Aug 23

How Does a Payday Loan Work?

One of the most popular types of loan that is growing fast in the financial industry are payday loans. Payday loans, which are also known as salary loans, are short term loans that are unsecured regardless if the payment is done through a dated check against the borrower’s payroll account. This type of loan is one of the easiest loans to avail of as the borrower is only required to have an existing payroll and employment records. It is seldom that a payday lender checks the credit score of the borrower thus making almost everyone eligible for a loan.

Here are a few points you may need to understand about payday loans:

  • Rules Governing Payday Loans Vary Widely.

Laws on payday loans and regulations that govern them widely between countries. In the US, it can also vary between states. An existing set of laws and regulations are established to ensure that excessive charging on interest rates are prevented. These laws and regulations protect the borrower from unscrupulous lenders that may take advantage of the borrowers need for cash. If you are considering a payday lender who is working around the area, make sure that you check out the laws and regulations that govern payday lending.

  • Payday Lending Involves High Interest Rates

Payday lending is one of the types of loan that has the highest interest rates being charged by a payday lender. This is the reason why certain countries (and states) ensure that laws are in place to protect the welfare of the borrower. A payday loan charges interest to be paid varies from 350% up to 400% annual percentage rate (APR) under regulated circumstances. In some countries where there are no laws or regulations, lenders charge up to 1000% APR depending on the computations used by the lender.

  • Payday Lenders Only Require Employment

Because payday lending is so easy to avail of, it is becoming more and more popular and often the priority option of those who find it hard to make ends meet. Payday lenders only require a borrower and existing payroll and employment from which the payday lender can collect from month after month while the borrower rolls over his or her credit.

Aug 12

How Personal Loans Can Get us Into Debt

A personal loan is a type of an unsecured loan where a lender gives the borrower cash that has needs to be paid with interest. Personal loans can be very advantageous for emergency spending, household and auto repair, or even purchases of goods and services that are high in value. Personal loans are one of the loans that are easy to avail of and with minimal documentation required. This is why there are a lot of people who take on personal loans for large amount of spending required rather than using up the cash they have saved.

On the downside, if a personal loan is not managed properly, it can turn into a debt that would eventually cause the borrower to struggle with finances. Here are some points how a personal loan can get us into debt.

  • Lack of Planning

Like with any other loans, it is a must to have a plan when making an application for a personal loan. A plan allows you to identify the purpose and strategy on how to deal with having a personal loan. Remember, personal loans charge high interest rates and must be paid for a period of 12 to 36 months. Without proper planning this period can become a struggle to pay off the debt.

  • Overlapping Loans

There are cases where a borrower has an existing personal loan and while the term is still in force, a new personal loan is being applied for. This will cause your expenses to balloon because of two amortization payments that need to be covered every month. Having overlapping personal loans can cause mismanaged amortizations and can lead to struggling monthly expenses.

  • Computations without considerations

When getting or applying for a personal loan, make sure you have your computations correct. You should also put in some considerations such as having to use your emergency fund for the next 2 to 3 months.

Being aware of these considerations will benefit the borrower to avoid getting deep in debt due to mismanaged personal loan decisions.

Jun 04

How to Borrow Money When Your Credit Rating is not Good

Just because you have a bad credit rating or just starting out to establish yourself in the credit realm does not mean you will have a difficult time filing for a loan. There is now a type of MONEY LENDER that caters to individuals just like you. All you need is to do a little research and you will easily find these types of loan companies that offer CREDIT to below average credit rating people.

 

Things to Remember

 

The first thing to remember when you’re a first time borrower (or one with a low credit rating) is to make sure you only borrow the amount of money you actually need. It is usually protocol for loan entities to offer you a higher amount but always understand that the higher the loan is, the higher the interest would be and the longer it will take for you to repay the debt. The main rule here is to refuse the offer and just stick to the amount that you actually need. Always remember that you should never be tempted to borrow a larger amount than what you actually need because this will only give you a harder time repaying the loan. Also, most lenders who would start you off by luring you to borrow a higher amount are lenders that you should avoid. So rule number one is to stick to the loan amount that you need.

 

Selecting the Lender

 

Select several loan entities from which to borrow money from. BORROWING money entails a high degree of responsibility so after establishing the amount of money you need; check out several lenders that you think would be suitable for your need. Study and understand their loan application processes. Second, know and understand their terms and conditions so you don’t get caught in a situation where you end up paying more than what you need to. If in doubt reject the offer outright. Third, evaluate each lender that you have selected and compare each others offer. Finally, make sure that you can easily get in touch with their customer service representative, in the event that you run into problems regarding your loan.

May 28

How Payday Loans Can Get us into Debt

Eventually everyone ends up having the challenge of making ends meet. There may be times when unexpected expenses arise or our main source of income suddenly gets cut off and we start struggling to pay the bills. One of the most sought options when there are expenses or finance related challenges is to get a payday loan.

Payday loans are great financial tools that can help us to manage our financial challenges and can serve as a solution to minor problems we may have. We must always remember though that like any other loans, mismanagement could lead to debt. Here are a few pointers to remember how a simple payday loan can lead us to managing debt.

  • Lack of Purpose

When we decide, as borrowers, to avail of a payday loan, we must make sure that there is a specific purpose for getting the loan. Without a purpose for the loan, this will often lead to unnecessary spending that would require you to pay interest. This technically means spending more than what should be spent and possible spending beyond your means.

  • Lack of Information

It is very important that you are aware how a payday loan works. Like any other loans, you are borrowing money from a lender and paying off interest as a form of rental fee for borrowing the lenders money for your own use. These so called “rental fees” are usually very high for this type of loan.

Learn and understand how interest fees are computed and paid. Know how much you will be paying and how much will be within your capacity to pay back. Understanding the rules of how a payday loan gives you the advantage over ending up deep in debt.

  • Lack of Discipline

This is an important matter which you need to look into when getting yourself engaged with a payday loan. Since payday loans are one of the easiest loans to acquire, the interest rates are very high. With minimal requirements, almost anybody can get a payday loan without the hassle. If a borrower’s discipline is low, they end up borrowing every month and rolling over the debt which eventually balloons in size.

Mar 08

How Much Personal Loan Do I Need?

Personal loans are unsecured type of loans that are efficient for any type of need that a borrower may have. It is one of the most sought for loans as it has no particular restriction on what purpose it should be used on. Personal loans can be used for emergencies such as household and auto repairs or even cover for any medical emergencies. Due to its nature of easy processing, the application process for a personal loan requires minimal documentation and fast processing results. Because of this, borrowers opt in getting these types of loans for a variety of reasons.

Since personal loans are unsecured in nature, they entail high interest rates. Because there is no collateral required for the loan, having a high interest rate is the lender’s solution to recover the principal amount soonest possible. A type of loan having high interest rates should be reviewed thoroughly.

Here are a few points on how much personal loan you should get if you are planning to apply for one.

  • Know Your Goal

Having a goal for your personal loan will definitely help. Knowing where you will use the money will allow you to have a good estimate of how much you need for your goal. From there you can consider if the amount is something you can manage and something your income can accommodate.

  • Create a Plan

It is very crucial that you have a plan in place on how you will handle, budget and allocate your proceeds once you receive them. You must also know where to get the money to repay the loan and how you can earn manage the amortizations properly. Having a plan will help you identify what steps to take if there are problems or concerns that arise during the term of the loan.

  • Know Your Monthly Budget

Once you have created your plan, you need to identify how much you are willing to set aside from your income and how much you can actually set aside for payment of your loan. Without looking into this, you will eventually find yourself struggling to pay a loan that is too big for you to handle from the start.