However, this means of attaining quick money can turn into debt even faster if you’re not familiar with the workings of payday loans in your country. In this article, we’ll introduce you to payday loans, touching upon what they are and how they work so that you can avoid becoming a victim of the debt trap. 

What Is A Payday Loan?

A payday loan refers to a loan borrowed by a third party that has a high-interest rate and needs to be paid back in a short period of time, typically in a two-week payday cycle. The loan is dependent on the amount of income you earn, with the borrowing limit being half of your net monthly salary in most provinces. 

This is because many individuals are paid by their employers on a bi-weekly basis, and payday loans are there to pick up the slack until your next payday. By this time, you are expected to pay off the whole loan, the interest rate on it, and any other fees altogether. 

Getting A Payday Loan

Getting a payday loan is not a complicated process; all you require is a job, your identification information, a bank account, and an approved permanent address. However, sometimes you can obtain this loan even if you don’t meet certain requirements as some lenders are not strict about it.

You’ll either receive cash in hand, have money deposited straight into your account or the lender will provide you with a prepaid card for use. The prepaid card has the disadvantage of requiring an activation fee to be paid for it to work. 

When it’s time for you to pay back the loan, the money will either be directly withdrawn from your bank account, or a post-dated cheque given by you in the beginning to the lender will be cashed out. 

Paying Back Payday Loans

Limited credit choices mainly drive individuals to seek out a payday loan in the first place. There are a few ways you can go about paying back your payday loan: you can check whether you are eligible for a personal instalment loan to pay off the payday loan and other high-interest debt that’s been burdening you since the repayment term is longer.

In case your bank refuses to lend you the money, you can turn to a private or subprime lender. Though they’ll most likely offer higher rates on the payday loans than your bank, it’ll still be far less than your collective payday loan

Endnote

A payday loan is meant to be a short-term solution. There are many reasons one might apply for a payday loan, but this type of loan should be approached with caution, especially if you think you’ll have a hard time paying it back on time. It’s important that you think through your decision before taking out a payday loan since interest rates are extremely high and can cause you a lot more trouble than it is worth.

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There are many lenders who have strict criteria and maximum age limits when it comes to approving mortgages, however, there are specialist lenders who are happy to offer mortgage products to borrowers of any age.

There are many schemes that have been created with pensioners in mind, such as lifetime mortgages, equity releases and interest-only retirement mortgages. But there are also traditional mortgage products available for those considered old. Thankfully there are a number of specialist lenders out there willing to offer repayment and interest-only standard mortgage products to pensioners and retirees.

Eligibility For Older Borrowers

It’s not surprising that lenders will be less inclined to lend to people as they get older for the simple fact that they have less time to repay the loan. There are however specialist lenders, who can be accessed through specialist mortgage brokers, that have no upper limits when it comes to the age of prospective buyers. Not only are mortgage products available for this age demographic, but there are some great deals with competitive interest rates available for those looking to get a mortgage later in life.

Older borrowers, particularly pensioners, are typically considered higher risk primarily due to the fact that their regular income is usually lower than their younger counterparts and therefore lenders are more concerned with their ability to meet monthly mortgage payments. Meeting the affordability criteria can be more challenging as you get older and most lenders, especially in the current economic climate, are not willing to take the risk.

There are three main eligibility criteria that lenders look at when applications are made for standard mortgage products:

1. Affordability

This is probably the most important test that the lender will apply to your application. The affordability test will look at whether the borrower can realistically meet the monthly repayments for the property they wish to purchase.

For borrowers in their 40s and 50s, lenders may be quite stringent in their criteria and will be assessed on their current income and employment. Although still quite a way to go to retirement age, this age group will possibly be accepted for a mortgage with shorter repayment terms. 

For the older age group, retirees and pensioners, proving that they can meet the repayments with their pension income is paramount to being accepted. All monthly outgoings will be taken into account as with any age group applying for a mortgage. The majority of lenders will allow 3 to 4 times annual income, with some even going up as far as 5 to 6 times.

For those considering an interest-only mortgage, this figure could potentially be a lot higher with some, but not many, offering 10 times annual income, provided you are using a secured loan to release cash.

2. Mortgage Term Length

The term length of the home loan is an important consideration, particularly for older borrowers who have fewer options available to them in terms of the number of lenders willing to approve them for a mortgage.

The majority of lenders will have an upper age limit which will restrict the term of the loan. For example, if you are 60 years old and the lender has an age limit of 75 years, then you will probably be required to take the loan over a shorter period which will, in turn, result in higher monthly repayment rates. Borrowers will need to prove that they can afford the higher amount for the lender to feel confident enough to approve the mortgage.

It varies from lender to lender as to whether they will allow a mortgage to run into the borrower's retirement age. Some will allow it, whilst others will have more stringent rules regarding mortgages being paid off prior to retirement. It all boils down to individual lenders’ criteria and most importantly the affordability aspect.

Qualification criteria will depend on various factors including the amount of retirement income the borrower realistically can expect to receive on a monthly basis, the date at which they will officially retire and the amount of money that has accumulated in their pension scheme, if they have one.

3. LTV (Loan to Value)

The loan to value amount is very important when lenders are considering the approval of a mortgage for older borrowers. The LTV is the ratio of the mortgage against the value of the property that will be purchased. For example, an LTV of 60% means that the buyer pays a deposit of 40% of the property's full value and the lender will cover the remaining 60% with the home loan. 

The larger the deposit that older buyers have, the more likely they are to be accepted for a standard mortgage product. Many lenders will require a 20% deposit for a standard repayment mortgage with competitive interest rates. Others will accept as little as a 5% deposit but the interest rate will be understandably higher.

For interest-only mortgages, lenders will generally accept a 15% deposit but for older applicants, most require a minimum of 25% down payment. The property in this type of mortgage agreement is considered as the ‘repayment vehicle’, meaning that the ultimate sale of the house will repay the home loan in full. With a retirement interest-only mortgage there is no end date like there would be for a regular interest-only home loan.

4. Maximum Age Range

The maximum age range varies from lender to lender. The majority will approve applications from buyers up to the age of 70 as long as they meet all the eligibility criteria. For older applicants (75+) the choice of lender is significantly diminished and reduces even further for the over 80’s. However, this does not mean that this age group is completely excluded, as there are lenders, although only a few, that are happy to approve applications provided they meet all the criteria required by the lender.

Why Older Mortgage Applicants May Not Be Approved

There are a variety of reasons that older mortgage loan applicants may be rejected for a home loan:

• Bad Credit History – for all age groups this could present a problem when applying for finance, particularly for the older age demographic. A retired buyer is already considered to be high risk so lenders will be unlikely to approve when the applicant also has a bad credit history. There are, however, some specialist lenders who will consider these applicants.
• High-Interest Rates – as there are fewer lenders willing to lend to pensioners and retirees, interest rates are higher due to the lack of competition.
• The Type of Property – lenders will assess the type of property that the buyer wishes to purchase to ensure that it is not a non-standard construction which could potentially be difficult to sell at the end of the mortgage term.

What Is a Tradeline?

Tradelines or AU tradelines are credit accounts that appear on your credit report. Credit agencies use the information within those tradelines, such as their payment history, balance, activity, and creditor’s name, to form your credit score.

Your credit score is a figure that measures how credit-worthy you are. If you have made payments on time, have been responsible with credit, and kept your balances low, then you may have a high credit score. Banks and lenders may then be more likely to look favorably at you for lending. However, if you have too many tradelines open or haven’t made the best decisions regarding your credit, your credit score may be low.

To combat a low credit score or build a positive payment history, you may decide to purchase tradelines. These can improve a low credit score and allow you to build up a payment history. As common as this practice is, it’s easy to make some of the following mistakes.

Mistake #1: Not Knowing How Tradelines Work

You may have heard that tradelines can improve your credit score. If you don’t know a lot more than that, it can be easy to purchase too many tradelines, the wrong ones, or be led into making tradeline purchases that aren’t in your best interests.

Mistake #2: Expecting Instant Results

When you add an authorised user tradeline to your account, you may think your credit score will immediately increase. You may then put plans in place to secure a mortgage or take out a loan. Tradelines are not instant. Instead, when you purchase an authorised tradeline, it can take up to 30 days to see an improvement, as long as you’ve selected one that can improve your credit score.

Mistake #3: Thinking Tradelines Repair Your Credit

Many people don’t understand their credit score. Sometimes, it’s only when you go to take out a loan that you come to realise it’s not as high as you expected it to be. If your credit score is surprisingly low, a tradeline is not a way to repair it. Instead, it’s a way to add information to your credit report to potentially increase your score. If you have a low credit score and you’re unsure why, you have the right to question it. You may be able to correct anything that appears to be wrong and subsequently lift your score.

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Mistake #4: Adding Tradelines With Credit Freezes or Fraud Alerts On Your Account

If a credit bureau has put a fraud alert or credit freeze on your account, any tradelines you purchase will not be posted to your credit report. Before you go down the tradelines route, contact the associated credit bureau to have those alerts removed.

Mistake #5: Choosing the Wrong Tradelines

Each tradeline is going to have a different effect on each person’s credit report. Its power will depend on what your credit report already outlines. The goal is to choose a tradeline that has better features than what you already have. For example, if your accounts’ average age is eight years, a five-year-old tradeline is not going to benefit you as much as one that has an average age of 10 years.

When the time comes to request a loan or a mortgage, it helps to understand as much about your credit report as possible. You can then learn about ways to improve it, repair it, and use it to your advantage.

Paresh Raja, founder and CEO of Market Financial Solutions, offers Finance Monthly his predictions for the UK property market in the new year.

2020 has been, by far, one of the most impactful years of the last couple decades. COVID-19 has had a sizeable impact on the world economy, national governments, and health systems around the globe. No industry, nation, or continent has been exempt from the virus’s economic and epidemiological affects, and we are all now beginning to understand the long-lasting changes that have been brought about by the pandemic.

Despite all of these challenges, it is important not to let these developments overlook the successes of 2020. While some industries have struggled, other sectors like property have been able to quickly recover. In fact, one could argue the real estate market is the strongest it has been since the EU referendum in June 2016.

In my mind, the positive performance of bricks and mortar will continue in 2021. As such, now is an ideal time to take a step back and consider just how investors and prospective buyers can take advantage of property investment over the coming 12 months.

A standout performer of 2020

Of all the positive developments witnessed in the UK this year, the ability of the real estate market to sustain a consistent rise in transaction numbers and house prices should be applauded. However, it was necessary for the market to also recover from the initial disruption caused by the first lockdown.

Obviously, property professionals were concerned during this initial stage of the pandemic; with the UK government actively dissuading people from moving home. Lenders retreated from the market, and this resulted in buyers turning to specialist finance providers to complete on sales and prevent existing transactions from collapsing.

Of all the positive developments witnessed in the UK this year, the ability of the real estate market to sustain a consistent rise in transaction numbers and house prices should be applauded.

In May, the government announced that people could once again move home, and that those who worked in the property sector could go back to facilitating transactions. However, in a bid to further incentivise buyers and sellers back to the market, in July the government offered the real estate sector another helping hand.

8 July saw the introduction and implementation of the stamp duty land tax (SDLT) holiday. This means that buyers could now save up to £15,000 when purchasing a new property in England or Northern Ireland. Those who were skittish about completing a property transaction during a pandemic were incentivised back to the market, resulting in a new wave of transactional activity which has been maintained up until today.

Transaction numbers began to grow, and house price indexes recorded a rise in the value of British property for the first time since the 2016 EU referendum. Nationwide, Halifax and Rightmove recorded house price growth between January and November 2020 of +6.5%, +7.6% and +5.5%, respectively.

However, although buyers were keen to take advantage of the SDLT holiday, another obstacle stood in the way of many. In a bid to minimise risk exposure, mainstream lenders are still hesitant when it comes to lending. Some have tightened their lending criteria; others have taken financial products off the shelves, and it is being reported that the time it is taking to deploy loans is increasing.

There is clear buyer appetite for property, and I believe this will be the case so long as the SDLT holiday remains in play. For this reason, property investors and brokers must familiarise themselves with all their finance options, looking beyond mainstream lenders and mortgage providers.

The rise of specialist finance

A survey from September commissioned by Market Financial Solutions found that 52% of the homeowners were keen to take advantage of the SDLT holiday but were put off by the increased likelihood of being denied the necessary financing.

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Prospective buyers whose transactions were at risk of collapsing from a delay in the deployment of their mortgage have, in turn, been looking to alternative lenders. These lenders typically have access to in-house credit lines and can tailor loans to meet the unique circumstances of each buyer. As a result, specialist finance products such as bridging loans can be deployed within a matter of days.

As we enter into 2021, I can only imagine that this trend will continue. The scheduled end of the SDLT holiday on 31 March, combined with the implementation of an overseas-buyer 2% SDLT surcharge on 1 April, means there is likely to be a rush from buyers looking to complete on transactions before these dates.

From reviewing their performance this year, there is a risk that mainstream lenders will struggle to ensure that financing is deployed in time to finalise transactions before these two deadlines. As such, there is a growing case for prospective buyers to seek out mortgage alternatives, such as fast loan solutions.

An optimistic outlook for 2021

Looking to the coming 12 months, it is clear that property investment will play a defining role supporting the post-pandemic recovery of the UK economy. The SDLT holiday has been a success, and there is clear buyer appetite for bricks and mortar. For this reason, it makes sense for buyers and brokers to also familiarise themselves with alternative loan options. Doing so will ensure they can confidently complete on transactions without delay.

Alexander Pelopidas, Partner at Rosling King LLP, analyses the changes to come into effect and the impact they are likely to have on insolvency cases.

In any insolvency, there is a statutory hierarchy that determines how creditors are repaid, including HMRC. Since 2003, HMRC has been an ‘unsecured creditor’ after the 2002 Enterprise Act. This however is about to change with far reaching consequences for businesses. Under the Finance Act 2020, HMRC will become a Secondary Preferential Creditor on insolvency from 1 December 2020.

To properly assess the impact of the new policy, it is important to look at the existing (pre-December) hierarchy of creditors. They are as follows:

1. Fixed charge creditors. These are creditors whose lending to a company is secured against a definable object. This could, for example, be a mortgage on a building, or a company warehouse.
2. Costs of the insolvency process. This could include staff wages, or even the rent due during the process. Alternatively, it could be the fees of the administrators/liquidators (as applicable).
3. Preferential creditors. This currently covers some payments due to employees, and money owned as part of the Financial Services Compensation Scheme.
4. ‘Floating charge’ creditors. These are creditors whose lending is secured against a class of asset. For instance, this could be the ‘stock’ in a warehouse, but not specific items of stock. Asset-based lending is a common type of floating charge lending.
5. Unsecured creditors. This refers to all other creditors, including pension schemes, customers and trade creditors. HMRC is currently an unsecured creditor.
6. Shareholders.

While significant, the shift in policy is in fact, in some ways, a return to the pre-2003 policy, when HMRC was classed as a preferential creditor in corporate insolvencies. The 2002 Enterprise Act which made HMRC an unsecured creditor sought to establish a culture of business rescue within which certain ring-fencing was implemented for UK businesses.

The government’s decision to assign HMRC as a preferential creditor once more has sparked considerable anxiety amongst borrowers, who rely on asset-based lending or invoice discounting.

While significant, the shift in policy is in fact, in some ways, a return to the pre-2003 policy, when HMRC was classed as a preferential creditor in corporate insolvencies.

At the core of the problem is that while HMRC remains one of the largest creditors in many insolvencies, at present it sits behind floating charge holders as an unsecured creditor. This means its claim does not dilute the funds available to pay secured lenders. After 1 December 2020 however, this will change and HMRC’s claims for unpaid employer NIC, PAYE and VAT will rank ahead of floating charge holders and unsecured creditors and consequently reduce the pot of money available for distribution in corporate insolvencies.

The impact of this will be substantial due to HMRC’s claims often being significant. In addition, there will be an increase in the cap on the amount of the Crown preference from £600,000 to £800,000 with effect from 6 April 2021. This will mean less cash for businesses as many lenders will likely increase their calculations of the borrower’s solvency to address the impact on returns.

The largest impact will be on asset-based lending or invoice discounting, a very common form of business finance. Typically, a floating charge is all that is taken by way of security. When the changes come in, lenders will have to assess a borrower’s assets and make adjustments based on potential HMRC VAT and PAYE liabilities. These liabilities are hard to quantify but will be significant enough to prompt a Lender to require more security such as guarantees and fixed charges. All of this impacts liquidity for borrowers, and in the event of insolvency, likely means more liquidations than administrations as administrators cannot deal with fixed charge assets in the same way as they do with floating charges i.e. without lender consent.

Under these types of financing, new borrowers will see themselves submitting to greater costs for monitoring and audits by lenders and existing borrowers will be caught by the changes which do not have any transitioning period. This could result in good borrowers being deemed bad borrowers involuntarily, as the new Crown preference will require the lender to make adjustments.

Company Voluntary Agreements (CVAs) may no longer be a viable option for a company where HMRC has preference, as CVAs cannot be used to compromise a preferential creditor. This is a significant insolvency tool, which is particularly being relied upon at the moment by the retail sector, that will now be hampered. Similarly, there exists the possibility that HMRC will become less prepared to negotiate time to pay deals with companies as it has priority ranking, so why would it compromise its new status in the hierarchy of creditors?

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Overall, there are now very real fears that in the medium term there will be a domino effect for SMEs who are already struggling, and on whom these changes will result in even greater distress. The upcoming change may ultimately force the hand of some companies who may reach the uncomfortable yet unavoidable conclusion; namely, that it would be wiser to enter into administration or liquidation before the new rule takes effect.

In the longer term, the effects could impair the UK’s attractiveness as a place to do business. R3, the insolvency and restructuring trade body, has already warned that the changes have potential to cause long-term damage to the UK economy as well as to the UK’s business rescue culture. Moreover, R3 says that it will end up costing the public purse more in lost income and higher expenses than it will ‘save’ in extra taxes returned following corporate insolvencies. As a consequence, the body thus vows to continue to lobby for the legislation to be reconsidered.

Only time will tell if the Government will eventually listen to the unified concerns of business representatives and insolvency professionals and will repeal the impending changes to the Crown preference. However, for now businesses and lenders should prepare themselves for the challenges that the changes will create.

Karoline Gore gives Finance Monthly an overview of promising Candian fintechs to look out for.

With the rest of the world sprinting toward the inclusivity and diversity of fintech, Canada is catching up swiftly. It is the inclusivity of cashless transactions and peer-to-peer lending, in particular, that are catching the attention of the Canadian market. So it isn’t surprising that Canadian fintech is now attracting a rather diverse age demographic with 46% of them being over the age of 40, according to TransUnion Canada.

In response to this growing demographic, Canadian fintech companies are rolling out some very exciting developments. So which companies are making a splash, and how?

Talem Health Analytics and Ownest Financial

Two Canadian fintech companies are front and center in Holt FinTech Accelerator’s 2020 Cohort list. Talem Health Analytics, based in Nova Scotia, has helped insurers streamline data and empowered them to detect and avoid fraudulent attempts through their AI injury causation tool. They also help insurance firms map out rather accurate recovery trajectories so they can better develop plans to suit their clients. The Calgary-based Ownest Financial that cut down the internal processing time of their partner lenders by 90%. They partnered up with 125 Canadian lender companies to give consumers an easier time to shop around for mortgages, personal loans, and even car financing, to mention a few. They also boast that their clients need about 70% less paperwork, making the whole lending experience swifter and less complicated.

MindBridge’s AI Reducing Financial Risk

Surprisingly, only 45% of consumers feel confident that they can spot and identify errors in financial statements before turning them into reports, according to the Association of Certified Fraud Examiners. The Canadian fintech MindBridge has developed an AI that rapidly scans and identifies anomalies in financial statements and reports. This helps organizations and consumers reduce their financial risk and avoid damaging credit scores. MindBridge’s AI is effectively transforming how accounting can be done, streamlining the auditing process, and improving financial management for businesses and their owners, and private consumers.

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AptPay’s Faster Cash Disbursement

The Canadian fintech AptPay is making a splash in the UK. They’ve partnered up with Mastercard to facilitate an accelerated cash disbursement processing for businesses in various industries and sectors. It is through AptPay’s Application Programming Interface (API), that companies and businesses can integrate Mastercard Send to start payouts. Through AptPay’s compliance services, businesses and their employees can be assured that their transactions are secure and are compliant with the rules set for their particular industries. The API will also enable real-time digital payments that can be linked to banks. The best feature is that payments can be rejected, approved, and reversed by recipients—so they are not simply inert in the whole process.

As consumers and businesses are fully realizing the convenience, inclusivity, and safety of cashless transactions, it is the job of fintech companies to provide better services and processes. Thankfully, Canadian fintech is paying attention and is setting its own trends through its developments and initiatives. The coming months will be a truly exciting time for Canadian fintech and consumers should pay attention.

Halifax’s house price index, released on Monday, revealed that the average UK property sold for £245,747 during August, the highest level since records began.

The widely followed index recorded a 1.6% increase on house prices in July and a 5.2% annual rise. This figure fell below analysts’ expected 6% year-on-year increase.

The UK has seen a house price boom in recent months, following the imposition of a stamp duty holiday on home purchases below £500,000 in England Northern Ireland which came into effect in early July. Lockdown measures in the wake of the COVID-19 pandemic also drove many first-time buyers to delay their search for a home, leading to a swell of demand as lockdown restrictions eased.

Halifax noted this demand surge in its release. “A surge in market activity has driven up house prices through the post-lockdown summer period, fuelled by the release of pent-up demand, a strong desire amongst some buyers to move to bigger properties, and of course the temporary cut to stamp duty,”  the lender wrote.

However, Halifax also warned that the price increase will likely be curtailed soon: "Notwithstanding the various positive factors supporting the market in the short-term, it remains highly unlikely that this level of price inflation will be sustained.”

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Nationwide, a rival lender to Halifax, released its own figures last week that showed prices at record highs in August. According to Nationwide’s data, prices rose by 2% between July and August, and 3.7% from the same period last year.

A suitable title loan is one that is according to your needs and requirements. Borrowing against your car title is a non-traditional loan. When you start searching for the best place to get a car loan online, then you get thousands of results in a matter of seconds. Not every lender keeps your best interest in mind, and not every loan provider has the best terms. You should know how to find a suitable title loan by following some tips.

Always Check the Track Record

Some offers seem too good to be true when you start browsing the web about the best car title loans. You need to act like a careful buyer. Make sure you check reviews and ratings of a car title loan provider. Get an idea about the company by exploring its website, especially the “about us” page. Next, read online reviews about the company's services and offers. The more you read, the better you will know a company whether a loan company is legit or not. Try to make a deal with a company that has been rendering services for quite some time. For example, when a car title loan provider has served its customers for seven or more years, you can generally rely on its services. Also, check for the physical location and offices of a loan provider.

Know How Simple the Process Is

Every lender will share their contact details on their official website. All you need to do is to dial the customer care number and ask about the car title loan and its requirements. It would be best if you probed into this deal before you sign it. Try to know what kind of paperwork is involved in the process, how long it takes to get a car title loan, and what the terms and conditions are. If a company requires you to go through a hefty process that will continue for some weeks, you should look elsewhere. A car title loan is a secured loan where most lenders only take one or two days to process it. 

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Try to Meet Only Your Needs and Requirements

Don’t take a loan amount that you can’t afford to pay back. You are keeping your car as collateral; failure to repay the loan means losing it. Some lenders are ready to give you more money than you need, but no matter how mouth-watering the scheme is, you shouldn’t fall for it. If you are getting a low-interest deal when you pay in lump-sum, then don’t sign up for it unless you are sure that you can pay it back in a month or as per requirement. You should know that your vehicle will be seized by the lender if you cannot pay. According to a study, almost 20% of the borrowers who opt for a lump-sum type of car title loan end up having their cars repossessed. It is better to go for an instalment loan with your favourable terms so that you can pay the loan back conveniently.

Always Prioritise Your Safety and Privacy

The best place to get a car title loan is where you can enjoy the perks of information safety and privacy. Most of the time, you apply online for a title loan. You add your personal and financial information. Before you provide all such information to a company, make sure you can rely on its system.

Did you know that having an excellent credit routine practice is an integral part of securing one's financial future? It's why building a credit score is a high starting point, and one mustn't ignore it. One of the most excellent ways to make credit is by using credit cards to build credit. It can be a challenging process if you aren't up for the task. However, don't beat yourself up as you can implement excellent credit card management practices. In turn, you get to have a brighter financial future by having a stellar credit history. Here's a step by step guideline on how to build credit with a credit card in corporate finance.

1. Pay All Your Credit Card Bills in Full and On Time

Diligent credit management practice involves you making a timely monthly payment. It's a procedure that might pass you by if you aren't too cautious. However, if you want to skip getting a headache, you need to make autopay your close buddy. Thus, you can get to pay all your bills in due time. It ultimately contributes to your credit score improving. The secret to paying timely payment with no much hassle is spending a budget that's within your limit. Therefore, you won’t have to keep carrying a balance into the next month, which might incur a higher interest charge.

2. Your Needs

Before you think of getting a credit card, you need to take time and ask yourself the vital questions. You ought to know why you are signing up for a particular card. Do you want to build credit? Or do you want the fantastic rewards that come with credit cards? Finding the ideal credit card will enable you to make the most out of it. It's a chance you ensure that you meet your needs each time you get to swipe the credit card. As you open these credit cards, you ought to know about the soft and hard inquiries. It’ll enable you to tread lightly to ensure your credit score doesn't hang on the balance.

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3. Regular Purchases

It's quite unfortunate that most individuals have credit cards that have their credit cards lying idle and unused. However, it leads to one having a pause in credit score growth. If you need your credit history to continue improving, you need to continue making purchases using your credit card. As you use your credit card, you get to make timely payments. Thus, your credit card issuer will keep making monthly reports to the credit bureaus.

4. Don’t Get Too Many Credit Cards

With the numerous captivating rewards from several credit cards, it's easy to sign up and get as many credit cards as possible. There's entirely nothing wrong with getting more than one credit card. However, the trouble comes when you have more credit cards than you can handle. You might get tempted to spend more, and that's not good, and it might harm your credit score.

Mindful credit card usage is quite crucial in achieving your financial independence dream. It's a seamless process that enables you to learn how to use credit cards to build credit. It's because one learns to become financially conscious, determined, and precise on each penny that gets spent.

Obtaining a small business loan might seem scary at first, but it's easier than you might think. If you've never done it before, or if you've never spoken to a specialist regarding the matter, you might have heard a few things that are not only false but downright toxic when it comes to growing your business.

Before we get into the myths, you have to understand a few critical things about small business loans: they can vary by type and lender, which means that not all loans are the same. Each type of loan can have advantages and drawbacks. According to the nature of your business you're running, your track record, and how much money you tend to make every month, different types of loans might suit you better than others.

So let's get into the myths and why they're simply myths:

Myth #1: Obtaining a small business loan is a long and frustrating process.

False! As long as the amount of money you want to obtain falls below the million-pound mark, or even better, below the 500k mark, you can typically get a loan in just a few days. As long as you're transparent about your business and about what you intend to do with the money, you shouldn't have any problems applying for credit either at the bank or at private lenders.

Even better, if the amount you need is very small and if you want to get rid of the debt in less than a month, you can try out payday loans. You can apply online on a direct lender's website, and you don't even need to fill out too many forms.

As long as the amount of money you want to obtain falls below the million-pound mark, or even better, below the 500k mark, you can typically get a loan in just a few days.

Myth #2: Your credit score must be impeccable.

While traditional banks care a lot about your credit score, alternative or private lenders don't take it into consideration that much. Instead of looking at your financial history, this type of lender analyses the financial reality for a certain business based on market trends, your area's economic status, and other similar factors.

In any case, don't limit yourself to just one offer. Instead, ask several lenders about their offers and try to negotiate what best suits your situation. You might stumble upon a far better offer than you were expecting.

Note that while your credit score doesn’t matter as much, you still need credit history. A credit history is different from your bank profile. It gives lenders proof that you can handle a loan. Having credit history also indirectly impacts your credit score.

A good strategy for increasing your credit score is to apply for a payday loan. While these loans offer only small amounts of money, it’s usually enough to cover urgent expenses such as taxes or health emergencies. And because we’re talking about small sums, you can pay them entirely within one month. And the best part: you can get them online from a direct lender. Bonus: they also increase your credit score by showing banks that are able to handle your finances.

Myth #3: If you ask for too much money, you'll be instantly rejected.

How much money you request doesn't necessarily impact your approval chances. In fact, lenders often prefer giving out big loans because they win back more money over time. Banks are especially more hesitant to give out small loans rather than big ones. It's generally a good idea to apply for just how much money you need while considering how much you can pay back monthly.

Afterwards, the lender is going to check if you have enough cash flow to make your payments on time. As long as you take these factors into consideration, you can grow your business so much that your profits might easily surpass the lender's interest rate.

Myth #4: Getting a loan for a start-up is nearly impossible.

Many aspiring entrepreneurs simply assume that you need to have been in business for at least a few years to build up a credit score before applying for a loan—nothing further from the truth. In reality, a lot of lenders offer start-up loans that are aimed specifically at businesses with little or no credit history.

Sure, your personal credit score will be taken into account. However, as long as you're in good standing and present yourself with a good business plan, you'll likely get approved. So do your homework and don't be afraid to ask for an expert’s help. You might be pleasantly surprised by the outcome.

Myth #5: The bank is the worst place to get a small business loan.

While alternative financing is usually great for obtaining small business loans, banks can often offer some advantages. For example, if you're in a fast-growing field such as IT, healthcare, or software consultancy, banks might not be that great. However, if you anticipate a steady growth over a couple of years, then traditional banks have great offerings.

They have several plans from which you can choose. Fixed interest rates and flexible interest rates might also play a big role in choosing what's best for you. Commissions, late fees, and early repayments also need to be considered. Yes, some banks often cut a small part of your interest rate if you pay a part of your debt in advance. That might just be what you were looking for your business.

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Myth #6: Online lenders are frauds with disgusting interest rates.

False. This one is simply false. If we were to go 20 years back in time, sure, such a statement might have made sense. However, the world has changed so much it's almost incredible. Think about all the things you do online every single day. Now think about how you used to do them in the past. It's not any different from loans nowadays.

More and more online lenders have appeared on the market in the last couple of years. Many of them offer single-digit interest rates. It's up to you to find the ones who offer plans that benefit you in the long run.

Closing Thoughts

We hope the information you have found here will help you make the right decision. To reiterate, what matters most is finding the right solution for you. To achieve this, never be afraid to consult with experts. And ask the lenders as many questions as possible before making a commitment.

So do your research and don't be afraid to try something that you haven't until now. The small loan you take out today might benefit you immensely in a couple of years. Or maybe even in a couple of months.

Commercial finance intermediaries are divided on Brexit. One out of four respondents consider it a key challenge, while one fifth believe that it will bring new business opportunities. However, commercial finance intermediaries have a positive future outlook. 77% of respondents believe that the number of loans they broker will increase; more than half of these even go so far to say that they believe it will rise by a lot.

According to recent statistics from UK Finance, conducted with the support of industry organisations NACFB and FIBA, UK lenders approved over 290,000 loans and overdrafts to small and medium-sized businesses (SMEs) in 2018, worth £28 billion in total. Commercial finance intermediaries, including brokers, accountants and business advisers, are often the invisible hand in these transactions. They play a crucial role in helping UK businesses source the right funding from all the different options offered.

However, despite the healthy size of the SME loan market in the UK  there is still a £22 billion funding gap, with many businesses struggling to obtain capital for their needs , according to the Bank of England. What’s more, recent stats from the British Business Bank highlight the importance of commercial finance intermediaries stating that businesses receiving external support when looking for funding are 25% more likely to become high-growth companies.

Commenting on the survey findings, Niels Turfboer, managing director at Spotcap, said: “Commercial finance intermediaries are an important part of the SME funding jigsaw. The survey insights show that there is a lot of potential for them to help fill the  £22 billion funding gap. The more adaptable and open-minded to change intermediaries – and lenders – are, the better and faster they can compete and grow their business.”

Adam Tyler, the executive chairman at FIBA, the Financial Intermediary & Broker Association, adds: "We benefit hugely from such a wide range of lenders and to know that SMEs are still not aware of the choice is very disappointing. My own research has revealed similar shortfalls and the more we can do collectively, the more small businesses can get the funding they require."

Graham Toy, CEO of the National Association of Commercial Finance Brokers, responded to the findings: “The research chimes with our own view of the commercial finance broker’s role in supporting and advising business borrowers. Brokers have a positive outlook partly because they remain instinctively agile, with many of them having weathered the unpredictability of a post-2008 world.”

Here Sarah Jackson, Director at Equiniti Credit Services, reveals some surprising stats about millennials’ attitudes to credit and explores with Finance Monthly what it all means for lenders targeting this demographic.

According to Equiniti Credit Service’s latest UK research report ‘A three part harmony: how regulation, data and CX are evolving consumer attitudes to credit’, despite millennial borrowing increasing annually by a healthy 8%, three fifths of this age group will still only consider borrowing from a traditional, well-established lender, or one that they had dealt with before.

That’s weird

Right. Particularly when it’s clear that alternative lending is gaining traction across other age groups and showing strong overall growth of 15% in 2018. The same report revealed that some 62% of all UK consumers would consider alternative sources of credit (I.e. a non-bank, such as a retailer or car finance provider) the next time they apply for a loan. While consideration does not equal action, the figures about take-up also support the trend: over a quarter of consumers who borrowed over £1000 in the last year did, in fact, use an alternative lender over a traditional high street bank.

If both millennial borrowing and alternative lending are on the up, why is there a disconnect between the two?

So, while non-traditional lenders are not yet competing with banks in loan volumes, they have certainly established themselves within the market. Which begs a question: if both millennial borrowing and alternative lending are on the up, why is there a disconnect between the two?

Customer inexperience

The story, as usual, lies in the data. Although 70% of UK consumers are comfortable completing loan application processes digitally, this figure drops to 57% for millennials specifically. Considering this age group’s well documented digital literacy, this can only be chalked up to financial inexperience. Older generations have not only had more time to become comfortable with the credit processes involved with a loan application, but most have also had more opportunity. External factors play a big part here too. House prices are such that for many millennials, unlike previous generations, the prospect of buying a house and applying for a mortgage at a relatively young age doesn’t even feature on the radar. As such, this group has less exposure to credit processes.

Financial inexperience creates a need for more careful guidance and reassurance. This likely explains why over half (58%) of millennials would only consider borrowing from well-known or previously used lenders.

A helping hand

For lenders, this is both a problem and a huge opportunity. With many millennials now in their mid-thirties, their collective buying power is set to increase substantially over the next decade, making this an increasingly lucrative target market.

That this knowledge gap exists is a chance for the smartest non-traditional credit providers to differentiate themselves as genuine and credible sources of information and guidance for these nervy borrowers.

A great user experience (UX) will undoubtedly help, but will need to be far more than a facility for fast and convenient access to credit.

A great user experience (UX) will undoubtedly help, but will need to be far more than a facility for fast and convenient access to credit. This notion is given further weight by the same report which indicates that one in seven applicants cite clarity of the product’s documentation as the most important factor when deciding between lenders. Persuasive and confidence inspiring UX goes far beyond origination – it must resonate throughout the entire loan lifecycle.

To successfully target millennials, this means balancing investment in a slick digital user interface and the development of clear and simple documentation. Since this group values one-to-one guidance, the contact centre will be a key battleground for business. Here, engaging a specialist outsourcing partner may well be the way to go. These providers are trained and skilled in supporting the kind of dialogue that younger generations need to confidently apply for credit.