Savings Advice

Personal Loans

Mar 092011

loans Personal Loans offer you the opportunity to borrow money from a financial institution, such as a bank and gradually repay the amount borrowed in installments over an extended period of time. A personal loan can be taken out for a wide variety of reasons such as financing an extention, going on holiday, or even paying for private medical treatment. In exchange for the personal loan, you will be required to pay interest on the amount you have borrowed, which means that the total amount you repay will exceed the initial value of the personal loan.

Before you decide to take out a personal loan, consider all your options carefully and make sure that you will be able to afford the repayments. Failing to make repayments will have a detrimental effect on your credit rating. But if you handle it correctly a personal loan can enable you to manage your finances more easily and provide you with extra finance when you need it most.

When you understand the advantages and disadvantages of personal loans in general, comparing the loans on offer will prove easier.

Advantages of a Loan
Loans are a fast way to obtain funds for a special purchase or project, and even large amounts can be borrowed for almost any purpose. They are suitable for expensive purchases that require immediate payment, allowing you to spread the cost of the purchase and manage your short term finance easily.

There is a lot of competition amongst lenders, which usually makes it possible for you to negotiate a cheaper interest rate than the one which you are initially quoted. It may also be worth investigating whether there is a specialist lender who can provide loans tailored to your specific purpose, for example buying a car, since they may offer you a cheaper or more suitable loan.

Disadvantages of a Loan
Loans constitute a long-term financial agreement and used in the right way can be a useful financial tool. Anyone considering applying for a loan should look at their income and expenditure carefully, and calculate exactly how much they can afford to borrow based on how much money they can spend on repayments each month, once their other financial committments have been honoured.

If you cannot afford to make repayments when they are due, you may face a penalty. If you have chosen to take out a secured loan, you may even lose your home. For this reason it is important to read all the ‘small print’ of any loan contract to see what penalties could be levied, and consider whether or not you should be applying for a loan at all. If you default on the loan, your credit rating and ability to access credit in the future will be detrimentally affected.

You could also be penalised for making a large lump sum repayment to pay off your loan sooner than agreed. Although most loan companies will allow you to do this, they may charge you an early repayment fee.

For anyone wishing to borrow only a small amount that they aim to pay back within a short period of time, a credit card may be a better solution because the balance can usually be paid off in full at any time without incurring early repayment fees.

Savings safety net

Savings Advice No Responses »

Mar 032011

You can save safely with Banks and Building Societies because of the UK governments savings safety net.

All British savers have the first £85,000 of cash protected in the event of their bank or building society going bust from the 1 January 2011.

This £85,000 limit is applied ‘per individual, per bank’, so if you have more money than this to make sure your savings are government backed put any cash that you have more than the £85,000 limit in to another bank or building society. Remember that joint account customers can get up to £170,000 refunded if their bank fails.

The savings compensation was brought in after the banking financial crisis a few years ago and basically means that If you’re bank or building society hits the walls you are protected. This means that savers can claim back up to £85,000 back from the Financial Services Compensation Scheme (FSCS) – £170,000 for a joint account.

The £85k and £170k (joint account) limits do not apply to money held with National Savings & Investments, where all of your money is 100% guaranteed by the Government.

As Building societies are mutuals, where each member is effectively a shareholder, all building societies are independently governed by their own boards and cannot be owned by another institution. So each of the nation’s building societies will be separately covered by the FSCS up to £85,000 for each member.

Building societies will tend to support each other if the worst happens and their self-protecting outlook means another society is likely to step in and merge with another that may be in trouble.

Further House price Falls are inevitable

Savings Advice No Responses »

Jan 082011

house price falls Further falls in house prices are ‘inevitable’ and will continue into the new year, according to the latest report from property specialist Hometrack.

The forecast came as the index, which surveys estate agents across England and Wales, showed property prices dipped by 0.9% in October – the biggest monthly fall since January 2009.

But Hometrack says it expects a modest drift in the market and not a repeat of the dramatic slump of 2008 to 2009.

‘A stand-off is beginning to emerge between buyers waiting for prices to fall further and sellers being unrealistic on the price they’re willing to accept,’ said Richard Donnell, Hometrack’s director of research.

‘Further price falls are inevitable in the run up to Christmas and are likely to continue into the first half of 2011.’

‘We expect a modest adjustment in prices rather than a return to the double digit falls seen in 2008.’

After registering robust gains as house prices bounced back from their recent lows in spring 2009, the property market has come off the boil in the past six months.

The number of transactions remains low and Hometrack said that house prices were likely to continue to slip into the first half of next year.

You can read more here:http://www.fmwf.com/taxonomy/personal-finance/2010/11/falling-house-prices-are-inevitable/

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Will our kids get into more debt?

Family Money Saving, Savings Advice No Responses »

Jan 062011

A third of parents believe their children will be less equipped in the future to deal with their finances than they are.

Despite the credit crunch and the focus on finances, the nation’s parents admit they are worried about whether the next generation will be able to manage their own money, research from M&S Money has revealed.

It shows that a quarter of parents are fearful, despite the more cautious financial environment we’re now in and that it will still be easier for their kids to get into debt than it was for them.

A third think their children will be less able to manage their money than they are.

Almost one in five say their children will be ill equipped to understand and deal with their own finances, as there is simply too much jargon to wade through and not enough practical guidance in schools.

Despite this, almost a third of parents believe that imparting their own experiences can help children learn and improve future financial challenges.

They are confident that by being more open than their own parents were with them and integrating finance into the school syllabus, their children are more likely to be able to cope with future personal finance challenges.

A fifth of today’s parents said their mothers or fathers had the most influence over how they manage their own personal finances.

Colin Kersley, chief executive of M&S Money, said: ‘Having been through one of the most complicated couple of years for family finances the importance of getting things right for the future has never been more important.

‘Too many of today’s parents are not yet confident about the nation’s efforts to improve financial awareness and ability for the next generation.

‘Providing practical guidance in schools as well as offering simple and transparent products is really important.

‘The goal that our children will be more able to handle their own finances is worthwhile and one that industry, consumers and Government must work on together.’
You can read the full article here: http://www.fmwf.com/taxonomy/students/2010/11/parents-fear-their-kids-will-get-into-debt/

Photo Credit: http://www.flickr.com/photos/bradjward/

Bank of England advises "spend not Save"

Savings Advice No Responses »

Oct 032010

photo Credit - http://www.flickr.com/photos/x-ray_delta_one/

Is this the worst piece of financial advice ever? Charles Bean, no less a figure than the Deputy Governor of the Bank of England, has told British consumers that they should be spending rather than saving to help the economy recover.
To add insult to injury, he added that savers shouldn’t expect to be able to live off their interest in the current climate, but should be looking to “eat into their capital” to help make ends meet, and, where necessary, use the equity they have in their homes.
Such advice may sound like madness at a time when thousands of workers fear job cuts, there are record numbers of insolvencies, concerns about a housing market slump and a double-dip recession, and the pensions gap is wider than ever.
Prudent savers have been hit hard by the financial crisis and subsequent recession.

The measures taken to stabilise the banks and kick-start the economy have resulted in rock-bottom interest rates and rising inflation – both anathema for those trying to build a decent nest egg for their retirement.
While the Bank of England’s economic policies have cushioned those who mortgaged themselves to the hilt, splurged on credit cards and spent all they earned, helping to create the debt bubble in the first place, many are angry that no help has been given to savers, who outnumber borrowers by nine to one.

Now they are being urged to sacrifice some of their hard-earned savings in order to give a temporary boost to the country’s output.

Mike Warburton, an accountant with Grant Thornton, is one of many to have branded Mr Bean’s comments “irresponsible”, saying they run contrary to sound financial advice.