Why are some people better at saving money? Could your pension be at risk? How to kick start your business with a guarantor loan? Find out the answers to these questions and more from the independent loan broker Solution Loans, with lots of money saving tips and expert financial advice on a range of issues, from family budget travel to cheap home improvements and more.
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Are you paying too much for your insurance? Most of us consider insurance essential, whether it’s for your home, car, pet or holiday. However, it’s often difficult to know whether you’re getting the best deal when it comes to policies. The post How to avoid being ripped off by insurers appeared first on Solution...
Are you paying too much for your insurance? Most of us consider insurance essential, whether it’s for your home, car, pet or holiday. However, it’s often difficult to know whether you’re getting the best deal when it comes to policies. Now, a new assessment from the Financial Conduct Authority (FCA) suggests that many people are being overcharged for insurance and that this is disproportionately affecting those on low incomes. So how can you avoid the big insurance premium rip-off?
The FCA found that six million motor and home insurance policyholders are being overcharged by insurance companies by around £200 a year – each. According to the regulator, this is the result of the “loyalty penalty,” whereby the customers that remain loyal to insurance companies are not being offered the best deals. However, the regulator’s negative assessment of the insurance industry goes further than highlighting how insurance companies aren’t giving loyal customers the best deals. It also found that the sector is actually targeting those they consider to be the most loyal with the biggest price increases because they are the least likely to switch. There are also many ways in which the insurance industry will try to put up obstacles to customers leaving for another, cheaper provider, for example by using automatic policy renewal practices. The spotlight being shone on the industry by the FCA comes in the wake of a significant rise in customer complaints about the insurance sector – complaints about renewal hikes, for example, increased by two thirds in just one year.
Recent examples of those who have been hit by the premium rip-offs have been published in the mainstream media. They include:
Elderly and low-income groups were identified by the FCA as the most likely to be hit by insurance price rises. Two years ago the FCA introduced the practice of requiring insurers to publish the premium from the previous year when sending out a renewal letter to try and stop this happening. However, there is still more that could be done, for example requiring providers to automatically switch a consumer to the cheapest deal that is most appropriate for them.
Insurance may be essential but that doesn’t mean that you have to be caught out by insurance premium rip-offs.
For most of us, the concept of debt is as a sum that is borrowed and then repaid as soon as possible. However, while that might be the case for regular finance, student loans are rather different. As a result The post Should I repay my student loan early? appeared first on Solution...
For most of us, the concept of debt is as a sum that is borrowed and then repaid as soon as possible. However, while that might be the case for regular finance, student loans are rather different. As a result of the very specific terms and conditions that come with student loans, for some people, it may actually make more financial sense not to repay student loans. So, how does it work?
This is the first essential question. Depending on when you went to university you will have a different type of loan and alternative rates of interest and repayment might apply.
First of all, it’s worth noting that most student loan repayments will be automatically deducted from your salary once you go over the specific threshold for your type of loan. So, you will not have any choice about making the basic repayments. What many students are currently struggling with is the question of whether they should overpay on a loan – or pay it off completely if they have the cash. The short answer to that is unless you are earning more than £50,000 a year, you’re otherwise debt-free and you’re not likely to want to get on the housing ladder any time soon there may not be any financial benefit to you in committing to total repayment. Here’s why:
Rather than trying to clear such low-interest debt that is going to disappear at some point anyway, it makes sense for many people to invest extra cash elsewhere. For example, you might have credit cards or other debts from your student days that are smaller but have higher interest rates. So clearing other debt should be more of a priority than overpaying on student loans. Putting money aside into savings can also be more constructive than sending it to your student loans lender. If you’re lucky you might find a savings interest rate that is higher than what you’re paying for student loans. But you can also create some security by putting that additional money aside for a rainy day.
For many people, working to overpay or fully repay student loans as soon as possible just to be debt-free just isn’t financially smart. Rather than worrying about having that debt hanging over you, it may well make sense to use the extra money in a different way to help secure your financial future.
The rollout of smart meters across the UK was supposed to make life easier for consumers and introduce a new level of transparency to energy use. However, the original deadline set by the government to have smart meters installed (or The post Why are smart meters delayed? Is this a problem? appeared first on Solution...
The rollout of smart meters across the UK was supposed to make life easier for consumers and introduce a new level of transparency to energy use. However, the original deadline set by the government to have smart meters installed (or at least offered) to every home in the UK by 2020 has now been delayed. Instead, a new target of 2024 has been set. So, what does this mean for UK consumers and why has the rollout fallen so far behind schedule?
At the time the deadline was set energy providers suggested that it was not realistic. Most felt that that the technology required was just not ready. Plus, many providers said that they simply wouldn’t have the time or resources to get smart meters into the requisite number of homes by 2020. The new deadline means that they now have until the end of 2024 to install smart meters in at least 85% of customers’ homes.
Partly due to problems surrounding the technology itself, there have been a number of issues that have arisen with those smart meters that have already been installed. For example, many consumers found that the smart meters they were given only worked if they stayed with the same supplier and were useless if they switched. Some smart meters only work sporadically and others seem to be affected by changing environments, such as weather conditions.
As of June 2019, around 15 million smart and advanced meters were up and running in the UK. The overall goal for installation is 53 million smart meters in both homes and small businesses – now by 2024.
A smart meter is basically the same as a traditional electric or gas meter used to monitor energy consumption. The big difference is that the information it collects is sent straight to the energy supplier. Consumers are also able to monitor their own energy usage via the data that appears on the smart meter screen.
It will give energy companies a chance to fix the technical problems that have plagued smart meters and to find a model that works for everyone. It could also help to avoid a swathe of customer service complaints. In order to meet the rollout deadline, many energy companies have been repeatedly and aggressively targeting consumers with smart meter communications. This should ease off now that the deadline has been moved.
Although energy suppliers are under an obligation to ensure that every home is offered a smart meter, there is no requirement for consumers to accept one. There is no upfront cost to consumers in having a smart meter but no obligation either. Consumers can choose to have a smart meter when offered, to request one from a supplier if not yet offered, or simply to opt to have one installed at a later date. That applies to homeowners as well as to tenants who pay their energy bills directly to a supplier, as opposed to via a landlord.
Although this is arguably the worst time for a delay to the smart meter rollout – given that Brexit is on the horizon, winter is coming and many individuals are struggling financially, it may turn out to have had advantages. Smart meters that work and actually provide promised benefits for consumers – as opposed to making life more difficult – will be far more beneficial even if they arrive a little late.
Illegal money lenders – or, loan sharks – have a deservedly negative reputation. They frequently target those already struggling with financial problems and make it even more difficult to get back to a positive place. Loan sharks are unregulated and The post The Success of the Illegal Money Lending Team appeared first on Solution...
Illegal money lenders – or, loan sharks – have a deservedly negative reputation. They frequently target those already struggling with financial problems and make it even more difficult to get back to a positive place. Loan sharks are unregulated and often resort to illegal methods when it comes to forcing consumers to make repayments. As a result of the sinister nature of this industry, the England Illegal Money Lending Team (IMLT) was established in 2004 to provide support to borrowers and to investigate and prosecute loan sharks. Although it initially began life as a pilot scheme in Birmingham, today the IMLT works across the country and has had a great deal of success.
Illegal money lenders (loan sharks) are identifiable in a number of different ways. For example, they might be offering a cash loan that doesn’t come with any paperwork or records. Frequently, the interest rates offered by illegal lenders are high and can change without warning, and there may be no transparency over how much is actually owed. Plus, loan sharks often resort to threats and taking possession of a borrower’s valuables without any right to do so. In 2010, more than 300,000 households in the UK were in debt to illegal money lenders. It was because of the growth in the illegal lending industry that the IMLT was established. So far, the team has provided support for more than 29,000 people and written off over £74.9 million worth of illegal debt.
While loan sharks may initially appear to be offering a solution to financial problems they are not regulated and frequently resort to intimidation and unfair practices. Many people borrow small amounts from an illegal money lender but find that they owe vast sums as interest escalates and random fees and charges are applied. Repayment can be requested at random and violence, or even demanding sexual favours, is not unknown when it comes to forcing repayments. As a result, research has found that victims of loan sharks frequently go without food or heating or skip payments on rent or mortgages just so that they can meet the demands that an illegal money lender has made. Many victims just don’t feel that they can fight back against loan sharks because they are powerlessness. The IMLT was established to support those who have fallen victim to loan sharks and to ensure that illegal money lenders don’t get off scot-free.
Loan sharks are often particularly insistent on consumers making repayments because an illegal debt cannot be enforced by law. However, this has also meant the IMLT has been able to write off a large number of these debts – some £75 million in total – and has been able to provide support for 29,000 people who were struggling as a result. The team has also been able to carry out prosecutions for illegal activity. This has included prosecutions for illegal money lending and also for other offences, including wounding, assault and rape.
Illegal money lenders prey on the most vulnerable people and communities, often starting out friendly and helpful and become increasingly intimidating and violent. It’s an industry that can do a lot of damage despite the fact that the loans aren’t actually legally enforceable. What the IMLT has done is to shine a light on the problems surrounding loan sharks, to provide support to the victims and to start holding people accountable.
If you’ve been approached by a loan shark you can report them here. For your own safety, you should never use an unregulated provider of credit. Make sure that you only use a credit broker or lender who is regulated by the Financial Conduct Authority, as Solution Loans is.
Credit Reference Agencies in the UK have a key role to play in the way that consumers interact with financial institutions. Any time that you make an application to borrow money, for example, the information that an agency has compiled The post How do credit agencies get their data about you? appeared first on Solution...
Credit Reference Agencies in the UK have a key role to play in the way that consumers interact with financial institutions. Any time that you make an application to borrow money, for example, the information that an agency has compiled about your financial history will be checked by the lender. Credit Reference Agencies generate their own credit scores from this information too. Although lenders don’t use these scores they can still be a good indicator of whether you’re likely to be successful when applying for credit. Given the importance of the information that Credit Reference Agencies hold on all of us where exactly do they source it from?
When a lender accesses your credit file they won’t see whatever score that Credit Reference Agency has compiled about you. What they will see is a range of different pieces of data that will be used to build up a picture of your creditworthiness. It’s worth noting that the maximum length of time data is likely to stay on your credit file is six years (e.g. for late payments) – most of it (e.g. other searches carried out) will disappear more quickly. This information includes:
It’s important to understand what kind of data is in your credit file, as well as where this has come from. Most of the time it is up to consumers to regularly check their credit history and to ensure that the information provided by the sources that Credit Reference Agencies use is correct. So, if you want to avoid having a credit problem then it’s key to ensure you know what’s in your credit file – and that you check it on a regular basis.
This 4-minute video explains in more depth how you can go about actively managing your credit file to ensure it reflects reality – this includes how to remove incorrect data held about you that might adversely affect your ability to get credit in the future:
The guarantor loans industry is officially booming. Borrowing with the support of a friend or family member is very appealing, especially to anyone with a low income or without a perfect credit score. As a result, balances on guarantor loans The post The strong growth of guarantor loans continues appeared first on Solution...
The guarantor loans industry is officially booming. Borrowing with the support of a friend or family member is very appealing, especially to anyone with a low income or without a perfect credit score. As a result, balances on guarantor loans have more than doubled since 2016, as the use of this type of loan has increased significantly among consumers. The total borrowed under guarantor loans is now approaching £1 billion. But can the industry continue to expand in this way and is anything – including potential regulation – likely to slow it down?
The concept of guarantor loans is not new but technology and the internet have provided a way to offer access to a wide range of consumers. Borrowers who might otherwise have trouble getting approved for finance can ask a friend, colleague or family member to stand as a guarantor for their borrowing. Lenders are more likely to approve applications that are backed up by a guarantor who has a strong credit rating and/or is a homeowner. If the original borrower is not able to make payments on the loan the guarantor will step in and do this instead. The benefit of guarantor loans is that they can make lending accessible to those who otherwise would not be able to borrow – a guarantor is effectively a form of additional security for the lender.
There has been a steady increase in the number of consumers taking out guarantor loans, as well as the number of lenders in the sector. The market for online loans has expanded considerably with a range of new guarantor lenders popping up online. Some of the biggest players in the guarantor loans market are currently enjoying a lot of success – for example Amigo Loans has reported an increase of 17% in customers year on year and Non Standard Finance recently revealed a rise of more than 50% in its guarantor lending arm. However, this year there have also been some signs that the market is not as strong as it appears to be. For example, in August Amigo Loans share price took a 53.6% dip after the lender announced a rise in first-quarter impairments and costs and issued a warning that its ongoing growth could be relatively slow.
So far, the Financial Conduct Authority (FCA) has paid little attention to the guarantor loans industry but this year that also started to shift. Given the huge changes that have been forced onto payday loans to protect consumers in recent years, it was perhaps no surprise that the same would follow for other forms of higher-cost credit. The regulator has expressed concerns over the high-interest rates that accompany guarantor loans – particularly as the additional security of a guarantor is, in theory, there to provide the reassurance lenders need to charge relatively normal rates. Other potential problems include:
The guarantor loans industry in the UK has been experiencing a period of incredibly positive growth in recent years. Lenders have seen profits soar as the number of consumers using the loans rises considerably. However, there are some indications now that the market might be stalling. Issues are beginning to arise with the way that these loans are being handled, with the number of guarantors who are forced to take over the repayments and with the affordability of this type of lending. Whether as a result of new regulation, or a drop in consumer confidence, change could be necessary for lenders in this industry soon.
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