Personal Finance Blog

Great things come in small packages

According to Which? Car, the current economic climate is likely to result in many people downsizing their cars in favour of smaller, more fuel-efficient vehicles this year.

The previously strong general desire for 4×4 vehicles has practically disappeared as people have finally come to the realisation that they are not practical for everyday journeys. In fact, such vehicles are becoming increasingly socially unacceptable, unless used for farming. Owners of 4×4 vehicles are also faced with high taxes and unreliability in some cases.

Which? Car suggests that a family of six who are considering purchasing a 4×4 such as a Land Rover Discovery (which could cost £39,061) should instead think about opting for a multi-purpose vehicle such as a Honda FR-V (which could cost £19,095). Not only is the latter less expensive but it is also more fuel-efficient, easier to park, solidly-built and at the top of Which? Car’s reliability chart in its class.

Editor of Which? Car, Richard Headland, commented: “Times are hard, so it’s no surprise that people are downsizing to save money. It pays to think carefully about alternatives to the mainstream choices and if you go for a more fuel-efficient car you can cut costs for years to come. Luxury cars and 4×4s could be in for a rough ride.”
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Those who are looking to purchase a vehicle, but do not have the necessary funds available, may wish to consider taking out a secured loan to cover the expense. A secured loan is one of many options available to finance a new car purchase. Those who are downsizing existing vehicles in favour of a more economic car, could also consider a secured loan to consolidate existing debt. Several confusing monthly repayments could be replaced with just one simple, potentially lower, monthly repayment. However, it should be remembered that consolidating debts may increase the amount paid back overall and extend the repayment periods of debts.

Posted in Secured loans |

62 percent now opt for second hand vehicles

According to AA Personal Loans, their latest Car Purchase Index (CPI) has revealed that quality is now taking precedence over quantity in the minds of car buyers.  Despite the average value of car loans remaining relatively stable since March 2008, consumers are now 62 percent more likely to purchase a second hand, or ex-demonstration, vehicle as opposed to a new one.

The CPI shows that the average expenditure of a car buyer has remained static even amid the current economic climate.  52 percent of respondents stated that they intended to purchase a ‘new second hand’ vehicle in the region of £5,000 and £9,999.

With a 31 percent drop in new car sales, consumers are taking advantage of the fact that they have more flexibility to negotiate better deals within the used car market.  In addition, further figures from the second hand car market point towards some vehicles depreciating by up to 31 percent.  This means that a better class of vehicle is now attainable for the same amount of money that would have been spent this time last year.

Editor of Car Dealer magazine, James Baggot, commented: “It’s been a turbulent year for the used car dealerships: not only has the industry had to deal with consumers changing their spending habits because of the credit crunch, it’s also had to compete with massive variation in fuel prices.  All this has led to a shift in what car buyers look for in a second hand vehicle, such as better economy, better comfort and better performance, but crucially they’re now looking to get more for their money than ever before.

“While sales are still strong at dealerships across the country, many forecourt salesman are selling cars that would be worth £24,700 two years ago, for just £17,525 today.  That’s a saving of over £7000.”

Head of AA Personal Loans, Mark Huggins, said: “The credit crunch has turned into a recession which means consumers are now looking to get even more value for money than before.  As a result, second hand car dealerships across the country are finding themselves having to offer higher value vehicles at lower prices to make a sale, with savings of almost a third on certain models.

“Comparing information from the Car Purchase Index and industry figures on depreciation, it’s clear to see that while the purse strings may be drawn a little bit tighter, this could actually be one of the best times to buy a car.  Now is the time to spend the pennies if you want to get the car of your dreams.”

Those who would like to make their dream car a reality, but are lacking the funds to do so, may wish to consider taking out a secured loan to make the purchase.  Available to homeowners with a mortgage, this finance option could be the solution for those that are looking for the money to take advantage of the current opportunities within the car market.

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Thrifty Brits reduce spending by over £3,000 per year

According to new research conducted by Abbey Savings, it would seem that the British are intending to save their way through the recession.  Despite falling Bank of England interest rates and the reduction in VAT, the majority of consumers are cutting back on their expenditure.  In fact, only 13 percent claim that their spending has remained unchanged.

Director of Savings and Investments at Abbey, Reza Attar-Zadeh, commented: “In the current climate many people are determined to tighten their belts.  It can be surprising how even making a few small changes to our way of living, such as buying a cheaper brand of food or ditching take-aways in favour of making something from scratch, can add up to hundreds or even thousands of pounds in savings over the course of a year.”

Abbey’s research revealed five key areas in which people are planning to curb their spending.  69 percent are reducing the amount that they spend on food by means of purchasing cheaper brands or by shopping at a cheaper supermarket, which is saving them an average of £17.10 per week.  61 percent are refraining from going out as much, which is saving them an average of £19.47 per week.  51 percent have decided to alter their holiday plans by going on day trips as opposed to going away, which is saving them an average of £229 annually.  46 percent are walking or cycling more rather than using the car or public transport, which is saving them an average of £17.27 per week.  Finally, 35 percent have switched financial products to make savings, which is saving them an average of £139 annually.  To summarise the extent of the savings being made, Britons have each lowered their expenditure by an impressive £3,168 during the course of the past 12 months.

In terms of which generation is being the most frugal, it may come as surprising news that those between 18 and 34 are tightening their purse strings more so than their seniors.  Within this young group, spending has been reduced by £3,599 during the past 12 months.  In contrast, those over the age of 55 claimed to have saved £2,773 of their annual expenditure.

Abbey’s research also revealed that people are most likely to reduce the amount spent on food, regardless of their location.  The top three methods of saving money include opting for cheaper goods in the supermarket, reducing the number of take-aways purchased and reducing the number of meals out.  These are common across all regions of the UK.  However, where other methods are concerned things aren’t quite as consistent.  For example, 40 percent of those living in the Midlands claim to be using their car less whereas only 20 percent of Londoners are cost-cutting in this way.  Nevertheless, 31 percent of Londoners do appear to be taking advantage of nearby forms of entertainment by making the most of free services such as libraries, museums and outdoor concerts.  Just 20 percent of people are doing this in the North, Yorkshire and Humberside.

Those whose finances are tight a result of the recession may wish to consider taking out a secured loan to consolidate existing debts.  This finance option could be a solution for those that are juggling multiple, confusing monthly repayments.  A secured debt consolidation loan could be used to tie up all those existing debts into one simple, potentially lower, monthly repayment. It should be remembered however, that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.

Posted in Secured loans |

New Year, newly organised finances

According to Halifax credit cards, 32 percent of Brits planned to make New Year resolutions for 2009.  However, the usual health-related resolutions seem to have largely been replaced by a determination to review personal finances.  In fact, 57 percent decided upon this.

It would seem that the majority of people are sticking to this particular resolution, judging by the uplift in customers applying for a credit card balance transfer.  For many, the beginning of a new year is the favoured time at which to transfer debt away from store cards and loans, which are generally the more expensive products.

In an attempt to assist Brits in getting their finances in order, Halifax credit cards have unveiled a new online credit card deal.  The All-In-One credit card provides 0 percent for 9 months on both transfers and purchases, which could save an average credit cardholder over £151.

Head of Halifax Card Services, Alan Brindley, said: “Our own figures show an uplift in the number of people seeking to take advantage of balance transfer deals. We’re delighted to see many people are organising their finances after the festive period.

“The online All-in-One credit card deal is a great offer which could save our customers significant sums in interest payments. The card is ideal for customer who would like to reduce the cost of their spending or even reduce the cost of outstanding debt through a balance transfer.”

Homeowners that are juggling multiple credit and store card repayments may wish to consider merging their debts by means of a secured debt consolidation loan. This option could result in just one simple, potentially lower, monthly repayment. However, it must be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment period of your debts.

Posted in Secured loans |