When deciding upon any form of new credit commitment it is extremely important to ensure the selected resource is affordable. This means making sure the product and its repayments can exist alongside your existing monthly commitments without causing financial strain. Whether this be payday loans or Hire Purchase repayments, as consumers we have a responsibility to ensure we borrow in a manner which is realistic. Clearly in the UK consumer debt is of great consumer and yearly figures suggest that collectively we are increasingly our personal debt levels year on year. Of course financial lenders play a role in causing this problem but we too, as consumers using credit, must share the responsibility. Borrowing money of any amount should be taken seriously and therefore planned for accordingly. It is true to say that credit is only ever increasing in availability and nowadays credit is available for most products and services which are accessible to consumers. This means credit has not only become increasingly common place but also a popular choice amongst consumers. Whereas in the past we may simply not have made a purchase where the funds required were not readily available, in today’s economy we do not have to think in this way. In times when we do not have the funds at our disposal to make a purchase, we can instead consider the credit based alternatives which are offered. Whether this be for the purchase of a car or a sofa, most suppliers now offer the ability to access credit as part of the service on offer.
The increasing number of credit facilities which we have to choose from has undoubtedly lead to the modern day consumer having to better manage their monthly finances. Given that consumers regularly use resources such as home lending or payday loans, this means we have a much higher number of potential monthly outgoings to consider and account for. Thankfully many of these forms of credit, such as payday loans, recognise this fact in a general sense and as such offer repayments to their customers in a monthly instalment manner of repayment. The ability to repay credit in monthly amounts means there is a much greater opportunity to select a resource which is sensible and most importantly; affordable. This is because the repayment amount to plan for is generally speaking much smaller and therefore requirements a proportionally smaller commitment from the individual’s monthly finances. It is often those commitments which instead require large sums on a monthly basis which usually lead to a form of financially difficulty later down the line.
As consumers we do have at our disposal a very simple tool to help us manage our existing commitment and also any new commitments we may be considering, such as payday loans for example. This resource is that of a budget planner. Nowadays there are specific websites designed to helping the modern day consumers effectively manage their monthly budget and therefore their existing finances in a general sense. That said, consumers can formulate their own budgets in a number of simple and easy to follow steps and the process itself takes no time at all. A budget in basis terms simply means a record of all regular expenses which occur. This means a budget must account for all general living costs, whether that be rent or other household bills, travel expenses or existing credit based commitments. As consumers when completing a budget, it is vitally important we do so in a manner which is honest and open. This means listing every possible cost from which a repayment from our wages must be made. Of course your budget could and often does vary from one month to the next and as so your budget must adjust accordingly. Even if this means taking pen to paper and writing a budget for the forthcoming month; this simple act in itself will offer guidance and insight. Not only do budgets provide a detailed understanding of where money is being spent each and every month but in addition allows us as consumers to understand how much funds we have available each month deemed as spare income. Spare or disposal income is of course where any form of new borrowing would need to be made from. Obtaining a new form of credit without fully understanding your budget and furthermore your disposal income, will likely result in an unsuitable resource being agreed to. Equally budgets can help us to understand where we are over spending and perhaps then where savings could be made in the future.
Representative Example: Representative 1286.98% APR on a loan of £300.00 with 5 monthly repayments of £101.03 Total amount repayable £505.13 Annual interest rate (fixed) 290% Maximum APR 1351%
Warning: Late repayment can cause you serious money problems – For help, go to moneyadviceservice.org.uk
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Author: Internal Marketing Department