Figures were released from the Bank of England, and showed that consumers are trying to rid themselves of various loans and credit cards debts in a bid to try and reduce their outgoings are their overall debt levels.

The number of mortgages that were granted went up to the highest level since March of last year according to the figures.

However, overall lending levels were down, which officials have said indicated that people are less likely to take on debts in the current climate, and those that already have debts are looking to get their debts repaid as quickly as possible. During the month consumers repaid £579 million worth of debt. This reflected the biggest overall repayment on unsecured debts since records began back in 1993.

Repayments on overdrafts and loans fell for the ninth month in a row in October. It is thought that there are a number of factors behind the drop in credit card debt as well, two of the main factors being restrictions on lending levels from credit card providers and increased wariness from borrowers with regards to taking on further debt. Remortgaging levels for the month were also down according to figures.

Howard Archer, an economist from Global Insight, said: ‘The record, and fourth, successive net repayment in consumer credit in October is clearly the consequence of many consumers’ desire to reduce their debt, low demand for credit and a lack of availability of unsecured credit from banks.’

Many people are also loathe to put their money into savings at present due to low interest rates, and instead are putting the money towards paying off debt.

Borrowers trying to pay off more debt is a post from: Glitec Loans

The Advertising Standards Authority plans to keep a close eye on both financial comparison sites and loan advertisements to ensure that consumers are not misled or ripped off, and to ensure that complaints are dealt with properly.

The watchdog said that there are various rulings that have been used to set the standards that advertisers and comparison sites will have to adhere to in order to be compliant.

The ASA has already taken action against firms that have been found to mislead consumers through their advertising or make the process of taking out a secured loan to consolidate debt, such as Picture Financial Services, which had to stop ad advert last year that made light of taking out a secured loan.

After the advertisement was banned the ASA issued a report that read: “The ASA Council found the advert to be misleading for implying that consolidating unsecured loans was a decision that could be taken lightly.”

The number of adverts for financial services has been growing, and the ASA is now looking at adverts that are run on television, radio, and online.

The ASA report also said: “Our priority here is to ensure that ads do not mislead consumers and to help provide a level playing field where companies can make legitimate claims about their products and services.”

The number of complaints relating to adverts and price comparison sites dealing with financial products increased by 14 percent in 2008 compared to the previous year, and the ASA expects this number to rise again over the course of this year.

Watchdog to keep close eye on loan adverts and comparison sites is a post from: Glitec Loans

The figures also show that out of this group around 1.29 million have consolidated debts of over £20,000 in the form of credit cards, loans, store cards, and other forms of finance. It was found that people aged between 25 and 24 years were most likely to consolidate debts and move them all over to one lender. Around 23% of people in this age group have consolidated their debts and moved them all to one provider.

One official stated: “Anyone who is juggling a range of debts with money owed on credit cards, store cards and loans should be acting to get their debts under control. It is encouraging that so many people have taken action as you can make significant savings by moving all your debts to one place.”

He went on to state: “With average standard credit card rates at 17.01 per cent compared to average unsecured loan rates of 8.44 per cent it is clear that borrowers can cut their monthly interest bill by moving. However it is crucial that borrowers see consolidation as a wake-up call to get debts under control. It shouldn’t be something you keep on doing simply to tide you over from year to year.”

Recent additions:

• Debt advice companies and charities get new powers
• Darling wants banks to help vulnerable families
• Debt relief orders could make bankruptcy too easy
• Is debt consolidation the answer?
• CAB reports rise in enquiries relating to mortgage arrears and debt

Debt worries result in many consolidations is a post from: Glitec Loans

Consolidation is undoubtedly the right move for some consumers, as it means that they can reduce the number of debts and creditors that they have to deal with, reduce the amount that they pay out each month, and really streamline their finances, making financial management far easier and less stressful. However, there are also those that may not find consolidation very effective.

Those with little willpower when it comes to spending could find that consolidation actually lands them in a heap of trouble, as they may consolidate their debts, such as credit and store cards, and then quickly run up their original debts again. This will leave them with the consolidation loan to repay as well as the original debts, putting them in an even worse situation than before. Also, those with poor credit may find that they cannot get a low rate consolidation loan, and therefore may not gain any financial benefit from consolidating.

One the other hand there are plenty of people that can benefit from consolidation providing they exercise some willpower and determination, and do not run up debts again. In fact, research shows that over the past three years around 6.5 million borrowers have consolidated debts in order to reduce their outgoings. Out of these around 1.29 million have consolidated debts of £20,000 or more, including credit cards, store cards, loan, and other forms of finance.

One industry official recently stated: “Anyone who is juggling a range of debts with money owed on credit cards, store cards and loans should be acting to get their debts under control. It is encouraging that so many people have taken action as you can make significant savings by moving all your debts to one place.” He went on to state: “With average standard credit card rates at 17.01 per cent compared to average unsecured loan rates of 8.44 per cent it is clear that borrowers can cut their monthly interest bill by moving. However it is crucial that borrowers see consolidation as a wake-up call to get debts under control. It shouldn’t be something you keep on doing simply to tide you over from year to year.”

According to figures around 14% of borrowers have moved their various debts to one provider through consolidation in the past three years. It is thought that younger people aged between 25 and 34 are most likely to consolidate, with 23% of consolidators falling into this age group

Recent additions:

• CAB still dealing with many debt enquiries
•  Broker could be facing severe problems
• First annual fall since 90s for house prices
• Lord Hunt recommends changes to FOS

Is debt consolidation the answer? is a post from: Glitec Loans

There are many benefits to taking out a secured homeowner loan. These loans are often available to those with bad credit who cannot get unsecured finance, making them accessible to more people or for applicants wishing to borrow over £20,000. You will find that based on the level of equity that you have in your home the borrowing power with a homeowner loan compared with an unsecured loan can be far greater. Also, the repayment periods with homeowner loans are longer, which means that you can spread your repayments over a longer period and enjoy lower monthly repayments.

You will find a number of lenders that offer secured loans, and both the eligibility requirements and the terms and conditions can vary from lender to lender. It is important that you compare different homeowner loans from a number of lenders in order to get the best deal and the most suitable loan for your needs. You should compare the interest rate to ensure that you get a competitive rate of interest, although you should remember that if you have a bad credit rating the interest rate that you get is likely to be significantly higher than for those with good credit.

You can use a secured homeowner loan for all sorts of purposes, making this both an affordable and a flexible way of borrowing money against your home. You can use the cash to improve your home with new fixtures and fitting or simply a decorative facelift. You may want to reduce your monthly outgoings and make financial management easier by paying off al of your smaller, lower interest debts, so you could also use your homeowner loan for debt consolidation, leaving you with just one lower interest loan to pay rather than a number of higher interest debts.

You may be considering treating yourself to the trip of a lifetime, whether it is backpacking around Europe or exploring far flung destinations, and a homeowner loan provides an effective way of raising the money to fund this type of trip, so you won’t have to miss out on seeing the world simply due to a lack of finances. You may be looking for ways to fund a dream wedding either for yourself or for a child who is getting hitched, and again these loans provide an effective way to pay for this type of event.

There are many other things that you can use our secured homeowner loan for, from buying a new car to paying for an education. By comparing different homeowner loans and finding a low rate loan you can enjoy value for money on your borrowing and you can untie the equity in your home without having to worry about selling up and moving on.

What can you use a secured loan for? is a post from: Glitec Loans

How Secured Loans Work

A secured loan is a loan offered to a homeowner secured on the value of the house. It is a good option for people who own a house but who have County Court Judgements (CCJs), arrears or defaults in their credit history. It doesn’t even matter if the house is mortgaged, as long as the borrowers have some equity in it. Lenders will take a first charge on an unmortgaged home and a second charge on a mortgaged home. This means they will get paid if anything happens to the borrower. Secured loans have lower interest rates than unsecured loans because of this added security for the lender.

Lenders normally have the home valued and will lend up to 85% of the equity for periods of up to 30 years. This is much longer than the normal 10 year period common with unsecured loans. Some lenders may even lend 125% of the equity, which is fine in a booming market, but not if the property market is in a slump.

As with other loans, interest rates for secured loans can vary and this is another potential problem. If someone has borrowed more than the equity of the house and the interest rate continues to rise, the borrower could then be in a negative equity situation. In other words, the borrower could end up owing more than the value of the house. This borrower has ended up with a toxic loan.

Toxic Loans

Simply put, a toxic loan is a loan that damages the borrower’s financial health. In this situation, a borrower who ends up negative equity could struggle to meet the loan repayments. That means that the borrower is at risk of losing his or her home.

Many people use the option of secured loans for debt consolidation, rolling all debts into one to make a lower monthly repayment, but this is not always a good idea. A loan secured on the value of the borrower’s home always carries a risk. Property values go down as well as up, and so do interest rates. For those who can, it is best to look at other finance options before deciding on a secured loan.

One of the problems with secured loans is that loans above £25,000 are not regulated, so borrowers need to beware before signing on the dotted line. Read terms and conditions very carefully and check out loan companies with the Financial Services Authority. Above all, borrowers should make sure that they can really afford the repayments. A bit of advance planning could prevent them from ending up with a toxic loan.

More Information:

• Toxic loan advice – free advice on toxic loans fom Realtor
• Toxic loan article – article from Reality times
• BBC – Press Office – Real Story: Home or a Loan? – article from the BBC on toxic loans

Have You Got A Toxic Loan? 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