Are You Asking The Right Questions When You Apply For A Loan?

Are You Asking The Right Questions When You Apply For A Loan?

At Hoot we want to make applying for a loan as easy as possible, but we feel it is important that you understand what getting a loan with us means.

If you are accepted for a loan you will be asked to sign a loan agreement. This includes the terms of the loan and what will happen if you don’t make the repayments. It is important that you ALWAYS read the terms and conditions of the agreement before you sign. Here are some of the things you should check when you apply.

Are you borrowing what you need?

Is what you want to spend the money on essential? Could you wait and save for what you want? Better to ask what you need to borrow than how much you can borrow.

Can you afford the repayments?

Your repayments will depend on how much the loan is for, how long you agree to repay it over, the agreed interest. You should make sure that by taking out the loan you are not overstretched and can afford the repayments.

How long will it take to repay?

Your loan repayments will include interest payments (This is called Cost of Credit) and is the amount you pay as your charge for getting the loan. Add this amount to your original loan and this is what you will repay altogether.

Are there any extras?

With a credit union loan there is no setup fee, early repayment or late payment charges. So if you want to make extra payments or want to pay early you can with no charges. In fact, if you pay your loan off early you will save on interest!

Are you comparing like with like?

APR% will help you compare loans but you should remember to compare only loans that you would be eligible to get. For example, if you have a poor credit history, comparing with a bank loan with a low APR% that you would need an excellent credit rating for, wouldn’t give you a true picture of what your options are.

What do we look for?

When we look at a loan application, we always take three things into consideration

Affordability – Credit Worthiness – Individual Circumstances

Every loan is looked at by a person. There are no automatic machine made decisions and your circumstances are always taken into account.

We know that comparing loans can be a bit of a minefield. Take a look at our guide before you begin your borrowing journey.

Are You Asking The Right Questions When You Apply For A Loan?

Make A Fresh Start

Now we have all ridden the storm of pandemic and cost of living crisis, 2024 is the year to start building our financial resilience and making a Fresh Start.

Hoot is on a mission to improve the financial well-being of people in the community and we can start right here!

Make a Fresh Start by opening a Christmas Savings account

Building up for next Christmas can be the first step to reducing financial worry at a time when your finances are stretched.. In 2023, Hoot members had accumulated over £60,000 in Christmas savings and this year we want to make that £100,000. Find out more at www.wisewithmoney.org.uk/christmas-savings

Make a Fresh Start by thinking about debt consolidation

Citizens Advice research shows that 37% of people have used Buy Now Pay Later in the last 12 months and 25% of people have failed to make the repayments. Usage increases enormously at Christmas and in January some of you may be faced with a higher number of BNPL repayments than planned.

The average spend on credit cards at Christmas is £672. If you pay only the monthly minimum on that amount it will take you 2 years and 11 months to repay and cost up to £180 in interest.

A debt consolidation loan will mean you can reduce your monthly outgoings to one easy repayment and help you to manage your debt more easily. See more here

Make a Fresh Start by improving your financial well-being

Use our benefit calculator, or our Money Navigator to see if you are missing out on valuable income, able to reduce your outgoings and to generally clean up your finances. www.wisewithmoney.org.uk/help

By starting early and planning ahead you could find that 2024 is the year you get back on track with your money.

Are You Asking The Right Questions When You Apply For A Loan?

Dear Santa, All I Want Is A Realistic Christmas

Christmas is looming and I am sure many of you are already getting organised, despite feeling the impact of rising prices and increased household bills. But where does that leave when you have Christmas to think about?

Go back to basics

If you are worried that you can’t afford Christmas, go back to basics and think about what a realistic Christmas looks like. Make a list of what you normally do/buy and step back. Do you need it this year? Can you economise? Is there an alternative?

Talk to your kids

Having an honest conversation with your kids about why you might not be able to get everything they ask for this year will ease the pressure and help them understand the true cost of Christmas.

Talk about the difference between needs and wants. Needs are the things we can’t do without like food and heat. Wants are the things we would like to have.

We all know that Christmas is about wants, but sometimes we have to be realistic.

Involve your kids in making your gift and food shopping list so they can get a true picture of what things cost. They might just have some ideas on how to save money.

Need to spread the cost?

If you need to borrow to spread the cost, make sure you borrow from a responsible lender like Hoot; we will only lend to you if we think you can afford it.

Avoid high-cost lenders and local money lenders. Especially informal and illegal money lenders. They may be fast in handing you the money, but you would pay dearly in the long run. They are called loan sharks for a reason.

Take a look at our save while you borrow loans

Still feeling worried?

Don’t keep the pressure of managing Christmas to yourself this year. Share you concerns with a friend or family member; talk to your kids about what is realistic this year; and keep it simple. You might find that your realistic Christmas makes a difference to your financial well-being.

Are You Asking The Right Questions When You Apply For A Loan?

Consumer Duty – Getting The Best Outcomes For Our Members

Last year our regulator, the Financial Conduct Authority, launched a new set of rules called Consumer Duty.

The aim of launching the rules was to raise standards and trust in financial services, and to improve outcomes for consumers. The idea is that financial services providers, including credit unions, must always act in good faith to customers (in our case members) and avoid any foreseeable harm caused by using our services. The aim is to support people in pursuing their financial objectives.

A recent FCA paper looked at what can affect our choices when looking at financial products, especially loans. The study found:

  • Most consumers find financial products complex
  • Financial decisions involve risk and uncertainty
  • Many financial decisions are emotional
  • It can be difficult to learn about financial products

Financial decisions are often made when we are not at our best place in terms of financial resilience. We are finding that more and more people are borrowing to meet everyday expenses like rent and food. As a responsible lender we have always been careful about doing our best to make sure that lending to someone does not have a detrimental effect on their finances. Lower value and short-term lending is sometimes a good way to support members get over financial bumps; but if we see that there is little change or improvement in their financial situation in recent months, we would be reluctant to add to their financial burden for the sake of a short term fix.

We know that members can find it difficult to accept that we can’t always lend to them, but being a responsible lender is in our DNA and we would never lend to someone if we felt it would have a negative effect on their financial well-being.

We regularly provide information to members about where to find financial help, debt management, budgeting tools and how to improve financial well-being.

Borrowing more is not always the best outcome for members. Better outcomes may be building up savings, tackling short-term financial problems and developing financial resilience.

Credit unions including Hoot have always looked after the financial well-being of members, so we have embraced the new Consumer Duty rules and will use them to support our members in achieving their financial goals.

Want to know more about Consumer Duty? CLICK HERE

Are You Asking The Right Questions When You Apply For A Loan?

The SoundPound Loan – A Response To The Cost Of Living Crisis

Today I have been with Greater Manchester community credit unions launching the SoundPound Loan.

Developed by the Credit Unions for Greater Manchester Consortium, the SoundPound Loan uses local money for local benefit. You can borrow from £200 to £1,000 at a fair rate of interest and is aimed at people whose options for fair and affordable credit is dwindling. The Sound Pound loan provides a safe solution for local people who are experiencing squeezed finances due to rising household costs.

According to Greater Manchester Residents Survey, a quarter (24%) of Greater Manchester residents are seeking information or support for the first time, reinforcing how the cost of living crisis is bringing financial concerns to those not traditionally experiencing them.

With deep roots in the communities, credit unions provide a positive and safe solution to short-term credit pressures as they encourage saving alongside loan repayments and always act in the member’s best interests for the long term.

Any money made by a credit union is invested back into the running of the credit union and the local area allowing us to offer fair rates of interest.

A unique credit union initiative in Greater Manchester

The city region is unique as it is currently the only consortium of credit unions in the UK which has launched a loan product in response to the cost-of-living crisis. That is why the initiative has been supported by Andy Burnham, the Mayor of Greater Manchester, who is a great supporter of credit unions.

To find out more go to www.soundpound.co.uk.

Need to borrow more than £1,000?

Hoot offers loans up to £15,000 at competitive rates. Go to our loans page for more details.

Are You Asking The Right Questions When You Apply For A Loan?

Dear Santa, All I Want Is A Realistic Christmas

Everywhere you look it’s the cost of living crisis, and everyone is feeling the impact of rising prices and increased household bills. But where does that leave when you have Christmas to think about?

We all have to be realistic about what we can afford this Christmas. We want to do the best for our kids and sharing your concerns with them is the first step to managing your finances and doing the best you can to meet their expectations.

Talk to your kids

Having an honest conversation with your kids about why you might not be able to get everything they ask for this year will ease the pressure and help them understand the true cost of Christmas.

Talk about the difference between needs and wants. Needs are the things we can’t do without like food and heat. Wants are the things we would like to have.

We all know that Christmas is about wants, but sometimes we have to be realistic.

Involve your kids in making your gift and food shopping list so they can get a true picture of what things cost. They might just have some ideas on how to save money.

Need to spread the cost?

If you need to borrow to spread the cost, make sure you borrow from a responsible lender like Hoot; we will only lend to you if we think you can afford it. Avoid high-cost lenders and local money lenders. Especially informal and illegal money lenders. They may be fast in handing you the money, but you would pay dearly in the long run. They are called loan sharks for a reason.

Don’t keep the pressure of managing Christmas to yourself this year. Share you concerns with a friend or family member; talk to your kids about what is realistic this year; and keep it simple.

You might find that your realistic Christmas makes a difference to your financial well-being.

Find out more about talking about a realistic Christmas here