Loans for HM Forces
Loans for HM Forces
If you're in the services, it can sometimes be difficult to find a loan due to the special circumstances of your employment.
This can be a source of great frustration for servicemen and women who hold responsible positions, often in charge of many people or equipment worth millions, who then find themselves unable to get a loan of a few hundreds of pounds.
Why is this? Contrary to popular opinion, it's not because the lenders are inherently biased or prejudiced against members of the Armed Forces. The problem arises mainly because of the unique demands that the services put on their members.
There are not many civilian careers that require their participants to uproot regularly at periods ranging from a few months to a few years, and move to anywhere from the other end of the country to the other side of the world!
This need to move frequently can sometimes cause a problem, in that it can prevent service personnel from building up a good credit history as quickly as they might in a more settled career.
Accomodation is often 'on camp' or rented rather than purchased, electoral information may not be kept up to date, phone and utility accounts may be absent - all these things may have a bearing on your ability to get credit.
The main UK loan option open to members of HM Forces is an Unsecured/Personal Loan. This is a loan which is not secured on property. An Unsecured loan lets you borrow money without offering security to the lender, but you are of course still liable to repay the loan.
Because of the greater risk to the lender, Personal or Unsecured loans are generally more expensive than a Secured loan and it can also be more difficult to find if you've had problems with your credit record, or if you've just started work.
Your loan application will be judged on your ability to repay the loan - your earnings and bank and credit history will be important.
However, there are lenders who specialise in offering competitive rates to tenants, including members of HM Forces.
On the positive side, an Unsecured Loan can be arranged with the minimum of paperwork and can also be paid out much more quickly than a Secured Loan, as there is no need to wait for a survey or valuation of property. In some cases, it's possible to get the money paid out within a couple of days.
Interest rates - variable or fixed
There are reputable lenders that deal with service personnel but it's important to shop around. The web makes this easy to do no matter where you are. When you are searching for a loan ensure that you are dealing with a reputable company with the appropriate consumer credit licence and ask the following questions:
Don't try to get a loan by sending off multiple applications to lenders if they require your approval in advance for a credit search. Each time you are credit searched, a 'footprint' is left on your credit file, and too many searches will set lenders wondering if you are in financial difficulties.
If you're not sure about your credit history, you can obtain a copy of your report on line for a fee - an enquiry of this type won't adversely affect any application you may be considering.
HM Forces Mortgage
Many service personnel worry about getting on the property ladder, especially with house prices still firm despite the general economic gloom - you can feel left behind in the property market. It may be worth considering a buy-to-let mortgage.
When you leave the forces you will need somewhere to live and many leave it until then to arrange a mortgage, avoiding the hassle of re-selling everytime you move. However, with property price hikes it can be worrying as to whether you will be able to afford the price of the type of house you want when you leave the services.
There is also a recognised shortage of housing for sale and rental throughout the UK, so if you leave it too late you can find yourself in difficulty, or on a waiting list for a rental property or council accomodation. There are specialist Buy to Let mortgage lenders who can advise on finding the best option for you.
The advantage for forces personnel is that you can invest in a property, live in it while you are working in the area then rent it out when you are posted. The rental fee should preferably cover your mortgage, and you will still have the potential capital gain from the property.
In addition to these advantages, getting a foot on the property ladder takes off the pressure and worry about what happens when you leave the services.
It is important to research your chosen area carefully before you buy. The property does not need to be your ideal home, it needs to appeal to a prospective tenant. Generally, smaller properties in urban areas are popular, but you will need to check the local area to find what is in greatest demand.
Remember, it is important to realise the costs involved and to have a contingency plan just in case you are unable to rent out the property for some months - you would have to fund the mortgage, possible fees for an agency and maintenance costs.
Help with Debt
If you're thinking about borrowing to consolidate existing debt, it's worth taking some independent advice before you make any further financial commitments. There may be alternatives to taking out additional borrowing which you hadn't considered.
If you are in the forces and are experiencing financial problems, the Royal British Legion offers grants and loans to current and ex-members of the services for a variety of purposes. If you have left the forces, are unemployed and are thinking of setting up in business for yourself, the RBLA can offer financial help and advice.
The Soldiers, Sailors, Airmen and Families Association (SSAFA) also offer a confidential support line where you can talk to a sympathetic volunteer on a variety of subjects including debt. They are also usually able to give debt advice to ex-servicemen and women and dependents.
Don't forget as well, that you can get unbiased debt and finance advice from the Citizens Advice Bureau and the Insolvency Helpline in the UK. As always, the best course of advice when dealing with debt is to get as much good quality information and advice as possible, before making any decisions.
Finally, don't be tempted to leave things too long hoping that 'something
willl turn up' - it's generally best to tackle money problems sooner
rather than later.
Prepaid Credit Cards
Credit Cards with practically 100% guaranteed acceptance - no credit searches
In the past, shopping on the internet or making a large purchase without having to pay with cash was not possible for everyone. In the past few years though, an alternative to the standard type of credit card has become available. It's called a Prepaid card and is much easier to obtain than an ordinary credit card - in many cases the card issuers can offer 100% guaranteed acceptance.
There are no credit searches involved with a prepaid card, no complicated or lengthy application processes, and with some prepaid cards you don't even need to be 18.
When you apply for the card you will need to provide identification, but as a rule you won't have to agree to a credit search because the card doesn't actually offer you any credit - it's really a prepaid debit card. As its name suggests, you need to pre-load the card with money before you use it. This can be done in a number of ways - by transfer from a bank account for example, or by paying in cash at a nominated outlet.
The prepaid card is accepted in most of the ways that a normal card is, but unlike a credit card because you pay before you make a purchase, you can't exceed your credit limit.
You can use a prepaid card to pay your bills, transfer money, top-up your phone, internet shopping and with the prepaid Visa or MasterCard you can also withdraw cash from an ATM.
This means when you go abroad you can use ATMs, and some card providers even offer 0% foreign exchange fees. Make sure you check rates etc before you go and check which ATM's are free for you to use as otherwise you may be landed with hefty fees.
A prepaid card also provides extra security if you are buying over the internet as you can load it with just enough cash to cover your intended purchase so that even if your details are stolen, you have less to lose.
A good advantage to a prepaid credit card is that you can apply for an additional card for a member of your family, and many use it for their teenage children. It can be reassuring to know that they have quick access to money if they should need it but they can't overspend.
What are the catches with a prepaid card?
Depending on which type of card you use, you may have to pay a sign up fee and/or a monthly fee.
Additionally, some cards make a charge for cash withdrawals from ATMs, but if you read the 'small print' and make sure you understand all the costs involved before you make a decision, you'll find that a prepaid credit card can be a useful addition.
Top up cards have the convenience of a credit card without the debt worry.
Additionally some pre-paid credit cards can help you repair your credit record - in this case the monthly fee - or part of it, is classed as a loan and once you have paid for a year with no missed payments, it shows as a repaid loan on your credit record.
Pre-Paid Credit Cards are not for everyone and can be expensive to run - with monthly charges and transaction charges.
Make sure you read the terms and conditions of any card you apply for and understand exactly what you'll be paying out!
If in doubt we strongly suggest you get independent advice before applying.