Usually, during hard times like experiencing low financial status or rather unemployed, you will probably find it very difficult to get a loan on a standard basis. In fact, almost all the reputed financial institutions will simply decline your request to offer credit if you do not have a regular income job.
Alternate to this situation, if you can convince them that you are able to pay back the debt on schedule, then you may be issued with a standard loan. However, the better your financial level, the more attractive would be the terms and conditions of the loan granted to you. This indicates that you will be offered the highest interest rate if you are unemployed or even you are on lower income. Thus, there exists a risk if the loan is not repaid on the date.
The Secured loan types. These are the loans granted on the basis of keeping a possession like a house or vehicles as security. The security asset can be repossessed if payment is not repaid on the date.
The Personal loans offered at a higher interest rate. The risk of interest payments would be more if the amount borrowed is also higher.
If possible, avoid taking the payday loan or the doorstep types. Payday loans are really expensive and are also associated with small repayment periods. Moreover, there are great chances that the penalty fees shoot up quickly and are actually hard to handle. Similarly, doorstep loans or home credit types are exclusively for those who do not have a bank account. You can register your interest online and followingly, the loan company will send a representative to talk on the terms and approve the loan on high interest if everything is set.
Credit unions also lend you money from their savings. It is a non-profit financial organization formed by members linked by a common bond. Their savings are initially pooled and loaned out to the members in need.
At times our credit scores don’t suffice to get a proper bank loan and we are forced to turn to loan sharks for help; illegal lenders are known as loan sharks. While borrowing loans from these people will help us overcome the financial difficulties we end up in greater trouble than before and there is no legal recourse to this. It is therefore paramount that you know your rights before you borrow money. This will prevent stress and pressure from lenders.
Always sign a credit agreement with the lender. This important piece of the document will contain details about how much you borrowed, what are the costs involved and what is the time span within which you must repay the entire amount. It will also state if there is any additional interest for missed or late payments.
You can cancel a credit agreement within 14 days of signing without giving any reason but you must give the lender cancellation notice preferably in writing with the date and time visible. You will have to return the money borrowed when you cancel the agreement.
If according to your agreement you are allowed to pay off some of your loans early, then the lender must tell you the balance amount and also you will get a rebate on the interest and charges paid so far.
Sometimes you might not be able to pay your repayment on time due to some unavoidable circumstances; in that case, your lender must send you arrears notice and a Financial Conduct Authority information sheet. This will help you sort your arrears. If you still lag in repayment the lender must send another notice and FCA before he can take any action.
The onus is on your lender to provide you the correct information without which he cannot take you to court.
A Trust Deed can be defined as the document which states the legal agreement between a lender, borrower and a third party known as Trustee. The borrower hands over the legal rights of the property to the Trustee, as a sole reason for security for the benefit of the lender. The Trust Deed can also be called as a Deed of Mortgage in some places. Following are some of the must know Trust Deed disadvantages.
Trust Deed Disadvantages
Usage Of Equity By Homeowners To Pay Off Creditors
According to a Trust Deed, if a homeowner holds any kind of equity in relation to his or her property, then that equity should be released fully to accommodate funds to pay off creditors. There are various alternatives to this idea though – like going for remortgaging, or doing extra payments or even increasing the overall life of the Trust Deed.
Credit Rating May Take A Hit
This is the one most overlooked fact, but a Trust Deed can be a serious issue for a borrower’s credit rating. This will be a part of the borrower’s history, so any future transactions like taking loans or even obtaining a credit card will become a very difficult process. More worse situation would be like non-payment of dues or increase in debts, that could single-handedly destroy a borrower’s credit rating.
Not Destined To Be Always Successful
Decisions of the creditors are very much crucial in making the deed successful. If the creditors do not agree with the terms offered by the Trustee, there will be no such protective status vested on the Trust Deed.
Terms Cannot Be Changed Easily
Here again, without the agreement of the creditors, the Trust Deeds becomes an inflexible piece of document. Plan to reduce monthly payments? Cannot do that without the agreement of the creditors. Trust Deeds can also fail sometimes due to various changes in circumstances and the borrower would still be liable for all the debts or even can be forced into bankruptcy.