One good news is that the British Bankers’ Association has announced that it will not appeal against the High Court’s ruling on PPI mis-selling. But what does it mean for common borrowers?
Payment Protection Insurance is designed to cover your loan, credit card or mortgage repayments in case you fall ill, suffer an accident or lose employment. The big problem is that this insurance was being sold alongside a number of financial products to thousands and thousands of customers without them even realizing they are signing up for one. So, the first thing to do now is to check if you really have a PPI. Mis-selling consisted in making people who could never claim a premium, take it out or in making it sound at the point of sale as if a PPI was necessary to obtain credit at all.
Beginning from 1 February 2011 a new Consumer Credit Directive, unifying consumer protection rules across the EU countries comes into force. Here is an overview of some changes that it brings to the British public.
One clear and not-so-nice change concerns “typical APR” – an advertised rate of interest. Before now lenders were under obligation to offer it to 66% of their customers, but from now on this number will drop to just 51%. Which means that less borrowers are going to get the advertised rates and more will be penalized by much higher rates. Besides, technically, it means that an applicant will not get to know what rate he is going to be offered before making an actual application, which is reflected on the credit report. The new term is going to be “representative” APR. Continue Reading
Personal loans are becoming more attractive as interest rates are being cut by the biggest lenders in an attempt to beat the rivals.
Nationwide, for example, has recently announced a personal loan rate cut to a typical 7.2% APR for its current account holders. This offer is valid for a loan of £7,500-£14,999 for a period of 5 years. But even if you don’t have a Nationwide FlexAccount, it is still possible to have a loan with a 7.3% typical APR, applying through Moneysupermarket website. In this case the loan will be of £7000-£14,999 for a term of up to five years.
Santander answered last week by launching a similar deal with a 7.2% typical APR for those who need a loan between £7,500 and £14,950 but it is offered exclusively through specialized sites, such as uSwitch.com. Other banks, Tesco Bank, First Direct, HSBC followed suit and cut their interest rates on borrowing as well. Continue Reading
Small and medium UK businesses are facing hard times, finding it difficult to get financing from banks. A research conducted by Ebay among about 160,000 enterprises showed that 80% of them were refused a business loan by a high-street bank and were constrained to use more expensive means like business credit card overdrafts, remortgaging property and borrowing from friends and family. Continue Reading
In the time when more and more people find it from difficult to impossible to obtain a personal loan or a mortgage from a high-street bank or an established building society, sub-prime mortgaging seems to be the only solution.
The term sub-prime lending refers to loans and mortgages granted to people with bad credit history, turned down by the mainstream lenders because of the high risk they are representing. But the number of such people keeps growing, which means that there is a niche market for the lenders who are ready to run bigger risks – but at a price to the borrower, obviously. Continue Reading
