Did you know that over 12 million people take out payday loans annually? A payday loan is a quick monetary solution for individuals who live paycheck to paycheck. If you have been considering applying for a payday loan, here are five things you need to know to determine whether or not this type of lender financing is right for you.
The following is a guest post. Enjoy!
Are you considering higher education but are a little scared about finances?
You may be wondering how to get through the whole thing without a millstone around your neck and are worried about debt. You're not alone.
If you want access to money, personal loans are one of the options available to you. It gives you the benefit of lump-sum payments, fixed monthly payments, and often, lower interest rates.
Because of this, you can use it for a variety of reasons—like home improvements, buying a car, or consolidating your debt. In simple terms, when you manage it well, a personal loan can fill up gaps in your budget when you need money most.
In this post, we'll take a look at some of the benefits of using a personal loan in more detail.
The following is a guest post. Enjoy!
A personal loan is a loan that you pay back in monthly installments. It could be repaid in three months or three years, but it always has a set monthly payment and a date at which the loan is completely paid off. This is in contrast to a line of credit like a credit card, where your payments vary based on your outstanding balance. Most personal loans are unsecured. Let's learn how to get small personal loans online.
Have a Plan Before You Apply
How much money do you need, and why do you need it? Don't take out a personal loan today and then need to apply for a second one next week to cover predictable expenses. Don't take out a new loan to pay for impulse purchases, whether it is going on a weekend trip you can't afford or buying things you merely want. Debt is only justifiable as a tool when there is a good reason for it. For example, applying for a personal loan to consolidate high interest credit card debt or payday loans so that you can afford to make the payments is reasonable. Taking out a personal loan to go on vacation or buy new furniture is not.
Another reason to have a plan before you apply for the loan is so that you can plan how you're going to repay it. How much can you afford in terms of monthly payments? This information may affect the loan term you select. Having a plan on how you'll pay it off can reduce the risk that you're stuck in an endless renewal cycle with higher interest and fees than you expected, as well.
Do Your Research
Personal loans vary based on interest rate, loan terms and conditions. This is why you must comparison shop when you're looking at small personal loans online. And the stated interest rate is only one factor to consider, though it is among the most important.
You might pay a lower interest rate, if the lender doesn't give you the option to pay off the loan early. Or you could find a lender who doesn't consider you a bad credit risk, because they use different criteria than other lenders.
Compare lenders based on the total cost of servicing the loan. For example, paying one to two percent less interest isn't necessarily better if the loan stretches out an additional six months; they'll make more in interest than you'd pay on the shorter loan, if you pay it off.
Most lenders factor the loan administration costs into the interest rate, but you may owe additional charges in other situations. For example, late payments and refinancing charges vary between lenders.
Also take the time to verify that the lender is legitimate before you give them your financial and personal information. Are they licensed to issue loans in your state? Do they have license numbers you can search up in order to prove they're legitimate? Do they have a history of aggressive collections or bad customer service?
Read the Fine Print Before You Sign
Always read the fine print before you sign up for a personal loan. When will they debit your account to take your next payment? What happens if the payment bounces? What else are you agreeing to, from marketing by third parties to insane late fees? How do you contact them, if they accidentally sweep your bank account twice or the promised funds don't appear? You might find unacceptable terms and conditions. Your only choice is to not do business with them, but you have no options after you've signed the contract digitally and given them your bank account information.
Understand what is required of you before you start filling out the paperwork. For example, do they require you to provide a bank account number? If this is where they'll deposit the money, odds are that this is where they'll deduct the next payment, too.
Note that legitimate online lenders do not require you to pay fees via a gift card in order to get a loan. At the same time, many lenders are reluctant to deposit money to an untraceable cash card for the same reason.
Fill Out the Paperwork
Online lenders generally require your name, address, phone number, and Social Security Number. The last one is required to run a credit check, and it aids with debt collection if you're late. They typically require a scanned copy of your driver's license or state ID card. This helps reduce the risk of identity theft and confirms your contact information.
Many loan applications are rejected because of mistakes or incomplete fields. For example, putting a dummy phone number in the form can lead to a rejection, because they want to be able to call you if there are problems with the application or the loan itself. Typographical errors when entering an address can lead to rejection, if it doesn't match other sources of that information. Making mistakes when entering your birth date or SSN can cause a rejection, too.
Sometimes the omissions are intentional, though they can lead to rejection. For example, refusing to list your employer or not stating your income can lead to rejection, because they're concerned you may not have a job. And as lenders, they don't want to loan money to someone who could not possibly repay it. Overstating your income can lead to rejection, as well.
Go Through the Process
It isn't uncommon for lenders to require you to verify your identity or bank account information before the loan is processed. For example, you might have to perform a liveness check where an app scans your face and compares it to the picture on your driver's license. Or they verify that the checking account is valid before they deposit the money. Expect to have to verify your phone number via a text or email by clicking a link, so they know they can reach you.
The money may take hours or days to deposit into your account. Once it does, use it based on your prior plan instead of treating it like a cash windfall. Then you won't find yourself strapped for cash despite having just taken out a loan.
The following is a guest post. Enjoy!
Credit cards are financial tools designed to help individuals acquire things that cost more than they can pay upfront. When used and managed efficiently, credit cards also help improve credit ratings, increase loan approvals, and save money. While most people are aware of these advantages, many mismanage their cards or find themselves in an unexpected circumstance that results in an enormous amount of debt. The worst part is that this debt comes with many financial consequences that can be hard to overcome.
The following is a guest post. Enjoy!
Many people right now are in a situation where money is tight. There are many people who live paycheck to paycheck who are simply unable to build up their savings. Some are barely unable to make ends meet, or they simply lack the financial literacy to make effective use of their money.
Living paycheck to paycheck, without a financial buffer, is pretty much like walking on a tightrope. The smallest misstep or bad luck could put you in dire financial straits with no good choices to get out of it.
Besides the best contingency plans, you can also consider taking out a loan. Loans can be a godsend for both the people who have no money, as is the case with an emergency.
But loans can also be double-edged swords. While they can get you out of a tight spot now, they may cause you to lose something of much greater value later on if you aren’t careful with how you handle loans.
The types of loans you can get play a heavy role in risk management both for you and the lender. A few factors to help you determine the type of loan you plan on getting are the following:
Collateral
The defining difference that sets secured loans from unsecured loans is protection. Secured loans involve property or equipment to be used as collateral, which the lender gains ownership of if the borrower defaults on his payments.
On the other hand, an unsecured loan does not require collateral from the borrower. You can then infer that secured loans are risky for borrowers and low risk for lenders, while the opposite is true for unsecured loans. This risk factor also influences the other loan aspects significantly.
Lien Usage
A lien refers to the right to keep possession of a property of a borrower until his debts are fully paid. As previously mentioned, secured loans require collateral while unsecured loans do not. A prime example of a lien is when car title loans are taken out, the borrower must leave his car’s pink slip with the lender until he is able to pay off the loan.
Interest Rate
The risk level of borrowers plays a big role in determining interest rates. Lenders affix high-risk loans with higher interest rates and lower interest rates for secured loans. Through higher interest rates, lenders are able to break even with the transaction.
Loan Amount
Borrowers who take out secured loans are able to get a significantly higher loan amount than borrowers who take out unsecured loans. Again, the key factor here is security. Lenders are more willing to lend a bigger amount because they’re confident that the buyer has every reason to make sure that payments are on time.
When a borrower defaults on payments in a secured loan, lenders are at least able to get something of value in lieu of money. When a buyer defaults on an unsecured loan, lenders are left with nothing, and thus they lose the money that was loaned. It’s pretty much like putting your trust in another person. You’re more likely to share more of yourself with a person you trust versus a stranger.
Did you know that having a credit card is one of the most powerful financial tools when used appropriately? Any wrongful use of the credit cards can land you in a whole lot of financial woes.
However, how well do you know these credit cards? There’re essential items that you ought to know about your credit card. Here’re least-known facts about credit cards that you probably didn’t know.
There are many ways to teach your child the financial repercussions of their college choices. Making a mock budget inclusive of their eventual student loan payments is quite effective...
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If you’ve dabbled in personal finance teachings at all, you may have heard of Dave Ramsey’s Debt Snowball. But, how does the Debt Snowball work – and can it really help you pay off debt faster? Personally, I think it can. Let’s talk about what the Debt Snowball plan is and how it can help you get debt free.
