A sign of relief for bad credit holders
It is a universally known fact that anyone can get into a bad credit situation. Poor planning or uncontrolled expenditures are not always the reasons. Unforeseen circumstances and inconceivable situations crop-up in every body's life. However, irrespective of the reasons, a person trapped in an adverse credit situation has every right to fix his finances.
The realisation that a bad credit situation is not the end of the world has made creditors more receptive towards bad credit holders or 'the sub-prime customers'. From a feared set of borrowers, it has changed into a specialised one, and lenders are targeting this group by offering affordable bad credit personal loans. The main purpose of this loan product is:
To resolve the current money problem
Provide an opportunity to restore credit for the future
As lending is a business, every lender makes sure that the chances of repayment are not bleak and that he will get his money back with profit. Hence, before approving a loan application and the amount, they calculate and categorise the applicants past, present and future credibility, and then fix the APR, and finalise the loan terms and conditions. Lenders evaluate the sub-prime loan seekers:
Credit records to asses their past credit standing as low or medium or high adverse credit
Debt to income ratio (DTI = Debts/Income) to calculate their current monetary position
Employment status to asses their future payback capacity
Collateral value (in case of secured bad credit personal loans only) to the calculate the value of the pledged collateral and available equity
Bad credit personal loans can be availed in both secured (credit support against collateral) and unsecured (credit support without collateral) form.
Secured bad credit personal loans is the best option for those UK residents who can pledge collateral (homeowners and property owners), whereas, unsecured bad credit personal loans is the only option for those who can not (tenants and students).
For obvious reasons, the sub-prime borrowers have to settle for high interest rates and stringent loan terms and conditions. Still, secured type of bad credit personal loans are gainful and are generally easier to get as compared to unsecured loan deals because they are comparatively safer for the lenders.
The author is a business writer specializing in finance and credit products and has written authoritative articles about personal loans, unsecured loans , secured loans. He has done his masters in business administration and is currently assisting Go4UKLoans as a finance specialist.
Standard solutions for credit problems
Availing a secured personal loan is all about making use of the existing resources, i.e., it is obtainable by placing an asset (like home) as security against the loan amount. This pledged collateral ensures repayment under all circumstances. That is, if the borrower defaults to payback as decided - unintentional, incidental, or deliberate – then the lender can take over the pledged asset to recover his money.
To some, these loans may seem risky or dicey. But, the fact is that they are the most certain way of getting the best possible deal. Hence, this loan type has the largest market share in the UK loan bazaar. According to the latest market report, the total secured lending on homes at the end of February 2007 stood at £1097 billion. And, that the market of secured personal loans has increased by 11.6% in the last 12 months.
Please note: Borrowers can easily take care of the risk factors by paying their monthly instalments (EMI's) as decided.
As secured personal loans are safe for the creditors, the loan request gets quick attention along with other benefits like high credit range (as high as £250,000), low interest rates (as low as 6.7%), long payback term range (5 to 25 years), variety of rate plans (fixed, variable, discounted, capped or variable) and diverse repayment methods (capital, interest or partly interest and partly capital). Borrowers also get the liberty to negotiate for flexible loan clauses like deferred payment up to six months, repayment holiday and accelerated repayment.
Report indicates that majority of the applicants in March 2007 applied for secured personal loans for amounts between £10,000 and £25,000. Out of the remaining applications, one third was for amounts below £10,000 and one fifth for amounts above £25,000. And, the average amount requested in March 2007 was £22,514 – up by 2.3% since February 2007. The report also indicates that despite being offered a repayment term range of 5 to 25 years, more than half of the applicants chose to repay their loans in the multiples of five. And, of all, the five year the five year and the ten year terms were most favoured.
The author is a business writer specializing in finance and credit products and has written authoritative articles about personal loans, unsecured loans , secured loans. He has done his masters in business administration and is currently assisting Go4UKLoans as a finance specialist.
Find cheaper bad credit history remortgages - Many tips given
Several subjects that will be covered during the report are early redemption charges, life and payment insurance, fixed rates, along with other important subjects.
The aim of this short report is to help those with poor credit histories that are looking to get a mortgage. Although we don't promise earth shattering savings, by following the simple steps a substantial saving could be made on your monthly mortgage payment. With bad credit history remortgages getting lots of rejections can be daunting and most lenders will not accept poor credit, the tips given will try to eliminate turn downs and increase you chance of getting the deal you require.
Step I : Don't stretch yourself ! With house prices so high it is easy to over stretch your budget and this could lead to debt problems in the future. Maybe fixing the bad credit history remortgages would make planning for the future easier.
Step II : Don't accept the first quote ! Weigh up the benefits of different offers using either a broker or mortgage adviser. Use online mortgage league tables to see what kind of interest rate are being offered for customers with poor credit histories.
Step III - PPI - Lots of reports in newspapers and TV have said that payment protection insurance is a scam and should be avoided. That can be the case but it depends on your personal circumstances and likely hood of needing to claim. If you have 12 months full pay if sick at work then you may not need cover. If you have no other cover in place then cover may be of benefit to you. If you are considering taking PPI on your bad credit history remortgages then rather than comparing APRs compare the total amount repayable over the whole term. Because one lender may charge a cheaper APR but a bigger amount for the protection you could be better paying a higher APR and getting the cheaper cover throughout the term.
Step IV : Use a bad credit history remortgages specialist broker or independent mortgage adviser. These specialists have lots of experience at helping similar people to you and because of the large number of lenders they can access have the best chance at helping you. The opposite of building societies and banks these agencies have access to hundreds of mortgage products and can sometimes offer cheaper rates than going direct to the actual bank lending the money.
Step V : Watch out for early settlement charges ! Sometimes when taking a mortgage you get a discounted or fixed interest rate that lasts for an agreed length of time. By moving companies within that time or sometimes even after you can be stung by early redemption charges. Always find out what the penalties are and consider your future requirements.
What should I do now ?
Ensure that the correct steps above have been undertaken then read below. For bad credit history remortgages the best site we found is Bad Credit Remortgages
Damian is the owner of many finance related websites. Including mortgage, loans and debt advice. For more information visit http://www.remortgagesupermarket.co.uk
