking with them: that is only a sign of your despair and not helpful to anyone.

The Light and the Tunnel

There is always light at the end of the tunnel no matter how far away it might seem. If you are really unable to cope with managing your debt problem on your own then speak to one of the debt management companies that you can either find in Yellow Pages or online. They will charge you a fee, but they make all the calls to your debtors and you will at least feel that somebody is on your side.

General Loan Advice For Managing Debt is a post from: Glitec Loans