Posts filed under 'Loans'
Are you curious if you can afford a new car, especially considering that no one knows how high the price of gas may rise? If you would like to get an idea of the payments that new car will require, you can easily use simple online tools that will give you the basic information before you visit the dealer, so you already know what your financial picture looks like ahead of time.
The Dodge dealer listing cars for sale in San Diego has a nice little tool that allows you to put in the purchase price of the new vehicle you are considering as well as any rebates available. Include the value of your trade-in vehicle and its payoff amount, if applicable. Local sales tax rate also needs to be included in the final calculations. You can play with such factors as your downpayment and the interest rate offered by various financing options in order to get the monthly payment amount for 2, 3, 4, 5, or 6 year auto loans.
Tools like this can give you a pretty good idea of the payment to expect, although they don’t include license, emission, and other fees such as this. Knowing how much you can afford for a monthly payment helps you to keep your expectations reasonable before you get your heart set on a particular vehicle, only to find that the payments will stretch your finances. The potential danger is that some consumers may be tempted to go for that vehicle they fell in love with anyway. Considering the gas price increases, we can all expect our overall automobile costs to increase, so it would be prudent to keep auto loan payments lower than we think we can afford, in order to offset likely increases in the price of fuel.
We’ve talked quite a bit about Payday Loans and when they can be appropriate, as well as other options. We want to mention a few other things for your information and consideration as well.
When considering a cash advance company, be sure to ask about state licensing. Not all states allow the operation of payday loan businesses, but in those that do, you should be sure to seek State Licensed Cash Advances when taking out this sort of loan.
Another question concerns online applications. If you are planning to do business with a company via the internet, be sure to ask BEFORE you begin the application process about their security measures. They will be asking you for sensitive financial information, so be sure they use appropriate encryption technologies to protect your personal data.
Another feature we’ve noticed with some lenders involves the interaction of fees, interest rates, and loan periods. Generally, most of the cost associated with a payday loan are due to fees charged on the loan, while the amount actually considered to be interest is quite reasonable. The lenders are offering money with no credit check and minimal security for themselves, so they are expecting a high return on their risk. The return usually takes the form of fees you are required to pay for the processing of the loan.
The advantage to consumers occurs when the fees are fixed, and the repayment term offered is flexible.
Let’s say you take out a $500 loan to cover an absolute emergency. You THINK you can probably pay it back when you receive your paycheck next week, so you ask for a 7-day term. The interest rate on our example is only $2.50, which won’t even pay the wages of the person filling out the forms. Instead, the lender makes their money on the $112 fee they charge for processing the loan. In 7 days, you are expected to pay back $614.50.
Now, the problem comes when ANOTHER unexpected thing happens. You get really sick, so your next paycheck is a little short from the two days you missed with the flu. Soooo …. your only option is to extend your loan. This time you ask for 14 days, to make it to the next paycheck. Generally, you are going to have to pay another fee and more interest.The term is a bit longer, so now you are paying $3.50 for interest, but another $112 for fees.
At the end of 24 days, you will have to repay $730 for not one but TWO payday loans.
There is a smarter way to do this. Instead, find out what the maximum loan term is. If you can borrow the money for 29 days, for example, when you first apply, the interest jumps to only $7, and the fee is STILL the same $112. Now, you will be expected to repay the loan after almost a full month, and will only be expected to pay $619. Your savings over the above scenario is significant, and you have a longer term to repay. (Although we’d recommend paying it off as quickly as possible anyway, just so you don’t end up in an unexpected situation like the one described above and needing an extension.)
The details will vary with the state you live in, and the company selected. The above details were using Florida and PayDayOne as an example. Most states offer even longer repayment terms for even more significant savings, although a very few limit terms to a shorter period.
The bottom line is this: you are responsible for your financial well-being. Check into all of your options, and find the best ways to manage your money in every situation in order to maximize your potential from each decision.
There are several principles to employ when managing accrued debt, and making plans to pay off debt. While these can be accomplished by filling out a plan on paper, some people prefer to use software to develop a plan to payoff debt legally. The benefits are that it is easily managed in your computer and it becomes much easier to view the overall picture, and ability to view the projected savings can be a good motivation to continue.
There are several factors to consider when developing your personal debt payoff plan. First, you need to honestly consider your current and potential earnings and your total monthly expense for your current debts. If you are behind on payments, or if your income doesn’t adequately cover your current obligations, it may be wiser to seek a debt consolidation loan. The goal of such a loan is to bundle high-interest debts together and lump them into a single loan of lower interest, thereby lowering the monthly payment so that it becomes more manageable. The danger is that the “extra money” each month is no longer going to reduce debts, and particularly if it creates the illusion of having more money to spend and lulls the consumer into acquiring more debt, the overall financial position becomes worse in the end. In the hands of responsible consumers and those who must reduce monthly payments in order to survive, it can be very beneficial.
If you are fortunate enough to have income sufficient to meet your current obligations, a better choice for overall financial health can be a debt stacking repayment plan. The benefits of debt stacking are that the overall amount spent on monthly payments does not increase, but the time needed to become debt free is reduced, along with a substantial savings in overall monies paid to debtors due to less interest being paid over those years you save.
The principle is to list all of your debts and the amounts being paid. Generally, you will list these in the order they will be paid off under your current monthly plan. It can be beneficial to adjust this to list debts with higher interest rates first, especially if they can be paid off within a reasonable amount of time. A caveat here … often credit card companies will require only a very small monthly payment relative to the overall debt owed, and usually charge the highest interest rates. These debts should be paid off as quickly as possible, so it is better to allocate more funds each month than the minimums required and most importantly, DO NOT further increase your debt by continuing to use those cards!
Any debt that can be paid off, particularly those with higher interest rates, should be concentrated on first (while of course making payments as required to all of the others). If any extra money is available, it is usually best applied this debt. If you use some money each month for investment or savings, it is usually a better return to apply this money to your debts instead, once you have a sufficient amount in your savings account to cover an emergency situation (usually about two months’ worth of expenses). The reason for this is that the interest you pay on your debts probably far exceeds the interest you receive on savings or the return on any investments.
Concentrate on paying off one debt at a time. As soon as that one is paid off, take all of the money you had been sending each month to that creditor, and add it to the payments you are sending to the second creditor, increasing the amount paid for the second debt. This will of course result in the second debt being paid off even sooner. When that one is repaid, take all of that money and add it to the amount being paid to the third creditor, and so on. By the time you reach your longest-term or lowest-interest bill (usually the home mortgage in both cases) you will be able to send considerably more than the regular monthly payment, and will pay down the principal much more quickly than with your regular payment schedule. Your mortgage (along with all of your other debts) should be paid off years sooner than it would otherwise be, saving you a substantial amount of interest.
You will then be debt-free, often in far less time than your mortgage was scheduled to run. The savings for each person will vary, of course, depending upon your personal debt profile, but for almost everyone the savings of both time and money will be significant. If it is possible for you to use a debt stacking plan, you can be debt free in much less time than with traditional repayment methods and save substantially on interest.
There are several ways to save money on auto loans. The first thing is to make sure your credit score is as good as possible, since you will probably be offered a rate that depends upon your creditworthiness. This is not a quick-fix though … it is something that takes time and must be monitored. If your credit rating is poor, it may be possible to receive a better offer if you have a co-signer with good credit.
Another helpful resource is a loan broker. By applying to a loan broker, you can easily get quotes from a number of lenders, which will make it easier to choose one that offers the best rates and options for the loan you need. Quite simply, it’s better to have the lenders competing with one another for your business.
You may also want to consider alternative methods of finance. In some cases, the equity in your home may prove to be a better financing option. If you can take out an additional homeowner’s loan instead of an auto loan at a better interest rate, you may save money. However, you do place your home as collateral on your automobile in this case, which if there is any question at ALL in repayment is a riskier option.
Dealer financing is often a poor option. Before you decide to accept their terms, no matter how good they may sound, check into the terms you can receive from an independent lender. And before you are swayed by the $500 rebate they offer along with their financing, or the offer of a period of time with no payments, be sure to add up the total payments in that case and compare the bottom line. You will usually find that the higher interest over time will end up costing you more than you save with the rebate, or that the free period costs more than if you made payments all along with a different lender.
You might even want to consider leasing a vehicle instead of buying one, if your credit is good enough and you can find a good lease offer. Payments are often less than those for buying a car outright. However, the flip side is that you don’t own anything in the car, and after the lease expires you own nothing.
Careful consumers will explore all their options, and factor in the downpayment, total payments over time, and any other factors that enter in to the deal in order to make a decision. While you are researching, find out how much your insurance payments will be as well, so that you get the whole picture of your financial obligations before you make a commitment. And with the price of gas these days, it is wise to also consider how one model compares with another regarding fuel costs, as this is becoming more and more of a factor as well.
There are two types of mortgage suppliers a consumer may shop with when seeking a mortgage. One is a mortgage lender. The lender provides money to the borrower at closing, in exchange for the borrower’s promise to pay, and a lien on the property in case the loan is not repaid. Mortgage brokers, on the other hand, do not lend money. Instead, they work as an independent contractor and offer loans to the borrower from a number of different lenders. In general, the broker will solicit clients in the market for a mortgage and provide them with offers from different lenders and counsel them on the selection of a mortgage. They may also offer counseling to help the buyer qualify for a mortgage, will take the consumer’s application, and usually process the loan for the lender.
Consumers will usually receive better rates by dealing with a mortgage broker rather than a lender, because the broker will be able to offer the terms from a number of lenders, allowing the consumer to select the best deal available at that time. Also, they can specialize in helping consumers with particular needs, such as those with a poor credit history.
With internet access, this process has never been easier. For example, consumers can apply to get a loan with Centrro, a company with an online network of brokers and lenders, just by filling out a simple one-page form and submitting it, then waiting for several competing lenders to contact them.
This is similar to credit card comparison sites. In fact, some of the same loan networks carry different types of loans. You can also get a credit card with Centrro, and the company will soon be including personal loans in their service as well.
Speaking of blogs (as we did in our last post) we would also like to review another site that includes an informational blog along with their regular service. Mortgage Finders Network offers a variety of home refinance options, making it more likely that the consumer can find a mortgage that suits their particular needs. Along with this service, the helpful information provided in the blog can steer consumers in the right direction, whatever their current situation.
There are posts on a variety of topics suited to consumers in all areas of the housing market. Buyers may wish to know how to be able to purchase a home without making a down payment out of pocket, how to select the best mortgage and what all those terms mean anyway, how to avoid mortgage scams, how to decide how much house they can realistically afford, how to find the best house for their needs and how to negotiate the best deal on it. Outside links for buyers are listed with information on all aspects of purchasing a home.
Sellers will appreciate tips on selling their home, the seasons that affect sales and market prices, and information about having the home inspected for the buyer. There are links to outside resources for sellers as well that help with each phase of readying the property for sale and getting the best price for a home, and everything else along the way.
Homeowners who aren’t planning to sell can benefit from reading about securing a loan for home improvement, how to refinance their mortgage and save money in the process, refinances to avoid, and how to increase the value of their home (as well as mistakes to avoid that could potentially decrease its value).
And anyone can benefit by reading tips on how to start putting some of your money away in savings and the general money management tips offered within the blog posts.
If you are interested in refinancing though, that’s where the information is most helpful, since this is a mortgage finders service. Making the decision to refinance (or not) is covered with all of the details that may affect a particular consumer’s choice. Overall we have to say, there’s a lot of interesting reading here and it’s definitely worth a visit whether you are buying, selling, or considering a refinance or any other type of home loan.
We’ve talked about payday (cash advance) loans, but there are other options for personal short term loans. Widely available online from a number of companies, there are some important differences between personal unsecured cash loans offered on a short-term basis and traditional payday loans.
One important advantage for your bottom line are the interest rates. While we have discussed some financial crises that may arise in which it can make sense to take out a payday loan, one should still consider the interest rates and seek out all possible options to compare them. According the Wikipedia, the interest rates on payday loans, which typically include a repayment requirement of $115 to $130 per $100 borrowed for a two-week period will translate into an annual percentage rate of 390% to 780%.
Companies offering payday loans state that it isn’t reasonable to list their interest rates as yearly rates, because they do not offer such long-term loans. It is true that it is essentially impossible to roll over these loans into the longer term, but it can be possible to initiate a number of loans back-to-back to essentially create a longer-term loan, if one can afford the additional fees with each new loan. While payday and cash advance loans are not available as year-long loans, the only way to actually compare different loans offered is to figure the interest and fees over a longer term so that you are able to see the real differences between various lenders.
Compare these rates to ThinkCash loans, which are short term personal loans offered from between 25% up to as much as 75% lower on overall interest charges. ThinkCash loans are offered at varying rates, depending upon the amount borrowed, the term of the loan, and the borrower’s credit rating, and range from 87% to 365% APR, which is a significant savings over the typical payday loan rate.
Remember that short term loans of any type will require higher interest rates than long-term loans. They are generally unsecured and processed quickly, both of which will serve to increase the interest rate because of the risk and the expense to the lender, and that is only fair and to be expected.
However, on the other hand, competition among lenders is often keen, because there are so many sources out there vying for business. This is especially apparent online, which opens the door for many lenders to offer services to consumers they would not otherwise be able to reach. Because of this intense competition, rates are lower than they might otherwise have been. The opportunity to select a lender benefits the consumer by making it more likely that they receive the loan they seek, and giving them the opportunity to choose a better interest rate as well.
With all that being said, short term personal loans are still higher in interest than other options that may be available to the consumer. For that reason, just as we have discussed before, we encourage the borrower to explore all options available when a loan must be taken out immediately and choose the best one for their personal situation, taking into account all factors, including interest rate, ability to repay on schedule, ability to secure a loan from that lender, associated fees and penalties, and any other options available.
Of all these factors, the one most important to many consumers is the ability to repay the loan according to the lender’s stipulations without causing further financial difficulty. If taking out a loan puts the consumer in deeper financial trouble, taking out another loan will the the inevitable next result, and adding more fees and interest on top of those already accrued will lead to another loan, until eventually the borrower is unable to repay the loans. For this reason, flexibility in repayment schedules is of greatest importance.
This is one area where payday loans typically offer very few options, and the very feature that causes so many problems for consumers who take out payday loans without making sure of their ability to repay them according to schedule without further compromising their financial position. ThinkCash offers the option of installment payments. A loan such as this can represent a much safer one for the borrower, making repayment according to the agreed-upon terms much easier and more likely, which will help to rebuild credit rather than destroying it.
It is also important to seek a lender that will allow the loan to be repaid early without a penalty if it becomes possible for the borrower to do so. Again, companies such as ThinkCash allow repayment on time or early, according to your own choice at the time, with no extras fees or penalties, giving you more flexibility in handling your finances.
When you are dealing with a financial emergency, it may be tempting to take the first available option. However, if it is at all possible, it is better to research at least a few different kinds of options before making a decision. Protecting your financial future is the goal and reward of careful decision-making.
Payday loans are very short-term loans (usually requiring repayment within 2 weeks) that have very loose qualification terms. Generally it is enough that a person is 18 years of age or older, has a job that pays at least every two weeks, and has a bank account. Credit rating is not an issue in most cases, so even individuals with very poor credit can be approved. The interest rates for payday loans are typically much higher than other forms of loans, and can add up very quickly if the payment is not made according to schedule. While these loans would generally be considered unsecured loans, they may require the borrower to sign a check for the repayment post-dated to the due date or an authorization for the lender to automatically debit the borrower’s account for the amount due on the due date.
Because the interest rates and fees make this a costly option, this type of loan is not recommended for every circumstance. It certainly isn’t a loan you should take out in order to buy something you want that you can’t currently afford. Even the decision to use a payday loan to pay something like a utility bill that is due should be carefully weighed. While we don’t recommend habitually being late on your utility bills, it could be in your best interest to simply pay the late fee to the utility company as it will probably be cheaper, although you would then have a strike against your credit rating with the utility company (and likely with credit reporting agencies). The potential damage to your credit is the only reason you might want to consider using a payday loan for this kind of reason. However, the cost often won’t justify this kind of reasoning.
Generally speaking, it is better to attempt to access the necessary cash by some other means, if possible. Private loans are generally offered at better interest rates, as are credit cards. Perhaps you can secure a personal loan from someone you know. Consider if you have any assets that could be used to raise the money.
However, these other options require good credit (in the example of the private loan or credit card), and usually more time to arrange. The major advantages of payday loans are that they are easily available without requiring good credit, and that you can receive the money quickly — usually within 24 hours (or sometimes as little as a few hours in the case of faxless payday loans.)
These advantages make payday loans most appropriate for emergency situations where there is no other way in which to raise the necessary cash in time. Even individuals with good credit might be best served by a payday loan in such an emergency situation.
Situations in which it might make financial sense to use a payday are emergencies such as necessary car or house repairs that come up unexpectedly but must be completed in order to be able to keep driving to work, or to prevent further damage to the home.
Also, some financial situations can be even more costly in the short term than payday loans, such as checking overdraft fees or late payment fees for loans or credit cards. While careful financial planning and management should eliminate the chance for these problems, if they do occur because of an unforeseen event (such as a check deposited by you was returned unpaid and will cause checks you have written to overdraw) it can make sense to cover the amount in the meantime to avoid numerous overdraft charges that will quickly add up, given that the usual fee is about $25 to $30 and may be charged by both the bank as well as the party receiving the check. Add to that the daily fees many banks charge while your account is overdrawn and you can see that the potential for one bad check received in payment to you can quickly run into hundreds, especially if you write a number of small checks. In situations like this, a payday loan can save you a lot of money as well as protect your account from receiving numerous bad check strikes and can be the wisest choice (assuming you can “beat” the checks to the bank).
There is a lot of bad press about payday loans, not because they are not useful in some situations, but because if the borrower takes out a payday loan because they are unable to meet their regular financial obligations, the situation only becomes worse for them because when the loan comes due, they are less even less able to meet their bills than they were before, now that the extra interest costs and fees have been added. Payday loans are not intended to extend credit when the monthly income is too low to pay the bills … rather they should only be used as a tool in emergency situations by persons responsible and financially able enough to repay them in a timely manner. So above all, do NOT indebt yourself to a payday loan that you can’t realistically repay on time. Instead, be wise and handle these loans (along with other kinds of loans) responsibly.
Do you find yourself in the position of having poor (or non-existent) credit, but still expecting to need to buy a car in the near future? While the situation can take extra effort (as well as some added expense) it is not impossible to secure bad credit auto loans that still provide the best possible terms for the consumer.
Firstly, if you are considering accepting a bad credit loan from a car dealer, be very cautious. While not every dealer employs such tactics, there are quite a few who specialize in bad credit buyers who will inflate the prices of the vehicles they sell and then offer in-house loans at higher interest than usual. It is always a good idea to check out the full amortization (the cost of the loan paid out over time) including all payments to principal and interest as well as any fees plus the down payment in order to arrive at the total cost paid for the car you are considering. Compare that total to the value of the vehicle itself. You should of course expect to pay more than the actual value, because financing DOES cost money, but unscrupulous dealers are offering “deals” where the buyer will be forced to pay some 3 to 4 times the actual value. In many of these cases, the buyer ends up being forced to default on the loan because it is too high a payment to carry, which will cause the car to be repossessed and further damage the credit rating of the buyer.
In finding a legitimate offer for a bad credit auto loan, the buyer should expect to pay a higher interest rate than would be offered to a consumer with a better credit rating. You should also be prepared to pay a higher initial down payment. Credit rating also affects the amortization schedule offered … while those with better credit may be offered terms ranging up to 5 to 7 years to complete repayment of the loan, bad credit will usually reduce the offered time to repay to around 2 to 4 years. All of these factors are necessary to protect the lender, and will generally result in a higher monthly payment for the borrower than would have been the case if their credit was better. However, there is a good side to all of this … in repaying the loan faithfully and making payments on time, the consumer’s credit rating will improve and rebuilding of a good credit rating can begin.
If you don’t already have a particular car in mind, that can work to your advantage. Using online referral sites that ask for your financial information in order to provide you with an auto loan will generally then do one of two things. If they are associated with a network of dealers, they will then forward your information to a local dealer or dealers who are able to offer you financing. Depending upon the quality of the dealers in the network, you may then be offered better options on cars, financing terms, and prices. If the referral service is affiliated with a lending network, they will likewise forward your information to a number of potential lenders, who then will hopefully compete to offer you the best possible loan for your particular situation. Either of these can produce a winning situation for the buyer, and save time as well.
Above all, and especially if your credit is very poor, you should be willing to remain flexible. Don’t become discouraged if your first attempts fail to result in securing a loan. Be willing to continue trying, and be willing to consider a different vehicle if your first choice cannot be approved. Just be wise, and don’t end up paying far more than you should, or place yourself into a situation that will further damage your credit.
A loan is a situation where an individual (the debtor) receives a sum of money from the lender (the creditor) and in return, promises to repay. There is almost always a cost involved in addition to the amount borrowed, which is referred to as interest. Loans are generally (but not always) set up to be repaid in regular amounts over a set period of time. There may or may not be be penalties involved for paying off the debt early in order to save additional interest payments.
A secured loan involves some material property (such as a car, home, land, etc) being promised as a security (collateral) for the loan. Legally, if the debt is not repaid as agreed, the creditor then has the ability to take this property from the debtor. When purchasing a car or home, the car or home is then generally held as collateral on the loan, and may be repossessed by the creditor if payments are not made as arranged. Mortgages on a home are a very common type of secured loan.
An unsecured loan is a loan that is made based only on the promise of the borrower to repay. These take many forms, including credit cards, personal loans, overdraft protections, open lines of credit, etc. Interest rates are typically higher for unsecured loans due to the increased risk taken by the creditor.
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Applying for home loans is not easy. Since pay day loans are not easily available anymore, one may have to resort to applying for a consolidated loan instead. Although the banking loans system state the loan a solution to many a dilemma, the repayment should be managed with care.
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