Five Benefits of a Homeowner Loan Compared to a Payday Lender

Those dastardly payday loan lenders have been in trouble again. Following MoneySavingExpert creator Martin Lewis’ calls to ban payday loan ads from children’s television, Labour party leader Ed Milliband has also now joined the growing swathe of outraged parents and economic commentators who are calling for an end to the dodgy practices of payday loans companies.

Earlier this month, Martin Lewis told MPs that payday lenders are “in danger of grooming a new generation to this type of borrowing”, as he called for payday loan adverts to be banned from being shown during kids’ TV programmes.

His announcement followed the recent publication of Making Consumer Credit Markets Fairer: Payday lending advertising research conducted for the Department for Business, Innovation and Skills, by Ipsos MORI Social Research Institute.

The research found that 100% of people were able to recall seeing payday loan advertising on television and there was “widespread disapproval that the adverts were thought to be targeted at those out of work and short of money.”

But what about the kids?

Appalled, Martin wanted to find out more. A follow up MoneySavingExpert poll of nearly 3000 people found that

  • more than one in three people with children under 10 have heard their kids repeat payday loan slogans from TV ads
  • 14% of those polled said when they’ve refused to buy something for their under-10, they’ve been nagged to take out a payday loan for it
  • almost 70% of under-16s have seen payday loan adverts, and nearly one in three parents say their kids see the ads as “fun”.

These are shocking statistics that show the lengths some short-term lenders will go to in order to sign vulnerable people up to a payday loan with astronomical interest rates.

Free advice for anyone struggling with debt is available from Citizens Advice Bureau and StepChange, formerly the Consumer Credit Counselling Service.

All well and good, you might say – but if you need access to finance, these short-term loans can be a viable option for many who have not succeeded through other avenues.

Unfortunately, many people nowadays who are perfectly capable of keeping up with regular loan repayments are being refused credit due to a poor credit history in the past.

So for these responsible borrowers, is there an alternative?

For homeowners, there is.

Secured loan broker: the steady, low cost alternative

Obtaining finance through a homeowner/secured loan broker can offer a number of benefits in comparison to payday lender schemes. Some of these are detailed below.

(1) Homeowner loans are easier to obtain – As these types of loans are secured, the banks are able to offer finance to people who may have a low credit score.

Obviously it’s important to make sure you can pay the loan back, or you may lose your house. But for the majority of people who have a perfectly adequate income to meet repayments (but have simply suffered from a poor credit rating in the past), secured loans offer an affordable and practical solution.

(2) You can borrow larger amounts – Now, don’t go mad; but you can borrow up to £75,000 with a secured loan. If you need a wedge of cash for a particular large expenditure – for example a wedding , new car, home improvements or university fees – a homeowner loan could be your best option.

Of course, you should only borrow what you need and not just take out the largest loan you can just for the sake of it. But we’re all grown ups here, and you know exactly what is affordable for you. Just borrow responsibly over a long enough period of time to make sure you can afford the monthly repayments.

(3) Debt consolidation loans – If you’re rolling a few higher interest loans and borrowing into one, secured loans allow you to do this quite easily. Consolidating existing debts into one monthly payment is still one of the most popular uses for a homeowner loan.

If you have a number of credit cards and store cards, clearing the balances using a secured homeowner loan could reduce your monthly payments considerably, and offer you the convenience of one simple loan payment to deal with per month.

And what’s the point of getting into a cycle of needing payday loans to stretch your budget until the end of the month, when you then need half your next month’s spending money paying the interest on last months? Better to have a clean slate and know what you need to pay over time. And remember, the interest that a secured loan broker charges in much lower than you can get on a payday loan.

(4) You can borrow over a longer period of time – Whereas payday loans companies will come knocking at your door immediately wanting repayment, homeowner loan brokers generally offer a much longer payback period, allowing you to take your time and pay back at your own pace, without hassling you.

(5) Lower monthly repayments – As your borrowing is over a longer period of time on a secured loan, your monthly repayments can be much lower. A good secured homeowner loan broker will offer you a variety of payment schedules, so you can choose the plan that suits you, and remain in complete control of your borrowing.

Whatever finance option you choose, you should always check out the alternatives. An easy way to do this is through a good secured or homeowner loan broker: one that will look at your individual circumstances and match you with the right lender, on a payment schedule to suit you.

Liam O’Dowd posts on behalf of Sky Loans. A keen spots fan who loves Mountain Biking, Ski-ing and Spearfishing when the weather is kind.

Leave a Reply

Your email address will not be published. Required fields are marked *