Borrowers ‘Unrealistic’ About Paying Back Loans
Keywords: debts, out, of, control, loans, credit, cards
The majority of British borrowers have unrealistic expectations as to how long it will take them to complete making repayments on their debts, a new study suggests.
In research carried out by the Motley Fool, the average consumer expects to have cleared their debts in three years’ time. However, the financial services firm claims that in reality credit cards and personal loans will not be paid off an average for seven years and seven months. The findings also showed that the typical borrower has non-mortgage debts of around 11,000 pounds.
With the average Briton putting about an eighth (13 per cent) of their salary towards debt repayments, many could be set to see pressure on their repayments last longer than expected. According to calculations by the company, which uses an example of interest charged at 14 per cent, two-thirds of all borrowers are reported to take 91 months to get out of the red - more than twice the amount of time they had expected to do so. Overall, for every 100 pounds borrowed they are set to pay back 167 pounds.
Findings also showed that older people could be in deeper financial difficulties, as two-fifths of people in their 40s currently owe more than 20,000 pounds. Meanwhile, a tenth of Britons over the age of 58 are in so much debt that they are unable to pay it back. Just under a fifth (19 per cent) of those owing over 20,000 pounds are not able to afford to make any repayments.
David Kuo, head of personal finance for the Motley Fool, said: “It is worrying to learn that two out of three people have taken on debts without fully understanding what is involved or how long it will take to repay the loan. For many, borrowing money is as easy as walking through a doorway. But it’s a good idea to ensure that you have a way out before the door slams shut”.
“Of course, people don’t get thrown in prison for not paying their debts any more. It’s much worse than that. Loans can now be drawn out indefinitely, which means that you are shackled to your lender forever rather than being incarcerated for a while.”
As a result, those looking to avoid developing further debt problems were recommended to “budget carefully to identify where savings can be made”, with selling unwanted items to raise extra funds also mooted. In addition, the Motley Fool advised making payments above the minimum monthly amount and clearing debts with the highest amount of interest first. Taking on a second job to supplement incomes was also another way consumers were told can help them pay off money owed more quickly.
Earlier this year, Stephen Rose, director of the Debt Advice Bureau, claimed that taking out debt consolidation loans could well be the best way for consumers to rein in their spending. He stated that by transferring money owed to various creditors into one monthly amount, they may be able to free up more cash to put towards credit payments. “Refinancing [debts] to lower the interest burden may be a solution,” Mr Rose purported, adding that creating a budget may be another way to relieve financial pressures.
Tom Dawson writes for Essentially Home Loans. Our visitors can apply for secured home loans online, for whatever reason with whatever credit history. Visit us today for the best rate loans available. www.essentiallyhomeloans.co.uk
Previous Articles Highlighter:
Credit Card Debt Help Online (1)
A benefit of consolidating creditor debt is that your credit repair center will work with your creditors so that you are not receiving constant phone calls and collection letters. Credit repair services can also decrease the interest that you're paying on old credit card debt.
Homeowner's Insurance: How To Save Some Cash (2)
It is common knowledge that rates for homeowners insurance don't vary drastically as ratings are based on the same factors. As with any insurance company, make sure to choose one with an excellent track record.
Trading Commodities - Reading Prices (3)
Each futures contracts deals with 100 troy ounces, which makes the minimum tick per contract $10. That's a significantly greater amount than the average stock investor is used to, because prices they are typically move from $.10 to $.25 per share there.
Commoditiy Trading - Financial Indexes (4)
With rollover, traders can take a long position on a futures contract. As the expiration nears, they can transfer their position to another contract; the new contract as an expiration date that is beyond the one in their current contract.
Trading Commodities - Margins (5)
Simply put, futures trading is fast-paced and puts you at higher risk in the world of commodities. It's not for everyone, but if you have a high tolerance for risk and can put additional funds in as necessary, and if you can withstand some losses as a matter of course, it might just be for you.
Myths About Real Estate Agents (6)
Myth #3: Realtors know your area. Fact: Just like normal people, realtors can't know everything. Though they do spend a lot of time driving around town, they can't be in all places at once, and they themselves probably have preferences for one neighborhood versus another.
The Benefits Of Buying Real Estate In A Bad Neighborhood (7)
It's difficult to rent in good neighborhoods because fewer people are looking to rent and those who do are generally there short term while they look for a house to buy.
Auto Loan Tips To Keep In Mind When You Buy Your Next Automobile (8)
A lot of people will do sixty or seventy two month payments now because it is a lower interest rate and a lower monthly payment. Then they will pay double payments in months when they can to pay it off quicker.
Business Insurance Tips To Make You Feel More Comfortable (9)
Most of this is common sense. You have a business to run and are an expert in what you do. You should expect the same from the agent or broker when it comes to the business insurance they offer you.
Bad Credit? You Can Still Get A Loan (10)
If you get a loan that has a pre-payment penalty you will want to make sure you choose the shortest term so that the loan is paid off quicker and without the penalty.
Asheville NC Rental Houses Abound (11)
In the summer you can enjoy the local National Parks which offer camping, hiking and fishing. In the fall the area comes alive when the trees turn red, orange and yellow.
Asheville NC Lakeview Real Estate Can Be An Excellent Investment (12)
In addition to the major rivers, there are a multitude of natural creeks and streams which flow in the area. Many of them have private property available. The rivers and streams of the Blue Ridge Mountains are some the best fly fishing areas you can find in Western North Carolina and the United States.
Dental Insurance - Costs Far Less Than The Consequences (13)
Should an individual seek coverage, there are many resources available. The first place to check is the local city and state health websites. Those websites often have links to insurance carriers who offer dental insurance to the otherwise uninsured for an affordable rate.
Car Loans 'Could Save Britons A Bundle On A New Car' (14)
Steve Smith writes for 1 stop finance shop where visitors can apply for UK secured loans and also focuses on personal loans and bad credit loans for UK residents. Visit Today: www.1stopfinanceshopuk.biz
Overspending 'Could Lead To A Bad Credit Rating' (15)
Just over a third (38 per cent) were also shown to be spending more than they would have liked on presents for their work colleagues. However, managing director Jim Hodgkins claimed that such a lack of control over their finances could see consumers damage their credit rating and cut off their access to competitive borrowing in the future.
Britons 'Do Not Know Personal Debt Figure' (16)
The company is sponsored by 30 product provider sponsors, including the likes of Clerical Medical and Prudential, and has around 9,000 independent financial advisers on its database that stretches across the UK.
Garden Improvements Add Privacy And Value (17)
"Very occasionally people will do their garden, if it's quite small, in a way that it blends in with the house. For example, they may have a wooden floor going on to decking or a slate floor with a slate patio beyond it.
Home Insurance: Do You Really Need It (18)
It will definitely save you a lot of stress, money and family troubles when the time comes. It is the passport to better safeguarding your American dream. Craig Thornburrow is an acknowledged expert in his field.
Millions Of People 'Should Look To Debt Consolidation Loans' (19)
Recent research from an independent financial advisory service, Unbiased, revealed that more than one in twenty (six per cent) UK consumers do not know how much money they owe - with the figure rising to two in five (41 per cent) in people aged between 18 and 24.
Credit Card Tips To Save You Money, Time And Worry (20)
Balance Transfer Fees may be a little elusive sometimes and may just result in fees that you may not want to be involved with. Watch out for the Due Dates: It is very much advisable that you always watch out for due dates every time, because they are sometimes changed by the credit card companies so they could collect late payment fees and raise your rate.
Newer Articles Highlighter:
'Worrying' Number Of Young Brits In Debt (1)
Strikingly there's a big gender gap too with only 21 per cent of women believing they will never be in debt, compared with 40 per cent of men. Sadly, we believe the men are being rather over-optimistic." Earlier this month Susan Hannums, savings manager for AWD Chase de Vere, claimed that consumers need to take a greater interest in their financial situation so as to avoid incurring unexpected debt difficulties.
Britons 'Would Rather Consult A Hairdresser' On Money Woes (2)
While around 54 per cent would consult family, friends or acquaintances, 18 per cent - the same number choosing a financial adviser - would instead turn first to their hairdresser, taxi driver, pub landlord or religious leader.
Homeowners Insurance Guide (3)
Protection Against Liability This covers against lawsuits for any physical injury or property damage that the homeowner, or his/her family members, or pets cause other people. This liability policy covers a homeowner anywhere in the world.
Interested In A Home In Malibu? (4)
If you are looking at pure residential areas, then the real estate will be divided by the size of the home. Typically, this will be known as a single family or multi-family home.
Choosing The Right Insurance For Your New Malibu Home (5)
Another factor to consider when selecting home owners insurance is the type of coverage that is offered. Some companies will have different categories according to the types of things that you own and how this relates to what you will need replaced.
How To Sell And Rent Back Your Home (6)
Is it lower or higher than your current monthly payments? How long will you need to rent until you can get your finances together and get into your ideal situation?
The Right Penny Stock Can Make You Money (7)
The Pink Sheets are an exchange where most startup companies first get listed. There are no listing requirements to be traded on this exchange. A company does not have to have any sales, nor does it have to reveal how many shares outstanding it has to qualify for the Pink Sheets.
How To Sell Your Home If You Are Faced With A Foreclosure (8)
Depending on the state of your home, you might benefit from cleaning the carpets thoroughly, or even painting the walls. It's also a good idea to get your home inspected professionally for any defects that may have occurred in the structure, the pipes, or the electric wiring.
Finding The Right Student Loan (9)
It is common for a student to accumulate a lot of student debt on his or her way to a diploma. Where do you start on your way to a student loan or grant?
Foreclosure Epidemic Likely Means Additional Tax Liability (10)
Income tax liability? From losing your home? Such is the nature of the United States Internal Revenue Code. Given the foreclosure epidemic and the huge losses to which lenders of all sizes are now exposed, many lenders are willing to enter into a variety of work-out programs with their borrowers to avoid foreclosure.
Student Loan Consolidation Rates - It Pays To Shop Around (11)
The best place to find a consolidator for your student loan is by calling whichever student loan organization you send your payments through. Sallie Mae and ACS are two of the most widely used student loan programs.
Student Loan Consolidation Information - What Are Co-Signer And No Co-Signer Loans (12)
The lack of credit history or worse, actual late payments or defaults may without trouble put a potential borrower into the high risk category, most loan officers even in Federal student loans program system, may often look at that with a cautious eye and loan applications may be declined, or in borderline instances a higher rate is charged to offset the concern and compensate for higher default rates.
Choosing Your Malibu, CA Real Estate Appraiser (13)
If you hire an appraiser who is not that experienced, you will pay for it later when you discover that the property is not worth what you paid for it.
Student Loan Consolidation Information - How Credit History Affects Student Loans (14)
The first issue any loan officer will examine is the FICO score, the FICO is a total score calculated by the main credit agencies based on a secret proprietary formula, though the exact equation is not public, multiple criteria are well known and even obvious.
10 Reasons Why People Don't Want To Be Rich (15)
6. They are too cynical to believe that everyone can become rich, if they learnt how. They think the stock market will crash tomorrow if they buy today.
Dental Insurance Is A Ripoff (16)
Most dental insurance sold today has a maximum benefit of $1,000 or $1,500, so guess who's going to have to pay $2,500 to $3,000 out of their own pocket? That would be you the fleecee, sorry, the person who get's ripped off.
Enlightening Students About Credit (17)
Now that we have established that credit card companies have begun to target increasingly younger people, one question arises: What makes the student crowd come to them? Well, student credit cards are marketed differently from other kinds of credit cards.
Insurance For The Four Legged Folks (18)
Pet insurance is one type that is growing in the growing insurance markets. Quite a few of us are familiar with some pet owners regard their pets as being as much a part of the family as their sons and daughters.
Getting Your House Ready For The Appraiser (19)
So if you are new to the house buying business, it might make sense to shop for a home where the other houses and apartments seem to have a good value.
Borrowing For A Business Venture (20)
The initial years will also require you to invest a great deal. At times the money that you require may end up coming out of your wallet. You will feel the pinch irrespective of whether your business is a sole trading concern or a partnership.
Permalink to Borrowers ‘Unrealistic’ About Paying Back Loans