• Spotlight on Payday and Logbook Loan Advertising: Pitfalls of Payday Cash Advances and Loans secured on a Car

    Adverts for payday loans in particular were criticized in the Credit Action report. Their chairman Malcolm Hurlston said: “Many of the ads for payday loans are from small US-owned firms branching out to a new market… There are also illegal ads from a number of big name companies active in the UK for a number of years…”

    So have things changed one year on? Well, Credit Action has said: “Mission accomplished,” which is great news for consumers. However payday and logbook loans are still with us, so it’s essential that potential borrowers understand the nature of such loans before signing any legal agreement.

    What are Payday Loans?

    Many will recognize the scenario of running out of money just a short time before their next salary is due forcing them to apply for a payday advance. An Internet search for companies advertising payday loans reveals thousands of results. So what’s on offer?

    Payday loans tend to be less than £1000 and be based on salary and are offered to people in fulltime employment with a bank account. A check guarantee card is normally required.

    A search of online payday loans advertisers shows that in many cases an Actual Percentage Rate (APR) of between 1355–2680% is not uncommon. While some of the sites are transparent about their APR some hide it in the small print and a few don’t show it. Some businesses, in an attempt to defend the interest rate, argue that the APR appears artificially high because of the short-term nature of the loan.

    What are Logbook Loans?

    Logbook loans are specifically targeted at the most vulnerable people in society, those with bad credit history, with little chance of getting a loan from more traditional sources.

    This type of loan comes with a very high rates of interest. One online example had a typical 437% interest on a £1,500 loan. Repayments on this amount at this APR over 78 weeks would result in a total repayment of £4,180.

    Loans Secured on a Car

    The loans are secured on the car, the ownership (logbook) of which is transferred to the lender. In return the borrower keeps the vehicle to use. However if payments are missed the lender can take the car and If it’s subsequently sold for less than the amount owing on it, the balance has to be paid. So it’s possible to end up with no car and still be in debt.

    Credit Action work with the debt counselling charity the Consumer Credit Counselling Service (CCCS) to offer people with personal debt problems free and independent advice.

    The information in this short article is not exhaustive and does not constitute financial advice.

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  • Federal Student Loan Consolidation Interest Rate

    Federal student loans consolidation interest rate is always the lowest among all. The main problem that the students are facing these days is repayment of student loans. Along with practical reasons and the hassling work, there are problems of employment and underemployment too with some of the students. Consolidating student loans help lower the monthly installments of the students as the loans get consolidate at lower rate of interest and the loan tenure is increased. This eases and makes the borrower pay off his installments comfortably as well.

    However, if you are a student or recently completed your graduation and you are finding it difficult to pay off your student loans, consolidating all your loans will be an intelligent and smart option. Before this, it is good if you gather all the details of your existing student loans and then make a list of them. Mention the rate of interest and other terms against each of the loans. This will help you compare the options with your existing loans properly. Do not just go after the lowest rate of interest because many a times it has been observed that the companies that offer lowest rate makes you pay much more than what you would have paid before loan consolidation.

    If you need to consolidate your federal student loans, find out the federal student loans consolidation interest rate. Dealing with a federal loan consolidation company is the best way to merge your student loans. But the only limitation here is that you cannot merge your private student loans along with the federal ones. You have to consolidate them separately. Find out the eligibility criteria of the different programs and see which one fits with your conditions. Consolidating student loans can be beneficial for you on the whole provided you choose the right company.

    If you are able to select the right program, it can even improve your credit rating also. You will be able to repay your loans comfortably and there will be no question of defaults. So, evaluate and compare federal student loan consolidation interest rate against the ones that are imposed on your running loans.

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