Personal Loans are available in varying amounts and usually depend upon the purpose for which you require the loan. The amount borrowed usually varies from £500 upwards. The amount borrowed is usually repayable over a period of between 6 months and 10 years. Lenders charge interest rates on the amount borrowed. Their rates can either be fixed or variable. If the rate is variable, the rate changes with market forces and could change the amount you repay. Fixed rates offer more certainty but can be at a higher rate. As a general guide, it is advisable to compare the Annual Percentage Rate, (A.P.R) of different lenders. Depending upon your circumstances, Personal Loans can either be secured or unsecured. Secured Personal Loans have your property set against them as security for the amount borrowed. The interest rate on secured loans tends to be lower than unsecured loans. Personal Loans are repayable on a monthly basis at a fixed amount. However, some lenders offer the option of over-payments or under-payments that could assist you with your personal circumstances. Lending institutions offer you the option of taking a Personal Loan either in person, via written application, over the phone, or on-line. Assessments can be made very quickly. Your income and financial commitment details are collated together to see whether or not you can afford to take on the Personal Loan. The suitability of the Loan itself for its intended purpose is also assessed. Lenders use credit scoring facilities and credit reference agencies to assess your suitability. Credit Scoring assesses your personal statistics, for example your age and occupation and each statistic is given a score. This is to ascertain which broad category of borrower you fit into. Credit reference agencies provide a detailed analysis of your own financial position. In particular, any county court judgements, (C.C.J’s) which you may have, details of previous credit searches against you and details held on the electoral roll about you. If you are refused a Personal Loan or wish to make enquiries concerning your own credit file, you can apply to the credit reference agencies for a copy of your credit file. A small fee will be charged for this service. Details may be obtained from your lender. Personal Loans are governed by the Consumer Credit Act. The Act contains strict regulations about how money is lent and covers loans up to a value of £25,000. When taking out a Personal Loan you will be asked to sign a credit agreement. Read this through carefully before you sign, as you will be bound by its terms. Some Lenders offer insurance policies or payment protection schemes to protect you in the event of accident, illness or redundancy. However, cover may vary and you should check with your individual lender what a particular policy or scheme covers, or more importantly, excludes. If you do have difficulty making your repayments, seek advice from your lender immediately. The earlier the better and the more sympathetic they will be. For example, they may accept and underpayment, until you get yourself back on your feet. Alternatively, you can seek advice from a voluntary organisation.
There are three main types of car insurance:
Third Party Fire and Theft
Third Party Only
Which type of car insurance you choose depends on the amount of risk you want to take and how much you intend to pay. Comprehensive insurance will cost you more, but will offer greater protection.
Third Party Only
This is the minimum level of cover required by UK law in order to drive, and covers you only for claims made against you by other people for damage to them, their property, or their motor vehicle/s. When you have this type of insurance, your insurance company will pay your liability to the other people involved in the accident, but you will receive nothing personally. This means that your car and possessions will not be replaced – if your car is written off, or stolen, you will not receive compensation.
Third Party Fire and Theft
Third Party Fire and Theft offers the cover of Third Party (above) but also adds cover for your own car, in the event of a mishap. This means that if your car is damaged by fire, or is stolen, the insurer will pay the replacement costs. But you still have to pay for damage or loss to your car that is caused by eventualities other than fire or theft.
Although more expensive (often by a long way!) comprehensive cover offers far more protection to the UK motorist. Again you are covered for third party risks, but also damage to your own vehicle.
Beware: if you are a high risk (for example, a young inexperienced driver with a powerful car, or someone who has been involved in many accidents, or someone who has been prosecuted for drink driving) insurance companies may refuse to offer comprehensive cover to you.
How can I reduce my car insurance bill?
- Rule one: shop around. There are plenty of online motor insurance services who are keen to attract your business. Services such as BonaportDirectoffer a fast, cheap way to obtain motor insurance online – and because they are able to keep their costs down, they can usually get you the best deal. Beware ‘direct’ writers who only offer one policy from one insurer – they are usually ‘cherry picking’ the best risks and can consequently be MORE EXPENSIVE, despite their claims!
Of course, if you go to a multiple insurance quote service, such as BonaportDirect, they are doing all the legwork for you – saving you the hassle of shopping around!!
- Rule two: type of car. A mini is going to be cheaper to insure than a BMW Z3 – before you buy your car, check what the insurance is likely to be. Using an online quote service is great for this – you can alter the car and specification having entered your details such as where you live, without annoying a call centre employee!
- Security. It takes a few minutes to install an alarm or immobiliser – and this can make a BIG difference to your premium. Trackers offered by BSI registered tracking companies can also help reduce your premium. If you are going to fit a security product to your car, make sure that it’s a Thatcham approved device, as this is the standard to which most UK insurance companies adhere. Remember to keep the installation certificate, as your insurer may wish to see this, in the event for a claim.
- Drivers. If your 18 year old daughter wants to drive your Jaguar S-Type, be prepared for a hike in the premium! When you choose your insurance you can usually choose:
Any Driver – this will allow anybody to drive your car (sometimes excluding those under 25, check the small print!) and is consequently going to be more expensive than:
Insured and named driver – yourself and one other driver (ie your spouse or partner) or:
Insured and multiple named drivers – yourself and other specified drivers.
A number of factors will affect the price of your premium, including the AGE of the driver, the EXPERIENCE of the driver (the longer they have been driving, the less you can expect to pay), CLAIMS and ACCIDENTS history and DISABILITIES.
Other factors may affect the premium: for example, some insurance companies rate homeowners as more stable ‘better risks’ than tenants – which is why you may be asked these questions when applying for car insurance.
- How often/how the car is used. If you just use the car to potter to the shops on a Saturday, expect to pay less than someone who is using the car in their role as traveling salesman!
Insurers often allow you to choose ‘social and domestic’ usage of the car, including ‘travel to and from one place of work.’ Using the car to get to work is different to using the car ‘for’ work (ie traveling salesman – taxi drivers will need to apply for special cover as a taxi driver). Using the car FOR work purposes will increase your premium.
- Area. Where your car is kept overnight makes a BIG difference to your premium. If crime rates are perceived to be high in your area, you may have to pay more for your insurance. The level of ‘risk’ is estimated by your postcode area.
BEWARE: some direct insurers REFUSE to cover certain postcodes online, as a matter of course. This can be extremely annoying, especially if you have just spent ten minutes entering all your details for nothing! Again, use a multiple insurance company service such as BonaportDirect – they are more likely to be able to quote for your postcode than a single agent service.
If you live in what is perceived to be a very high risk area, you may have to fit a Thatcham approved security device to get cover at all – but it may reduce the premium, so is worth it in the end.
- No claims bonus and Excess. This can make a BIG difference to your insurance premium – and may be worth protecting. If you have a so-called CLAIM FREE (not ‘blame’ free) record as a driver you can obtain a No Claims Bonus discount (or ‘NCB’). A No Claims Discount can be as much as 60% after four or five claims-free years. Just look at the difference it could make to your premium:
If you have a maximum No Claims Bonus, some insurers will enable you to ‘protect’ this for a small extra fee. This would enable you to claim on your insurance, without losing the discount that you have built up over the years. Typically, insurers allow about two claims in a three or five year period – it really is worth considering, whatever your premium.
You may also be eligible for cheaper insurance if you are prepared to pay a larger excess. The majority of insurance policies operate a so-called EXCESS – this is the amount which you must pay in the event of a claim, usually starting at mourned £50. This means that if you have a claim for £500, the insurer may cover you for £450 but you will have to pay the first £50 yourself.
If you are prepared to pay more Excess (sometimes up to £250) this will decrease your premium. Using an online quote engine enables you to gauge just how much you can save.