Published: 16/11/2020
With the risk of increasing high unemployment rates in this pandemic-influenced recession, credit has become a lifeline to consumers and businesses who rely on us spending money with them
Most customers take personal loans to cover emergency expenses, consolidate other debts, or make a big purchase like a car or home improvements.
Whenever you have the opportunity to move loans such as payday loans from a higher to lower interest, it’s always a good idea to try to refinance. 1Plus1 may be able to help with a guarantor loan.
A 1Plus1 guarantor loan may help you get out of debt faster or lower your monthly payments, but you must understand all the risks and benefits.
It works similar to refinancing a mortgage, applying for a new loan to get better rates or terms to replace your previous loan(s).
Our financial circumstances change over time. Your credit or income may have improved since your last loan application. This may give you the ability to refinance to a better rate or lower monthly payment. Before taking the step to refinance any loans, it’s important to make sure you are creditworthy. 1Plus1 will only offer loans to those who are creditworthy and can afford to repay.
Applying to 1Plus1 Loans with an improved credit score or income, and a guarantor may position you for a better overall rate or terms.
Refinancing your credit may help consolidate a new loan you want now with your current loans to save money with one single payment. But - before refinancing, understand all the terms and fees involved to make sure you’re getting the best deal possible for you.
If you are able, you can refinance and increase monthly payments which will shorten the length of your loan(s). You will be credit-free sooner and save on the interest you would have paid.
Refinancing isn’t the right solution for everyone. Here are some situations where it may not make sense.
If you go for a longer repayment to lower your repayments extending the time to repay, means you will pay more interest for the additional time. You must understand the long-term financial consequences before making the decision.
Don’t get into a cycle of debt
Be aware of the risks of the never-ending cycle where you continually take on new loans to pay off other loans while extending your credit timeline even more
It’s always worth exploring if it puts you in a better financial position. Check the calculations! If you can get a reduction in your monthly outgoings or shorten the term of your loan, it’s worth considering.
If you are paying for high cost credit such as a “payday” loan, 1Plus1 guarantor loans may be for you. You must be able to afford and be creditworthy in your own right and be able to offer a guarantor in support of your application.
Make sure - do a real comparison with your current loans versus the new loan. Interest rates overall have decreased, and you may be able to take advantage of that.
Most financial advisors agree that refinancing credit can be an easy option to roll a number of repayments into one monthly payment, but that should not be an excuse to borrow more because you have “extra” cash!
Borrow responsibly! Make sure it is the right thing to do!