Credit Counseling As An Option For Debt Relief
Having debt is never a fun situation to be in. You have to deal with calls from creditors, collection agencies and other lenders. However, you can either put your head in the sand and hope the problem magically goes away, or you can take action and make sure that your debt goes away. Using credit counseling as an option to eliminate your debt can be an effective method to start saving you money right away.
What Is Credit Counseling
Credit counseling is a process that usually takes about 60 months and involves taking a hard look at your finances. It entails getting your bills together, the balances owed and figuring out the best payment plan for you. A credit counseling service will negotiate with your creditors to get the best possible result for your situation. In most cases, the credit counselors will get you a lower interest rate, and maybe a lower balance overall as well.
Why Use Credit Counseling Services
You might not have the time to go about settling your debts on your own, or maybe you don’t want to deal with creditors directly. You know that there isn’t much of a chance for you to pay your balances as they are currently constructed, but you don’t feel right asking for a lower balance. A third party will put your pride to the side and get you the best deal possible.
What Is My Role
The role of the person who enrolls in credit counseling is to make sure that you can stick to the plan and make payments on time. While debt relief programs are great ways to eliminate your debt, it doesn’t matter if you cannot follow through. The big advantages of using a service to reduce your debt is that your creditors will go easier on you and they won’t being calling or sending collection letters to your address if you do not want them to. A service reduces stress and helps develop a plan, but you ultimately have to follow through for it to be successful.
Find A Reputable Company
Don’t rush to the first company that you see advertising its debt services. Take your time and go through a process with several different companies. You want to make sure that whoever is taking charge of your financial situation is going to be doing so with your best interest in mind. You are going to be giving this company your money in fees as well, so you want to make sure that you are getting all you can get out of it. There is nothing to gain by using a company that is going to hurt you even more.
Get Out Of Debt And Stay Out
Once you have a plan to get out of debt, you should be looking ahead to how you can fix your situation for the future. Having to go back to credit counseling is not something that you want to do again anytime in the near future. What a credit counseling service should be teaching you is how to budget and deal with your money in an effective way. Some good ideas include getting rid of credit cards and saving for all major purchases that you would want to make.
Being in debt is not an enviable situation. It can create stress and problems in your life because you have so little money, and are always in fear of your creditors coming after you. Do yourself a favor and take action now so that you can get out of this miserable situation and start living the life you want.
Bad Credit Rating
Credit has always made life easier for each one of us. However, there are some occasions when the debtor is not able to honor their commitments and eventually causes a default. Debtors should best try to avoid defaults as it affects their credit rating which is crucial for availing credit easily from lending institutions.
Overdue caused by the borrower can be of two types. It can be either a default or it can be clearout. A default occurs when a borrower shows their inability to pay off their debt and clearout occurs when borrower cannot be reached.
The main difference between these two types of overdue is their affect on the credit report of the borrower. The overdue caused by default by the borrower stays on the credit profile of the borrower for the period of five years, the time period in clearout overdue is seven years.
Credit rating is the most important tool for the lending institutions to grant credit. Bad credit rating can severely affect the chances of attaining credit at cheap rates. Borrowers should always try to pay their credit installments on time in order to avoid bad ratings.
Loans can always be tricky and therefore, consumers should think twice before availing credit. They must take a loan only if they have the ability to honor their monthly commitments.
Consumers can also seek advice from professional financial planners which would guide and help them to make their monthly budget accordingly. Having a good credit profile is always beneficial and thus efforts should be made to maintain it.
The Differences between Debt Counseling and Debt Consolidation
For many of us today, debt is a big problem! If you find yourself stuck in a situation where you need help as you can no longer afford to pay all of your debts and bills each month then you need to explore which options are available to you. It’s important to understand that declaring bankruptcy isn’t the only option and should really be your last option as it can negatively affect your credit score which will affect your personally for the next 10 years. If this is the situation you’re in then you may want to consider debt consolidation or debt counseling to help resolve your financial problems.
Before making any decisions though it’s important to know how debt counseling and debt consolidation differs from each other, which will help you choose the service that is right for you and your problem(s). Continue reading if you want to choose the best service!
So what is the difference between debt counseling and debt consolidation? Well, there is a number of differences and each has their own advantages and disadvantages. One of the differences is that debt consolidation involves taking out a loan to cover your debts while debt counseling is the opposite where you work with a debt counselor to help narrow down the debts that you owe to your creditors. Another difference is the timescales that it takes to complete the programs and start to see some noticeable changes in your finances. With debt consolidation, you should expect to see results in about 5-8 years while with debt settlement you should see changes much quicker. About 2-3 years is about right.
Another difference between debt consolidation and debt counseling is how your credit report and credit score is affected. Many people think that with debt consolidation your credit report is affected negatively as your taking out a loan but this isn’t true at all. Instead, debt consolidation will be nothing more than a black mark on your credit report and this will last for a length of time so it may affect your chances of getting credit for the next 13 years. With debt counseling, however, the program only lasts for about 2 years so your credit score will be affected for a lot less time than it would be if you were to choose debt consolidation as your option.
Now that we understand the differences between the two, how do we know which option is best for us? Well, with the new understandings that you have gained about debt consolidation and debt counseling throughout this article, choosing the option which is best for you shouldn’t be a difficult task, however, you will also need to consider how much debt you actually have before making any decisions.
If your debts are under the 10,000 mark then your best option may be a consolidation loan which will take anything from 2-3 years to complete. If you owe much more than this, then a debt counseling program is probably your best option.
Your Rights When Buying a New Car
More and more people these days are buying second hand cars instead of brand new ones. Financially this makes much more sense as new cars lose value as soon as they’ve been driven away. So what are your rights if you buy a used car either from a dealer, or a private seller?
Buying from a Dealer
If you buy a second hand car from a dealer, your rights are exactly the same legally as when you buy a new car. However, if a problem occurs and the car has a fault, as faults can take a few weeks sometimes before they show up, it can be much harder to get this redressed.
Any car you buy must be fit for the purpose it’s sold for. That doesn’t just mean its fit to transport you, it means that if you want it to tow a trailer or a caravan, and buy one that’s supposed to be able to do this, it should be able to do so.
Cars should also be ‘As described’ in any advert or conversation you have with the dealer, and also ‘of satisfactory quality’. This means that it should be in reasonable condition for its age and the price you’re being asked to pay, and that it should work properly.
You’ll find some traders will try and put up notices saying ‘sold as seen’ but this does not absolve them of their responsibilities, and if they’re doing this, then they’re actually going against consumer law and can be reported to Consumer Direct.
Buying from a Private Seller
As a buyer, when you purchase a car from a private seller you have far less rights. However, there are still some rules which may help.
Firstly the car must be theirs to sell – they must be the legal owner and have the right to sell the vehicle to you.
The car must be ‘roadworthy’. Hard to define, but generally speaking this means that it should be driveable on the road and shouldn’t have any major defects or issues.
It should match the description you were given so if they’ve said something on the advert, then they should be able to prove it on the car.
Some things to watch for
Dealers who pretend to be private sellers are breaking the law! If the log book doesn’t show them as the last registered owner, then they may not be a private seller! Report them to Consumer Direct or Trading Standards!
Does the same key open all doors? – this may sound like an odd one, but if there are separate keys to open different doors, or the boot then this can indicate that the car may have been damaged or broken into in the past.
Do a vehicle check to make sure the car’s not been stolen or written off. There’s a list on the directgov website of vehicle check services. Also do a vehicle check on the DVLA site to learn when the car was first registered and if it’s taxed.
If you do buy a second hand car from a dealer, you can get extra protection by purchasing it with your credit card. This way the credit card provider is jointly liable with the company that sells you the car if there’s a breach of the sale of goods act.
Serving nearly 3 million passengers every year, Bordeaux airport has flights from most of the French cities and few flights from Europe too. Car hire Bordeaux airport will be cheap if engaged from the arrival hall.
Steps to take before acquiring a contractor mortgage
Many people don’t realise, but you don’t actually have to be a contractor in order to get a contractor mortgage. Unbeknown to many people, the term is quite loose, and many factors can be taken into consideration before a package is approved. Depending on circumstances, a contractor mortgage option is available to anyone and can be tailored to suit specific needs and situations, which in many instances proves to be a lifeline for people. The majority of the time however, only contractors apply for contractor mortgages and many factors have to be taken into account in order to get you the best deal with the minimum amount of stress as possible.
Some factors that lenders will take into consideration that you should know about are; the number of years that the contractor has been working on a self employed basis and the profits and contract rate relevant to the time of application. They will also be interested in the duration of the contract, so it is wise to make sure you have all the relevant documentation to make your application accurate and worthwhile. It may seem like quite a lot of assessments and checks to go through, but it is wise to remember that the whole process is just as much about you as it is the lender.
You need to know that the package and mortgage that you require and are applying for is the right one for you and this way, with so many guidelines in place, you will know if it is the right avenue for you to be going down.
The importance of a mortgage quote
It doesn’t matter whether you’re applying for a first-time mortgage or are a seasoned veteran looking for a new mortgage or even remortgage, a mortgage quote is typically very important.
Your mortgage costs
The reason for that is twofold:
• you need to know how much your mortgage is going to cost you – and therefore whether it’s affordable;
• it might be useful to know how your mortgage offer compares with others.
The rates and deals offered by the banks and other mortgage providers, change regularly. Getting that mortgage quote isn’t, therefore, a waste of time.
You may find some very interesting deals and price differences!
The cost of your mortgage
When you’re thinking about the quote you’ve received and its affordability, it might be a good idea to keep in mind that you’ll face some additional related costs:
• legal fees for conveyance etc;
• it may be highly advisable to ensure that you have adequate insurance in place that provided buildings and contents protection;
• you may also need to consider having life assurance protection to cover the mortgage (or variations thereof);
• possibly some form of Mortgage Payment Protection Insurance (MPPI) may also be advisable;
• you may have substantial removal fees and expenses;
• there may be stamp duty to pay.
When looking at the total cost profile, you’ll be able to form an assessment as to whether you can afford the move initially and then, whether or not you’ll be able to afford the ongoing monthly payments.
Stretching to the limit
Only you, in conjunction with your potential lenders, can really decide what you can comfortably afford to pay out each month.
Yet comfortably is the key word.
Stretching yourself to the very limits of affordability may mean a deterioration in your standard of living and run the risk of stacking up debts elsewhere.
It’s also sometimes worthwhile to try and build in a little contingency planning to your budgeting. For example, the outgoings may appear manageable now based on two incomes but would they still be if there is an addition to the family meaning perhaps lower household income and a higher expense base?
Your mortgage quote is important but it’s only part of the overall equation. Don’t forget to do all the sums!
Using a mortgage calculator
If you have decided to take the plunge and enter into the world of the homeowner, then getting an indication of just how much it is all going to cost you per month may be a very sensible idea. This does not have to be difficult, as you can easily work this figure out using a mortgage calculator.
There are calculators of this type and in various forms, readily available on the internet.
Borrowing
If you are a first time buyer though, perhaps the first piece of information you’d want from a mortgage calculation is how much it may be possible for someone on your income level to borrow.
This could be as simple as inputting your income and pressing send. Armed with that piece of information, you can then see how much this could cost you per month.
In their simplest form, mortgage calculation aids can help you come up with a repayment figure for the mortgage that you have in mind.
You input the amount of the mortgage, the length of time you want the mortgage to run, and the interest rate for that particular mortgage.
Other relevant information at this stage would be the type of mortgage you’re looking for.
These factors are all typically explained on the relevant internet site.
Repayment
• with a repayment mortgage, each monthly payment is used to pay a portion of the capital and the interest.
Interest only
• with an interest only mortgage, your repayment only goes towards the interest and there is typically a separate endowment or other investment policy which matures at the end of the mortgage term to cover the capital repayment amount.
When using mortgage calculation aids for an interest only mortgage estimate, don’t forget to add in an appropriate sum for monthly premium for the investment policy that will pay off the capital part of the loan.
More complicated examples
Using mortgage calculators may also be able to give you answers to other more complicated mortgage questions. For example, what would the effect on your monthly repayment be if you were to:
take a repayment holiday;
make additional lump sum payments;
etc.
If you are looking for a buy to let mortgage, then some mortgage calculators may also be able to provide you with a realistic rental figure for your property based on the mortgage you have and your costs etc.
These days there’s no excuse for being in the dark about mortgage repayments and using a mortgage calculator in advance can help you understand your financial commitments and avoid them becoming financial liabilities!
Varieties of loans
If you’re looking for loans, you’ll find that there are a lot around to choose from.
Qualifications
However, before you even start you’ll need to think about the typical sorts of things you’ll need to have to qualify.
This will depend very much upon the amount you wish to borrow but typically:
• a loan may be hard to find if you are unemployed or have a poor credit history;
• ditto if you already have large borrowings in relation to your earnings (sometimes called your debt-to-income ratio);
• some providers may view certain categories of self-employment or part-time working as being cause for concern.
Types of loans
Broadly speaking, lending breaks down into two categories:
• secured – typically your borrowing is secured against an asset that the lender may seize (or get a court order to make you sell) in the event you don’t pay the loan back;
• unsecured – typically advanced purely based upon the lender’s perception that there is a small risk of you defaulting.
Typically, for larger borrowing, unsecured lending is a little harder to obtain than secured and it may sometimes cost you a little more in interest compared to a secured loan.
Costs
The costs of borrowing vary hugely depending upon the provider you use, the amount you’re trying to borrow, your personal circumstances and the purpose.
Shopping around for loans is, therefore, typically advisable.
What are remortgages exactly?
Remortgaging can mean different things to different people. Typically though it is about replacing one mortgage with another:
• if you need to raise capital and own a property, then remortgaging may be an option for you;
• where you simply want to switch to a different deal in a bid to save money on your monthly repayments.
Here we look at remortgaging in order raise capital.
Equity
If your house is worth more than you owe on it (typically a case of your mortgage being less that the property’s market value) then you have what’s called equity or positive equity in it.
So, if you have a mortgage debt of say £80,000 and your house is worth £130,000 then you have equity of £50,000 (providing you have no other credit, such as a secured loan, attached to your home).
You may be able, therefore, to borrow a sum of money and use your property as security for it. That’s called remortgaging.
Theoretically you may be able to borrow up to the £50,000 equity but as lenders typically seek to retain a margin of error, you may find that you can borrow up a percentage of it for remortgages.
Remember though – if you’re unable to repay that loan then your property may be at risk.
Negative equity
This describes a situation where the reverse is true.
Let’s imagine a hopefully unlikely situation where you’ve a £100,000 mortgage on your property and its market value has declined to £90,000.
That’s called negative equity – and in that situation you may find it difficult or even impossible to secure any loan against your property.
In such a situation, remortgages may simply not be available to you and you may need to find an alternative way of raising your required capital.
Top 21 ways to save money when on holiday
Going on holiday need not be expensive. Here at Rhino Money we have come up with 21 ways to save money when you are on holiday.
General tips
• Draw up a budget. If you live by a budget for the rest of the year, why deviate from this habit while you are on holiday? You may find that you avoid overspending if you know exactly how much money you have available;
• avoid temptation. Don’t torture yourself by going into expensive designer shops if you cannot afford to purchase anything there;
• read up on your holiday destination before you arrive so you know which attractions are the cheapest;
• know your currency costs. How much foreign currency are you really getting to the pound? Make sure you know how much exchange fees and rates are really costing you;
Accommodation
• booking your holiday long in advance may mean that you get a good deal, and that you get a while to pay it off;
• consider a house swap, but don’t forget that you have to be prepared to have strangers in your house;
• if your boss is flexible about when your holidays are book a last minute deal and just go!;
• consider youth hostels as a budgetary alternative to hotels;
• have a stay-cation at home. This may have many advantages, including not spending out on any accommodation, and getting to appreciate your own neighbourhood;
• stay with friends – but only if you are invited;
• go self catering rather than full or half board. But don’t forget to draw up a rota for chores if there is a group of you;
• camp and get in touch with nature;
• haggle for the best prices a hotelier has available;
Travel
• hiring a bike may typically be cheaper than hiring a car, and means that you can slow down and take in the sights as you are travelling around your holiday destination. And with all the extra exercise that cycling entails, you can justify some excessive holiday eating!
• travel during unsociable hours. If you are not travelling with small children, you may wish to consider picking the least popular (and therefore cheaper) times to fly or sail;
• if driving, drive economically. Driving more slowly and not having things tied to the roof of the car may all help save fuel;
• be flexible. If you don’t have your heart set on a particular destination, you may get a good deal;
• walk rather than use public transport of taxis. Just don’t forget the map!
Food glorious food
• take a packed lunch with you on day trips. Even if you are not staying in self-catering accommodation, you may still be able to buy bread and sandwich fillings from delicatessens for less than the same meal would cost in a cafe or restaurant;
• eat like a local, not a tourist; and finally
• be prepared. Rather than just wandering around to find somewhere to eat and ending up in a pricy restaurant, find cheaper places in advance.