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LOANS
Loans for homes and vehicles are generally secured, which means
that the home or vehicle is attached to the loan. Secured
loans can also be for furniture, computers, white goods, boats and
caravans. If you default on repayments, the lender can
repossess the home.
Unsecured loans include personal loans and credit cards.
If you default on the loan, you can be taken to court and a
judgement made against you to sell some of your assets or garnish
your wages to repay the loan.
The No Interest Loans Scheme (NILS®) provides
interest-free loans for individuals or families that have a health
care card or pension card and are on genuinely low income.
They are generally for the purchase of essential items like a
fridge, washing machine, TV. bed, clothes dryer and health
aids.
- Before you get a loan, do a budget to work out what you can
afford. DO NOT rely on the lender telling you what you can
afford. Don't assume you can afford a loan just because a
lender is prepared to give it to you.
- Don't borrow more than you need.
- Shop around for the best interest rate you can get.
- The contract must state the total amount to be repaid over the
life of the contract.
- You will be locked into making repayments for the length of the
contract.
- Because of interest, your repayments will add up to a large
amount of extra money compared to the amount you borrowed.
- If you repay early you will save money although there may be
penalties charged.
- If you face financial hardship and have difficulty making
repayments, immediately talk to your creditor or get help from a
financial counsellor.
CAR LOANS
Loans for travel and other fun stuff
- before you sign
- look at the interest rate. Loans are available from most
financial organisations such as banks and credit unions.
- how long will it take to repay?
- add up the total cost. Do a budget including all the
costs involved such as loan repayments, registration, fuel,
insurance and car maintenance. then YOU decide if you can
afford the loan.
- can you afford it? Do not be pressured by car salesmen
into buying what you can't afford.
- is there a better rate at another lender? Car dealers often
arrange finance or insurance for you. Do not accept these
arrangements unless you have tried to arrange them yourself and
can't do better.
DO NOT rely on the lender telling you what you can afford
Don’t borrow more than you need
Do you need HELP?
If you are 2 payments behind, the finance company can repossess
and sell the car to pay back the loan. If the selling
price is not enough to cover the loan, you are responsible to pay
the difference as a unsecured debt.
Be particularly careful when you buy a new car. The moment
you drive one out of the showroom, it is worth much less. If
you cannot afford the repayments and the car is re-possessed, you
may be left with a big debt and no car.
If you are in difficulty repaying your debt, you can ask the
creditor for permission for you to sell the car privately.
You may get more money this way but you will only be given
limited time.
Tips
Save as much as you can before you buy. Bigger deposits
mean smaller loans and repayments. If you are eligible for a
unsecured personal loan, check if it may be cheaper than a car
loan.
ADVERTISED INTEREST-FREE LOANS
Be very wary of taking one of those loans. The company
providing the loan is not being specially generous towards you and
still has to make a profit. The way they do this is usually
by charging a much higher price for the item or goods supplied.
You may pay double the market price or even more. You
will usually be much better off to get a normal loan to purchase
the goods at the best possible price and pay interest.
Tips
If you are considering one of those interest-free loans, do your
homework first.
Check the price being charged for the goods, then find out the
true market value of the goods. See if you can buy something
similar for a much lower price with a normal loan, then compare the
total payments you make for both options.
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