|
By Andrew Baker
For many people, a lavishly spent Christmas is sure-shot
sign of the New Year being tumultuous; at least until the
debts have been fully repaid. A study undertaken after the
Christmas of 2004 showed that one out of every five people
would continue to be in debt, i.e. not be able to clear debt
loan in the same month.
Rather than carry the debt burden over to the next year,
it will be much easier to carry it through Christmas loans.
It is misleading if you thought that Christmas loans simply
replace the debt burden incurred during this period. There
are a number of advantages that result of the use of Christmas
loans.
Some of them have been explained below:
• A Christmas loan that is drawn for making the expenses
as and when they come will force the borrower to spend within
limits. Borrower has the necessary cash and he himself decides
how much to spend on what item. Just as he would do with his
personal resources, the borrower would assign priorities to
the different expenses to be made through Christmas loans.
• When the borrower has the necessary cash to expend,
he is in a better position to bargain. Thus, Christmas loans
also help in reducing the cost of Christmas festivities.
• A Christmas loan drawn after the expenses have been
made offers an alternative repayment method. The expenses
have been made on credit, and through a Christmas loan, the
debtor intends to repay the debts.
It is on the borrower to decide the timing of the Christmas
loans. Many of them will prefer to take Christmas loans after
the expenses have been made. A majority of the people comprising
this group are not sure whether they will need the loan. Nevertheless,
when the expenses increase their expected limits, they have
to resort to this method. This method is good in the sense
that the borrower does not make an injudicious use of the
loan. Only the amount in excess of ones own capability is
drawn.
Drawbacks do follow this method also. The expenses have been
made on credit and a certain stipulated time period is promised
for repayment. When the processing of Christmas loans starts
after incurring the expenses, there is a greater probability
of the loans being approved later than the time due for payment
of expenses. The situation can be dangerous because creditors
will demand payment and the Christmas loan is still in the
half processed state.
Thus, the best time to apply for the Christmas loan will be
before you plan to spend. Just when you are about to spend,
you have the necessary cash ready with you to facilitate the
purchase.
The time that lenders take to approve Christmas loans differs
a lot with the type of loan taken, customs of the region or
place the lender is in, individual case statistics etc. Therefore,
it will be wiser to apply beforehand, even where borrower
intends to spend first and pay later. The borrower can predict
more accurately the time by which he will be in possession
of the Christmas loans, and promise the time for payment accordingly.
Borrowers in the UK draw more of Christmas loans than what
they intend to spend. A Christmas loan need not be spent wholly
on Christmas festivities. Borrowers can use the proceeds to
diverse ends. For this, the excess of Christmas loan will
be very useful. Christmas loans available at inexpensive rates
of interest will lessen the cost; whatever is the purpose
the loan proceeds are used in.
Rate of interest is an important search criterion. The best
method to compare interest rates of various banks and financial
institutions is through Christmas loan calculator. The major
banks and financial institutions have their interest rates
listed in the calculator. Differentiations have also been
made on the basis of secured or unsecured, bad credit etc.
This is good to get a basic idea of the interest rate that
the borrower is more likely to receive.
Security or collateral is an important question concerning
Christmas loans. A secured Christmas loan, where the borrower
has agreed to back repayment of loan with a lien on certain
asset/ assets will be cheaper. Interest rate in a secured
loan is lower than on unsecured Christmas loans.
Whatever form of does one take Christmas loan he/she will
find it very useful. Nevertheless, the basic precautions that
one takes in order to safeguard ones financial position needs
to be in place in Christmas loans too, just as in the regular
loans.
Summary
Christmas loans relieve you of the excessive expenses that
have been made during the Christmas period. People, who think
that debts incurred during this period are too impregnable
to be annulled with ease, see a ray of hope through Christmas
loans. This article shows how Christmas loans can be used
for ones benefit.
Andrew baker has done his masters in finance from CPIT. He
is engaged in providing free, professional, and independent
advice to the residents of the UK.He works for the personal
loan web site http://www.loansfiesta.co.uk for any type of
uk secured loans and unsecured loan please visit
http://www.loansfiesta.co.uk
|
