Loans And Credit Cards - Claim Your Money Back On Illegal Charges

It is a new rule that may have the banks running scared. As of May 31, money lenders are no longer allowed to charge sky-high penalties for late payments on credit cards, store cards, mortgages, loans and overdrafts. The most they are, in fact, allowed to charge is £12. And if they do not make the changes to these charges by this date, it is possible that these money lending outfits will be taken to court and made to pay up.

What this means is that outfits like Halifax, which is part of the Bank of Scotland group, can no longer charge £39 for unpaid cheques, direct debits and standing orders. Neither will other banks, which have penalty rates usually about £9 less than this.

And on top of this, the people who were charged these staggering rates dating back six years can claim them back.

The Office of Fair Trading made the rule because it felt penalties should be there simply as a way for organisations to recover costs, rather than profit from people who have borrowed money in the first place.

In reaction to the new rule, the British Bankers Association has promised to challenge some of the cases. A spokesperson for the organisation says they thought that the OFT’s decision should only apply to credit cards rather than all sorts of other money lending situations. The reason being, is that the investigation that the OFT carried out before it made the rule was only into the situation surrounding credit cards exclusively.

“We are surprised that the OFT has widened the scope of its ruling when it only spoke to credit card providers. We expect our members to challenge this. We believe our bank’s products provide good value”, the British Bankers Association spokesperson says.

But partner at Class Law Solicitors, Stephen Alexander, says banks will have little chance of being successful of a legal challenge against the new rule in a small claims court. “Now that the OFT has decided that anything over £12 is unfair, it will be a lot easier for people to succeed against the banks in the Small Claims Court. People are entitled to claim back charges made within the last 6 years,” he says.

While this rule, however, might be bad news for the banks, it provides probably some comfort to all of the people out there who have wracked up debts through accruing credit card fines. At least now they can get some of their money back. And the consumer magazine ‘Which’ can help you.

‘Which’ magazine says for £10, it will provide all the paper work one needs to apply for a rebate on excessive fees. The information can be obtained through the website www.which.net.

Banks make billions of pounds worth of profits each year, so it might seem that this ruling will hardly create even a dent in those profits. But at least it makes them play fair – and give you some of your money back.

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Loan House is a large website offering its clients Bad Credit loans.

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How to Understand Car Loans

Buying a new car can be an exhilarating experience, until you try to get a car loan. There are so many fees, interest choices and time lengths that one can get discouraged and decide not to get a new vehicle all together, but if you spend some time learning the mysteries behind car loans you will find it's a very easily understood topic. Below are some useful tips to help you understand the ins and outs of car loans.

How much can I borrow?

In most cases, a car loan company will allow you to borrow as much as you need to finance the cost of the car and cover any fees, loan insurance and comprehensive vehicle insurance.

Most vehicle loan institutions mandate a minimum of $10,000 to be borrowed over varying amounts of time. You may or may not be expected to pay a deposit on the loan. Most car loans are available for used or new cars, purchased privately or for a business as long as they are less than seven years old.

Consider Interest

There are two main kinds of interest rates when considering a vehicle loan: fixed interest or variable interest rates.

Fixed interest:

A fixed interest rate means that the rate stays consistent for the duration of the car loan. So if you lock in to a 10% interest rate you'll know exactly how much money you'll pay for the life of the loan. If you are on a tight budget then a fixed interest rate would be the right choice for you, as you can rest easy knowing how much you will pay each month.

Variable interest:

A variable interest rate means that the rate can change and fluctuate with the market during the life of the loan. So if you take the loan out at the above 10%, your rate may stay the same, rise or drop many times within the loan's life.

If interest rates are high to begin with and the rates drop then a variable interest rate will mean lower payments each month, resulting in a tidy savings. However, if the market tanks and interest rates rise, you could be looking at paying much, much more a month than you anticipated.

Secured vs. Unsecured

There are two main types of car loans you can apply for: secured or unsecured. Each have definite advantages and disadvantages, so make sure you read the details carefully so you know what you're getting into.

Secured loan:

These are car loans that take something into consideration as collateral against your loan debt in the event that you default on your payments. In this case, your car will be used as collateral.

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Unsecured loan:

An unsecured car loan is one that doesn't use the car as collateral. This type of loan is offered at a higher interest rate but if you default on the loan the company can't repossess your car. If you're buying an older car you may need to obtain an unsecured loan, since the car value may not be enough to serve as collateral.

Loan Insurance

If you're unsure of what your employment status will be two years down the road, or if you know you'll need surgery in the next year then loan insurance might be a good option to look into. Some car loan lenders will offer a discount on your interest rate if you procure loan insurance. Loan insurance protects you if you're disabled, or lose your employment.

Consider time into the equation

Your car loan will have different options on the length of time to pay the loan back. Typically varying from 12 months to 5 years (some companies offer six years or longer), the amount of time you choose to pay your loan back is important in many ways.

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So 'No' to Fees

Banks and loan institutions don't make money on just the interest rate of your car loan these days. They add in some other fees to make sure you keep paying and paying, even if you want to pay the loan early. When you're in need of a car loan ensure that you investigate the following fees and look for a loan that will give you as low a fee as possible.

Application fees:

Some banks and car loan companies will charge an application fee. This covers the work done researching your information and processing your loan. If you can, find a loan with a low or even better, no application fee.

Service fees:

Some banks will charge you a small, monthly fee for the length of your loan. Although an extra $3 a month or more may not seem like much, it can certainly add up over the years. For example, paying a $3 a month service fee on your car loan for a period of 7 years adds up to an additional $252 in fees.

Cash vs. electronic payment:

Some banks encourage electronic payment of car loans by issuing a fee if you choose to get a cash payment booklet instead. In this case, it might be in your best interest to waive the $100 or so fee and go electronic.

Early payment fees:

Paying your loan off early may seem like an attractive idea at first until you read the fine print and learn that you'll probably pay a fee for doing just that. Banks and loan companies don't want to lose money on the interest you pay them every month, and if you pay early that's exactly what will happen. To ensure they get a piece of their share they institute a fee for paying your car loan off early.

In Conclusion

Now that you know the differences in interest rates and what fees you might be charged if you're not paying attention, along with lots of other handy tips, you can rest easy when applying for that car loan. You will get out of the car loan office and behind the driver's wheel that much quicker.