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Payday Loans and Student Loans

With so many different types of loans, it may be difficult to determine what kind works best for you and if you even qualify for one. There are short-term loans that are generally used in emergencies and there are long-term loans that are used for large purchases such as a home or a car. However, comparing two different types of loans, payday loans and student loans, can help to take some of the mysticism out of the loan process.

What Are Payday Loans?
Simply put, payday loans are short-term loans that are available to those who have a poor or bad credit history. The length of time from which these loans usually range tends to be between 7 and 30 days. Just as the requested funds are deposited into a savings or checking account via direct deposit, the payment is taken from the account on the agreed upon repayment date.

The application process is also very short and simple. Most applications can be completed online in only a matter of minutes. While credit checks are either not required or limited, there is usually no need to include sensitive information such as a social security number. However, some lending institutions may require that an applicant provide proof of income. This can include employment, alimony, social security or any other regular payment. Sometimes there is a minimum requirement of monthly income such as $800 to $1000.

Of course, there can also be drawbacks to short-term loans such as these. The interest fees for these loans can be very high and depend upon the lending institution as well as the state in which the applicant resides. Applicants can also be subject to additional fees and penalties if the loan is not paid pack at the agreed upon time. Furthermore, applicants need to understand that these lending institutions are not banks and many of them are not based in the US.

It is also very important to find a reputable institution when looking for this type of short term loan, especially since many of them are internationally based. The Internet connection needs to be secure so that any financial information is not seen by unauthorized persons. Applicants should understand that just because they are approved for a loan does not obligate them to accept, but they must pay back the loan as agreed if accepted.

What Are Student Loans?
Student loans are one type of long-term loans, but this loan is used to cover the costs of educational needs including tuition, books, room and board and other expenses. Unlike a payday loan, these loans do not have to be paid back while a student is in school and the loan can actually accumulate over time depending upon the student's needs. This means students can borrow more while still in school until graduation.

The application process is much more involved with a student loan. Not only do students have to provide personal and sensitive information, but they may also have to get a co-signer if they are still dependents or have no visible means of income. There is also no guarantee that they will be approved for the loan. However, if the loan is approved, it can be much more than the limit placed on a payday loan, which tends to be about $1500 at most.

One of the biggest drawbacks of these long-term loans is that they can take anywhere from 15 to 30 years to repay and sometimes even longer. This may seem like a good thing while in school, but over time this means loan recipients are paying back almost as much in interest as the value of the loan. Students can also go into default if payments are missed and this can ruin a credit score.

Furthermore, while the interest rates from many of these lenders may start off low, these rates can fluctuate and change over time. Interest rates will also go up for those who go into default, which not only extends the payback period but also adds more to the overall cost of the loan. Applicants should understand the potential cycle of debt that can occur with these types of loans and make sure they understand all the terms.

PPI Claims and Reclaims

A major concern for many people planning to take out a loan is whether they are prepared to meet all the monthly payments even if they lose their job or get ill. When borrowers fail to cover their repayments, they risk incurring higher charges and putting a dent in their credit file, which makes it that much harder to get any financial aid from banks or other lenders.

Payment protection insurance is used as an assurance, that, should anything happen, you will still be able to clear your debts. PPI is usually sold alongside loans, credit cards, mortgages, etc. and it is specially designed to cover repayments should there arise unfortunate circumstances. Terms and conditions set by most lenders who issue a PPI Reclaim tend to be strict: For instance, the first month is usually omitted and if you suffer from back pain or stress, your loan will not be covered.

Pros and cons of PPI

Pros

Easy qualification
If you are employed and have a good job, chances are, you qualify for pi. The service is often offered to customers when they are paying their bills.

Payment protection
Most customers find PPI beneficial, especially if they lose their jobs. It is important to read the fine print before signing any papers. The slightest of details could have a huge impact in the days to come.

Instant coverage
A majority of policies go into effect as soon as you sign and mail the papers. A few lenders may invoke a waiting period, sometimes 120 days, before customers can make claims.

Cons

Cost
Paying for PPI can seem expensive, especially if the insurance fees are coupled with monthly loan payments; they can run up your credit line. Also, hassles involving PPI reclaims can be exhausting, especially if the policy was not properly explained.

Mis-sold PPI
If a lending company attempts to sell PPI to a self-employed or unemployed person then it can be classified as mis-sold. This happens if the company starts dishing out PPI without properly scrutinizing each case. In such cases, when people try to claim the insurance, they are usually denied.

Cancelling PPI
If you decide that you want to revoke your PPI after signing the documents, then you have every right to do so, and all premiums should be refunded within two to four weeks. If however, the policy was taken out a while back, then you could face a penalty for cancelling it, and there are fewer chances of having your premiums refunded. Special cases such as miss-sold covers may have different outcomes.

PPI does not have to be bought from the same firm, in fact, it pays to shop around for a good deal. Before buying PPI, check the policy to see if it fits your particular needs. Information such as the duration of the cover and its main benefits should be stated on the key policy information page. Some of the most important PPI areas to look into are:

• Price
• Possible limits on benefits if you claim
• Policy duration
• When the cover starts
• Types of injuries excluded or included in the cover
• If the policy covers longstanding illnesses

You might also want to check out how the policy affects you if you are self-employed; that is, if they accept such.

How to check if you have PPI
Paperwork for your loan may include payment protection insurance on the statements, possibly listed as PPI or loan protection, account cover, payment cover, credit insurance or loan payment insurance, etc. If you are still not sure, then contact the firm that sold you the credit card, mortgage, loan, or similar product.

PPI claims

These conditions constitute mis-sold PPI

• If you were pressured into taking PPI
• If it was added to your loan without your knowledge
• Certain exclusions were not discussed

Submit a claim
Private claim handlers handle PPI reclaims or any mis-sold PPI cases. Making a claim for a mis-sold PPI is a simple and straight forward process, and most importantly, it is free, so you should not be pressured to hire claim handlers. The ombudsman free form service is available to anyone who wants to make a claim and needs more help writing to the bank.

All you need to know About Scottish Trust Deeds

A Scottish trust deed is a legally binding agreement used to write-off part of a consumer’s debt. This type of deed is available to Scottish residents facing bankruptcy. Its similar to the an Individual Voluntary Arrangement (IVA), which is the English version of the debt solution. Usually, trust deeds last for three years and take into account what one owes and can afford to pay over this period. After the deed is setup, creditors cannot hassle debtor to pay outstanding debts.

How The Deeds Work
The process of setting up trust deeds involves an insolvency practitioner and a debtor. As the trustee, the insolvency practitioner takes into account all the debtor’s monthly revenues and expenses. This gives the trustee a good grasp of how much the debtor would be able to set aside to pay off his or her creditors every month. Armed with this figure, the trustee then prepares a proposal and submits it to his or her creditors. The creditors have a period of five weeks within which to raise objections to the proposal. If objecting creditors do not account for 33% of outstanding debts, the proposal becomes legally binding to all parties. After this, one’s monthly payments do not attract interest. At the same time, creditors can only contact the debtor through his or her trustee.

Outline Of The Scottish Trust Deed
It is important to note that Scottish trust deeds do not exonerate one from paying all debts. In fact, this type of deed only covers unsecured debts. These include credit card debts, overdrafts, and unsecured loans. For secured debts, the deep does not offer any form of reprieve. If you have equity in a property, your trustee may include this in the proposal. However, you will have to relinquish the equity in properties under consideration. This will go towards settling part of your outstanding debt. For employees involved in a private pension scheme, the trustee may recommend stopping monthly contributions in order to clear unsecured debts.

Monthly Repayments
The deed is valid for a period of 36 months. During this period, a debtor will have to make regular monthly repayments. After the three years are over, creditors will have to write off any remaining debt. The amount of money one has to pay depends on monthly income and expenses. Your trustee must ensure that you can afford to pay the agreed amount comfortably. The agreed payments can change at any time depending on your personal circumstances. For example, creditors can request your trustee to increase the amount you repay every month if your income stream improves. On the other hand, your trustee can reduce payments if you face financial difficulties.

Advantages
The beauty of agreeing to the deed is the option to avoid sequestration. While the deed is valid, creditors cannot pursue legal avenues to recover unpaid debts. As a result, creditors cannot repossess your home or personal assets. If you are a businessperson, a deed does not affect operations. As a result, you can continue to serve clients and carry out daily tasks without any interruption. It is easy to negotiate the terms of your monthly repayments depending on expected earnings. At the same time, you will not have to worry about legal repercussions during and after the three-year period.

Disadvantages
Even though these deeds can settle debt problems, one has to be aware of the potential downsides. To start with, a deed will have a negative impact on your credit history. This can go on for up to six years making it hard to obtain credit from traditional lenders such as banks. If you breach the agreement made with creditors, your trustee can institute bankruptcy proceedings. In addition, access to credit during this period is limited to £250 or less. During this time, one cannot serve as a director of a limited company.

If you are facing financial difficulties, it is wise to consult qualified insolvency practitioners. These experts will be able to guide you on insolvency practices. You will also benefit from professional advice on handling debt. Many people in Scotland have used these deeds to ease out of tough debt situations. Most creditors will accept the proposal submitted by a trustee on behalf of a client. Unlike bankruptcy (sequestration), Scottish deeds offer far much better returns to creditors. While your debt problems will not end overnight, a deed gives you the opportunity to be debt free within 3 years.