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Five Tips to Ensure You Repay Your Loan on Time

It is really important that you make your loan repayments on time. If you miss a repayment you will get charged and you may find that your interest rate will go up. It will appear on your credit record and not only will it make it harder for you to borrow money in the future you may also find borrowing is more expensive and you may have trouble with other things such as renting a home or getting a job. It is therefore so important to make those repayments and below are five tops to make sure that you do.

Set up a direct debit for your loan repayments so that the money leaves your bank account as soon as you are paid. Make sure that there are not too many other payments going out that day, so that there is a big chance that there will be enough money there to cover the cost of the loan. Think about the date that you are paid and if it is not the same date each month (perhaps the last Friday of the month) then set the payment to come out on the next day that you know the money will definitely be available (such as the first of the month). By doing this you will not have to remember to make the payment and you should have money in your bank account to cover it.

Make sure that you are aware of how much your loan will cost you each month. Sites like Emu Payday Loans display this information clearly but other lenders may not divulge the full picture. If you have a variable interest rate then it could change. Most lenders will increase their interest rate if the Bank of England base rate goes up. You need to be aware of these changes so that you can ensure that you will still have enough money to cover the loan repayment. Find out how your lender lets customers know about rate changes and when you do get notified make sure that you calculate what that will mean for you in monetary terms so that you can check that you have enough money to cover the change in repayment amount.

It is wise to make sure that your loan rates are competitive. It is wise to frequently compare rates so that you know that you are not paying more than necessary. It may mean that your repayments will not increase too much over the term of the loan and therefore it will make it easier for you to manage. Do make sure that you check whether there are fees for switching though. There may be administration fees for opening new accounts and fees for paying back loans early, so make sure you are aware of these first.

It can be a really good idea to make sure that you have some money in reserve to cover a few loan payments just in case you are short of income for a few months. If you save some money each month this could soon add up to enough to cover a few repayments. You will then have the peace of mind of knowing that you have some extra money to play with just in case you find that you are short for some reason.

If you think that interest rates will rise or that you will be short of money one month, then you may worry that you will not be able to cover the cost of the repayment if this happens. This can be a difficult situation to cope with particularly if you have not managed to save anything as suggested above. It can therefore be worth having a backup plan in case this happens. You might be able to do some overtime at work, ask for an advance on your salary, sell some things to raise money, borrow form friends or family or something else. If you have a plan, then you will be able to relax more and not worry so much about what might happen should you be in this situation.

So there are some things that you can do to help make sure that you will pay back your loan on time. It can help you to put your mind at rest if you know what your options are and that you are as well prepared as possible. It is also a wise thing to do as it could end up saving you a lot of money.

Will a Reduction in Student Loan Interest Rates be Significant?

The UK news has recently stated that there may be a reduction in interest rates in student loans. There are many students and parents of students who are really pleased about this announcement as well as those looking to do degrees in the future. However, how much of a difference will this make to most students?

Student loans in the UK are currently paid back over thirty years and then any remaining balance is written off. The repayments only have to be made once the graduate starts earning above a certain amount, currently £21,000 and will gradually increase as they earn more money. After the thirty years are up, any money that is left owing will be repaid by the government. At the moment many graduates start off on lower incomes and do not increase that quickly. This means that over three quarters of them do not repay their whole student loan by the end of the thirty year term. The interest on the loan is only a small part of what needs to be repaid and so those students that have not paid it all back are unlikely to have repaid the interest anyway and therefore any change in rates will be irrelevant to them. Therefore rate changes will only have an effect on students that are high earners once the graduate.

As student loans are relatively new in the UK many people do not fully understand them and the consequences of different things on them. It is well worth making sure that you completely understand how they work so that you can understand the relevance of any changes that are made to them.

One main worry for students is that the government could change the rules with regards to student loans. This has already happened once when the salary threshold for repaying was fixed at £21,000 when the government had said that it would increase with inflation. Although this may not have huge impact, what is significant is that the government changed the rules. If they do this again, it could have a more significant impact and may affect more people. Also with governments changing so often, within the thirty years term of a loan, there could be changes made which could have a big impact on student borrowers. It is hard to believe that a huge change could happen in one go as it would have a big impact on the popularity of that government, which is something that they will want to avoid. However, a series of small changes could have an impact. Although this can be a worry, it is worth remembering that this type of borrowing is still very much more favourable for most people, particularly the three quarters that do not have to repay the full loan, compared with standard lenders.

Interest rates could change a lot over the years as well. The student loan rates are supposed to reflect inflation and so if inflation increases sharply, then the loan rates will as well. However, this could even out if it falls. The Bank of England do try to keep inflation at a fairly steady level by adjusting quantitative easing and interest rates so chances are the changes will not be that significant anyway.

Whether to get a student loan can be a tricky decision and should be considered with care. It is a good deal compared with other forms of borrowing and if you want a degree or to have the opportunity to get a better paid job, then it is likely to be your only option. As long as you are sure that you will finish the course and that you will use the degree, then it is probably a wise move. The borrowing is not like a standard loan as repayments are taken out of your tax code and therefore you will not have to remember to repay or find the money for it. You will just pay more tax and therefore your net salary will be lower as a result. The good thing is that you will not have to calculate how much you need to pay back or when as the tax office will do that for you.

Is it Wise to Get a Second Credit Card?

Many people have a credit card and they can be useful for paying for items and getting a delay before they have to be paid for as well as offering extra security when buying things online. However, you may consider whether you should have a second card and this is something that you should think about really carefully.

It is wise to always think hard before you take out a loan and applying for a second credit card could be thought about in that sort of way. You will have credit available to you and you need to decide whether it is something that you really need. Some people feel tempted to spend available credit and will buy more things than usual because the money is available to them. Although this is not the case for everyone, it is important to be honest with yourself and think about whether you might be tempted to do this.

It is also good to think about why you are looking for a second card. If you have been offered the card then it is best to turn it down. If it was not something that you were considering then why take it on. It will just create more paperwork for you, decisions when spending as to which card to use and extra accounts to keep a track of. It just adds complication. However, if you are looking for a second card because you feel that you need the money, then this is different.

It is good to think about why you need the extra money and whether getting a credit card to get it is the best way. Credit cards are very expensive unless you pay off the full balance each month. It is much cheaper to use savings, not spend so much money or save up to buy items than to use a credit card and then repay it slowly over time. You may have other options available to you that could be cheaper or easier or both.

It could be easier to ask whether you could increase your credit limit on your current card. This would make it much easier to keep a track on your spending than getting a second card because you will not have to check the balance on more than one. You will also not have to make sure that you pay two bills but just one which should make things a lot easier.

Another option could be to use any savings that you have instead of borrowing money. Although it can feel good to have savings and they earn some interest, they do not earn anything like as much as credit cards cost. You would save a lot of money in interest if you used savings to buy things or pay off the credit card debt rather than having them sitting in an account. If you do not have savings and can wait for the things that you want to buy then it could be best to save up for them. While you are saving the money will be earning interest and you will not have to pay extra when you buy them, compared to the extra costs of buying things on a credit card.

If you do need to borrow money then research other types of borrowing. Compare the costs and see if there are any cheaper ones available. It is always worth doing this before you borrow any money as you could end up saving a significant amount of money. It could be worth asking a financial advisor for help with making a decision as they will know what loans are available to you and what might be the cheapest.

There are circumstances where a second credit card could be useful. However, you need to make sure that you really do need the money and that you will not be tempted to use it to spend more money than you actually need to spend. Make sure that you keep a close eye on what you are spending and make the monthly payments when they are due to avoid excessive charges. Try to pay it off as soon as you can so that the borrowing is as cheap as possible. With a credit card you can pay it back whenever you like, so there is no need to wait until you get a statement.