Getting The Best Deal On Personal Loans

Getting The Best Deal On Personal Loans

A personal loan is a sum that any adult individual borrows to fulfill his financial requirements. There are many purposes for which any individual can take a personal loan. Personal loans can be used to provide funds to buy a car, pay for your dream cruise or that remote island escapade, buy a boat, pay mortgage arrears, finance your home improvement plans, payment of alimony or paying for credit card bills etc. In fact personal loans can be taken for most of the financial emergencies you can think of.

There are many banks and financial institutions, which provide personal loans. All of them have their own terms and conditions. To get the best deal on your personal loan you must ensure that you contact and consult as many lending institutions as possible. Tell them about your financial requirements and situation. Get quotes from them and check whether you can repay the personal loan with ease.

The banks will provide you with a lump sum amount when you complete the formalities of getting the loan. The money can be used to fund your requirements. The amount banks will recover from you will include the debt, coupled with the interest charged on it over the repayment period. The longer the repayment term the less will be the interest to be paid on the personal loan.

The two most common types of personal loans are secured and unsecured personal loans. The option of secured and unsecured personal loans are linked to the fact whether you can offer any property or fixed asset as collateral for the loan. These loans are discussed below in detail.

Banks and financial institutions often overlook negative credit ratings, CCJ, defaults or pending debts since they get collateral for their loan. Secured personal loans are available to individuals within 30 days of giving an application.

Unsecured Personal Loan

In an unsecured personal loan the amount given by the bank or financial institution is not secured by collateral. The lending institution gives the loan solely on the creditworthiness of the person concerned. This type of loan has a greater element of risk for the lenders, so it carries a greater rate of interest and is often followed by a through background check on the financial soundness of the individual. The loan amount can start from as little as £500 and go up to £25,000. Since the loan is unsecured, lenders are wary of giving large amounts as loans. Unsecured personal loan is good for tenants, people who don’t own their homes and those who cannot offer anything as collateral.

In case the borrower defaults on payments then the lender will use the credit agreement and take legal help in recovering the outstanding amount.

Before jumping to a decision, the interest rate charged should be given a serious look while taking a personal loan. The amount of interest you will be charged, will decide what you finally pay to the bank. Lenders have a legal obligation to tell you the interest they will charge on your loan. The APR (Annual Percentage Rate) shows the real interest rate the banks will charge from you. The lower the APR, the better it will be for the borrower. The borrower is also advised to investigate whether the interest charged by banks is fixed, or a floating one. Ask the bank about prepayment penalties and other cost incurred in getting a loan.

Every financial institution has its own way of enquiring about the borrowers. Some might want to ask personal questions, get a feel of what you will do with the loan amount and how you wish to build your future before lending you anything. Be prepared to answer such queries.

Every loan that is taken has to be repaid. The banks and financial institutions derive part of their profits by the interest you pay. It is fine if everything goes as planned, and you repay the entire loan in due course with no hiccups. However life is known for its glorious uncertainties. Plans fail, calamities come and something disastrous often thwarts our plans. This might lead to repayment problems. This happens and one should not get panicky in such situations. If you get into one such situation, the first thing that you should do is to talk to your lender. They are interested in recovering their money, a mutually agreeable solution can be reached, which is less tense for you to manage and appears promising to lenders also.

18 Ways to Reduce Your Mortgage Loan

18 Ways to Reduce Your Mortgage Loan

1. Skip the introductory rate (Honeymoon)

Beware of lenders bearing gifts! Introductory or honeymoon rates have long been an important marketing tool for lenders. You are initially offered a cheap rate on your loan to get you in the door but once the honeymoon period is over, the lender will switch you to a higher variable rate of interest. An example of this is an Adjustable Rate Mortgage (ARM).

There are two problems with this scenario. First, the variable rate is often higher than some of the lower basic loans available so you could end up paying more. Second, you need to clearly understand that a honeymoon rate applies only for the first year or two of the loan and is a minor consideration compared to the actual variable rate that will determine your repayments over the next 20 or so years.

You may also be hit with fairly steep exit penalties if you want to refinance in the first two or three years to a cheaper loan. So make sure you fully understand what you are letting yourself in before setting off on a “honeymoon” with your lender.

2. Pay it off quickly

Time is money. There are all sorts of strategies for paying less interest on your loan, but most of them boil down to one thing: Pay your loan off as fast as you can. For example, if take out a loan of $300,000 at 6.5 per cent for 30 years, your repayment will be about be about $1,896. This equates to a total repayment of $682,632 over the term of your loan.

If you pay the loan out over 15 years rather than 30, your monthly payment will be $2,613 a month (ouch!). But the total amount you will repay over the term of the loan will be only $470,397 – saving you a whopping $212,235

· Make repayments at a higher rate

A good way to get ahead of your mortgage commitments is to pay it off as if you have a higher rate of interest. Get a loan at the lowest interest rate you can and add 2 or 3 points to your repayment amount. So if you have a loan at about 6.5 percent and pay it off at 10 per cent, you won’t even notice if rates go up. Best of all, you’ll be paying off your loan quicker and saving yourself a packet.

· Make more frequent payments

The simple things in life are often the best. One of the simplest and best strategies for reducing the term and cost of your loan (and thus your exposure should interest rates rise) is to make your repayment on a fortnightly (bi-weekly) rather than monthly basis. How can this make a difference I hear you ask? It works like this:

Split your monthly payment in two and pay every fortnight. You’ll hardly feel the difference in terms of your disposable income, but it could make thousands of dollars and years difference over the term of your loan. The reason for this is that there are 26 fortnights in a year, but only 12 months. Paying fortnightly (bi-weekly) means that you will be effectively making 13 monthly payments every year. And this can make a big difference.

Using our example from above, by paying monthly, you will end uprepaying $682,632 over the term of your loan. But, by paying fortnightly (bi-weekly), you will save $87,254 in interest and 5.8 years off the loan. Zero pain to you, major benefit to your pocket.

· Hit the principal early

Over the first few years of your mortgage, it may seem that you are only paying interest and the principal isn’t reducing at all. Unfortunately, you’re probably right, as this is one of the unfortunate effects of compound interest. So you need to try everything you can to get some of the principal repaid early and you’ll notice the difference.

Every dollar you put into your mortgage above your repayment amount attacks the capital, which means down the track you’ll be paying interest on a smaller amount. Extra lump sums or regular additional repayments will help you cut many years off the term of your loan.

· Forego those minor luxuries

This is the bit you don’t want to read. Once you have a mortgage, your life is likely to be luxury-free (or at least pretty close to it). Think of all the weight you will lose by giving up your favourite indulgent snack. For the sake of your health you should quit smoking and drink less anyway. Take your lunch from home and save on bad fast food. Trust me, your body will thank you for it.

If you’re still not convinced consider the following example. A typical day may include a pack of cigarettes ($10), a coffee and donut ($5), lunch ($12) and a couple of beers after work ($8). That’s $35 a day or $175 a week or $750 a month or $9,100 a year.

Assuming a mortgage of $300,000 at 6.5 per cent over 30 years, by making $750 in extra repayments each month, you’d save more than $216,000 in interest and be mortgage free in just over 14.5 years.

No one is saying you should live a convict existence but just cutting down a little on your expenses will see you reap huge financial benefits.

3. Get a package

Speak to your lender about the financial packages they have on offer. Common inclusions are discounted home insurance, fee-free credit cards, a free consultation with a financial adviser or even a fee-free transaction account. While these things may seem small beer compared to what you are paying on your home loan, every little bit counts and so you can use the little savings on other financial services to turn them into big savings on your home loan.

There are also “professional” packages on offer for amounts over a certain limit, which can be as little as $150,000. Some lenders offer discounts to specific professional groups or members of professional organizations. Ask your lender if your occupation qualifies you for any discount. You might be pleasantly surprised. There are all sorts of discounts and reductions attached to these packages so make sure you ask your lender about them.

4. Consolidate your debts

One of the best ways of ensuring you continue to pay off your loan quickly is to protect yourself against interest rate rises. If your home loan rate starts to rise, you can be absolutely positive about one thing – your personal loan rate will rise and so will your credit card rate and any hire purchase rate you may happen to have.

This is not a good thing as the interest rates on your credit cards and personal loans are much higher than the interest rate on your home loan. Many lenders will allow you to consolidate – re-finance – all of your debt under the umbrella of your home loan. This means that instead of paying 15 to 20 per cent on your credit card or personal loan, you can transfer these debts to your home loan and pay it off at 7.32 per cent.

As always, any extra repayments or lump sums will benefit you in the long run.

5. Split your loan

Many borrowers worry about interest rates and whether they will go up but don’t want to be tied down by a fixed loan. A good compromise is a split loan, or combination loan as they are often known, which allows you to take part of your loan as fixed and part as variable. Essentially this allows you to hedge your bets as to whether interest rates are going to rise and by how much.

If interest rates rise you will have the security of knowing part of your loan is safely fixed and won’t move. However, if interest rates don’t go up (or if they rise only slightly or slowly) then you can use the flexibility of the variable portion of your loan and pay that part off more quickly.

6. Make your mortgage your key financial product

Mortgage products known as all-in-one loans, revolving line-of-credit or 100 percent offset loans allow you to use your mortgage as your key financial product. This means you have one account into which you can pay all of your income and draw from for your living expenses by using a credit card, EFTPOS or a checkbook, as well as making your mortgage repayments..

These types of accounts can make a huge difference to the speed at which you pay off your loan. Because your whole pay goes into your mortgage account you are reducing the principal on which interest is charged. Sure, you might take a couple of steps back as you withdraw living expenses but careful use of this sort of product can get you thousands of dollars ahead of where you’d be with a “plain vanilla, pay once a month” home loan.

These loans work well when you are able to make additional payments towards the loan. If you are only able to make the equivalent of the minimum repayment on your loan (and not put in any extra) you may be better off with a cheaper standard variable or basic variable loan. However, it’s not unusual for dedicated borrowers using these types of loans to cut the term of a 30 year-old loan to less than ten.

7. Use your equity

If you have already paid off some of your home, you are said to have equity. Equity is the difference between the current value of your property and the amount you owe the lender. For example, if you have a property worth $500,000 on which you owe $150,000, you are said to have home equity of $350,000, which you can re-borrow without having to go through the approval process by accessing it through your existing loan.

Many lenders will allow you to borrow using your equity as collateral. Most lenders will allow you to borrow up to about 80 per cent of the loan-to-value ratio (LVR) of your available equity. If you are careful, you can use this equity to your advantage and help to pay off your home loan sooner.

Using an equity loan to improve your property could be a good way to ensure that your home increases in value over time. But larger expenses such as cars and holidays that would have been paid by credit card are more affordable on the lower rate of your home loan.

8. Switch to a lender with a lower rate (But do your sums)

It may sound like a simple idea but switching out of your current loan and taking out a loan at a lower rate can mean the difference of years and thousands of dollars. If you have a loan that is tricked up with all the features, or even if you have a standard variable loan, you might find that you could get a no frills rate that is as much as a percentage point cheaper than your current loan.

However, before you jump the gun, check out what it will cost you to switch loans. For example, there may be exit fees payable on your old loan and establishment fees and stamp duty on your new loan. Work it all out and if it makes sense, go for it.

9. Stay informed – don’t forget about your mortgage
Visit Mortgage Loan Hints.com

With any long-term commitment, there is always the temptation to let your mortgage roll along, make your repayments as they fall due and think as little about it as possible. As long as you keep up the repayments, there’s not much else you need to do, right?

This attitude can be a big mistake. Keep yourself up to date with what’s happening in the marketplace. You might find that there’s an opportunity to put yourself well ahead of the game. Rates change, new products and changes in the market itself may allow you to seize an opportunity or negotiate a better deal.

Stay informed and stay ahead of the game.

10. Get a cheap rate and invest the difference

When interest rates are low, like now, it is usually safe to say that inflation is also low. Thus, bricks and mortar may not be the best place to invest. Try getting the cheapest home loan you can find and make the minimum repayment. This allows you to use the extra cash to invest in other, more profitable areas.

You may find that the return you get on shares or some other type of investment means that you have created a nice little nest egg which you can use to pay off a bigger chunk of your home loan than you might otherwise have been able to do.

But beware – high returns often mean high risks. Before undertaking any investment, invest in a consultation with a qualified financial adviser.

11. Run an offset account

Instead of earning interest, any money you have in your offset account works to offset the interest you are paying on your home loan. For example you may have a mortgage of $300,000 at 6.5 percent and an offset account with $50,000 in it earning 3 percent.

This means that $250,000 of your loan is accruing interest at 6.5 percent but the rest is accruing interest at just over 3.5 percent (6.5 percent on your loan less the 3 percent the $50,000 in your offset account is earning). Imagine how much you can save!

Of course, the best sort of offset account pays the same rate as your loan (100 per cent offset).

12. Pay all your mortgage fees and charges up front

Some lenders allow you to add to the amount you borrow instead of coming up with cash for your upfront costs. While this can seem a blessing try to avoid doing this. Consider the following example:

Borrower A borrows $300,000 over 30 years at 6.5 percent. Her upfront costs are $1,000 but she has enough cash to make sure she can cover these. Her total repayment over 30 years will be $682,632

Borrower B takes out the same loan but doesn’t have enough cash to cover the upfront costs. So he borrows $301,000, at the same rate. Her total repayment over 30 years will be $684,907.

Two thousand odd-dollars might not sound like a huge amount but what could you buy with it if it stayed in your pocket?

13. Pay your first instalment before it’s due

With most new loans, the first instalment may not become due for a month after settlement. If you can manage it (and your lender will let you), pay the first instalment on the settlement date. If you do this, you will be one step ahead of the lender for the term of your loan. Every little bit counts.

14. Shop around and make sure your lender knows it

One of the most powerful tools you can have in the search for the best home loan is information. Make sure you have rung half a dozen lenders and brokers (as well done some internet research) before you start talking to your preferred lender about getting a new loan or refinancing your existing loan.

Make sure you know what rates and features are offered by each of your lender’s competitors on comparable products. Be ready to tell the lender what you are looking for and don’t be afraid to ask for extras. If they want your business, and know you know what you are talking about, they may be prepared to work that little bit harder to get your business.

Don’t be afraid to walk out if you aren’t getting the best possible deal you can.

15. Make sure your loan is portable

If there is any chance that you will move house during the course of your loan (and let’s face it, there is a strong chance), make sure that your lender will allow you to transfer your loan to a new property and that it won’t charge you the earth for the privilege.

Be careful. If you sell up and buy a new house, you could find yourself down thousands in discharge costs on your old loan and establishment fees on your new one.

16. Avoid bridging finance

Someone once said bridging finance is so called because it allows you to “pylon” the debt. The joke’s appalling, but so is bridging finance. Unless you get your timing right you could find yourself with two home loans at the same time – with the bridging finance element costing you an extra couple of percent premium on the standard variable rate.

Consider using a deposit bond or selling before you buy, as it will be much more cost effective for you than another loan.

17. Choose the loan that suits your needs

Choosing a loan is about knowing what you want. Draw up a table of potential home loans and rank them. Make a list of all the features that are important to you and rank them according to importance. Give each feature a score out of 5 – one for unimportant right through to 5 for indispensable.

Use this technique for ranking the loans on offer and pretty soon you’ll see the one that’s right for you. Remember, different loans have different purposes so you need to match a loan to your need. Taking out an interest only loan suitable for investors if you are planning to live in the house is just foolish.

Ditching the features you don’t need can save you up to 1 per cent on the interest rate of your loan. Over 30 years that’s a whole lot of money you’ve just saved yourself.

18. Don’t be afraid of smaller lenders with cheap rates

Since the advent of the mortgage managers over the past five or six years there’s been a lot of talk about smaller and “non-traditional lenders” and how they have forced interest rates down. With the property boom, plenty of opportunities sprang up for smart lenders with low fees willing to take on traditional lenders and many have done very well indeed.

Some borrowers worry about what might happen if their lender gets into financial trouble. Keep in mind that you’ve got their money – so don’t worry too much. There are some smaller lenders whose names might not be readily familiar but whose rates might be enough reason to get in touch.

Be wary, however. Some of these smaller lenders can have huge hidden fees and charges. It is true that the interest rate might be much lower, but in many cases, they exit (or penalty) fees can be very high if you refinance or pay off your mortgage in the first couple of years. Of course, if you’re planning on staying with that lender for some time, then these fees will not impact your pocket at all.

Low Interest Auto Loans

Low Interest Auto Loans

Car buyers know the benefit of a loan. A loan can help you get a vehicle you want at a monthly payment that fits their budget. What you may not know is that in the case of an auto loan, you can avoid travel and apply for the car loan from your computer! The availability of online auto loans comes from the emergence of online financial institutions. Banks and several other businesses have become comfortable operating online, with some banks even performing loan interviews over the internet. In the case of online auto loans, banks and other financial aids can operate via online lenders to help people receive their loans through online transactions.

One of the benefits of applying for a car loan online is that the car loan application takes no time at all to finish. Whereas you would have to commute to the bank and then the dealership to fill out the paperwork involved with applying for a loan, you will not have to leave the house to fill out an online auto loan application! The streamlined service involved in applying for an online auto loan comes from the plethora of online loan lenders that will work with you quickly and efficiently to find the best loan that you need.

A simple search will reveal thousands of sites and lending services ready to help you on the spot and the applications are stress free. As with all loans, whether they are for a car or house, when applying for a loan online, research it! The online loan rates can differ wildly depending on what bank, company, or business the online lender works with. In order to find the best APR on a loan, I would recommend searching various lender web pages, such as Up2drive.com or Myautoloan.com. These sites have APR estimates on the main web page and can give you a rough idea of what you are looking at paying for your monthly bill.

As with all loans, the APR is extremely important to take into account when looking at repaying your loan. The APR, or annual percentage rate, is the interest returned on your borrowed loan from the bank or financial service. These institutions can help settle your financial matters through a fixed APR, meaning an interest rate that cannot change, regardless of the bank’s situation. A non-fixed APR means that the interest rate on the loan from the bank or in some cases, the dealership itself, would fluctuate at the end of a year. At the beginning of the New Year, the bank can either decrease or increase your APR, and although they are rare, a decreased APR could be obtained under the precedent that your financial institution is working with you to help you repay your loan.

This could stem from a financial hardship or simply not having enough money at the time to repay your loan. To counteract bad credit, a bad credit auto loan can be applied for. These loaning situations are for those that have a credit score of 600 or lower. When applying for loans, if your score is below 600, it’s very likely that a loan corporation or business will simply pass you over. However, applying further for loans will actually hurt your credit score more, so to counter this you could visit Myautoloan.com. This site helps you connect with high risk lenders and nearby car dealers that can help you finance your new car.

An online auto loan holds many benefits to the average consumer. In one example, an online auto loan will typically beat out a dealer’s overall APR. As well as being cheaper overall, an online auto loan application does not incur fees, such as one may be subject to at a dealer’s. Many car dealers tack on application fees to squeeze that extra bit of cash out of the customer beforehand. In another example of why an online auto loan is more beneficial than an in-person one, you may find that the online application is considerably easier to fill out, since you do have the internet at your fingertips. Besides having the information needed to properly fill out an app online, you will also be able to work at your own pace to fill the application out. Lastly, the best part about an online auto loan would be that with most online auto loans, there is no down payment involved. Unlike at a dealership’s, an online auto loan steps around any down payments by working directly with the lender, as opposed to working through the dealer to find financing.

The availability of online auto loans comes from the emergence of online banking and financial institutions. Banks and several other businesses have become comfortable operating online, with some banks even performing loan interviews over the internet. In the case of online auto loans, banks and other financial aids can operate via online lenders to help people receive their loans through online transactions.

One of the benefits of applying for a car loan online is that the car loan application takes no time at all to finish. Whereas you would have to commute to the bank and then the dealership to fill out the paperwork involved with applying for a loan, you will not have to leave the house to fill out an online auto loan application!

The streamlined service involved in applying for an online auto loan comes from the plethora of online loan lenders that will work with you quickly and efficiently to find the best loan that you need. A simple search will reveal thousands of sites and lending services ready to help you on the spot and the applications are stress free.

As with all loans, whether they are for a car or house, when applying for a loan online, research it! The online loan rates can differ wildly depending on what bank, company, or business the online lender works with. In order to find the best APR on a loan, I would recommend searching various lender web pages, such as Up2drive.com or Myautoloan.com. These sites have APR estimates on the main web page and can give you a rough idea of what you are looking at paying for your monthly bill.

As with all loans, the APR is extremely important to take into account when looking at repaying your loan. The APR, or annual percentage rate, is the interest returned on your borrowed loan from the bank or financial service. These institutions can help settle your financial matters through a fixed APR, meaning an interest rate that cannot change, regardless of the bank’s situation.

A non-fixed APR means that the interest rate on the loan from the bank or in some cases, the dealership itself, would fluctuate at the end of a year. At the beginning of each year, the bank can either decrease or increase your APR, and although they are rare, a decreased APR could be requested and obtained under the premise that your financial institution is working with you to repay your loan. This could stem from a financial hardship or simply not having enough money at the time to repay your loan.

For car buyers with bad or no credit there are special bad credit auto loans available. These loans are for those that have a credit score of 600 or lower. When applying for loans, if your score is below 600, it’s very likely that a loan corporation or business will simply pass you over. However, applying further for loans will actually hurt your credit score more, so to counter this you could visit Myautoloan.com. This site helps you connect with high risk lenders and nearby car dealers that can help you finance your new car.

An online auto loan holds many benefits for the average car buyer. In one example, an online auto loan will typically beat out a dealer’s overall APR. As well as being cheaper overall, an online auto loan application does not incur fees, such as one may be subject to at a dealer’s. Many car dealers tack on application fees to squeeze that extra bit of cash out of the customer beforehand.

Another example of why an online auto loan is superior to a traditional in-person one, you will find that the online application is considerably easier to fill out. Besides having the information needed to properly fill out an app online, you will also be able to work at your own pace to fill the application out.

Lastly, the best part about an online auto loan would be that with most online auto loans, there is no down payment involved. Unlike financing at a car dealership, an online auto loan steps around any down payments by working directly with the lender, it also lowers your cost and rate and removes dealer mark ups.

Get the Facts Before You Borrow

Get the Facts Before You Borrow

In the current economic climate, alternative means of obtaining money to make ends meet are becoming increasingly necessary. Some alternatives include borrowing money from friends/relatives; cash advances from employers; pawning personal effects and payday loans. Also known as a check/cash advance loan or deferred deposit check loan, the payday loan is the most popular among these. As payday loans grown in popularity, more and more people want to know just what a payday loan is, and if it is the right solution for their situation.

SO, WHAT IS A PAYDAY LOAN?

A payday loan is an unsecured, short-term loan of anywhere from a few hundred dollars to as much as fifteen hundred dollars in some instances. A borrower generally secures the loan by post-dating a personal check for a specific amount of money to be posted against their account on their next pay period. Payday loans are designed to help out in situations when you need quick cash to cover an unexpected bill or an emergency situation until your cash comes through or is made available.

A payday loan is NOT a revolving line of credit. It is short-term and that is a key factor in this type of loan. The idea is to take out the loan to cover a small bump in the road or to smooth out any rough financial edges until your next payday. If you are thinking of the payday loan as way to repair a much bigger financial problem, the advice is to STOP! A payday loan can create bigger problems down the road when used as part of an overall troubled cash flow situation.

SO, WHAT IS A PAYDAY LOAN?

The most important thing to remember about payday loans is that they must be repaid on time in order to avoid paying insane fees that could potentially equal or surpass the amount of the loan itself! It is the renewing of the loan and failing to repay it on time that can create a major financial dilemma for the borrower.

Most loans have a repayment period of four to eighteen days depending upon the terms negotiated with the lender. The repayment schedule and the method of repayment is arranged at the time the loan is disbursed. More often than not, the borrower will agree to pay the loan in full with cash on or before the due date. Additionally, some lenders may opt to collect on the loan by depositing the borrower’s post-dated check against his/her bank account on a mutually agreed upon date.

With payday loans, there is a fixed rate fee calculated into repayment on each loan disbursed. The average rate is $15.00 to $20.00 dollars per $100.00 dollars borrowed. Due to the nature of the quick turn-around time of payday loans, the annual percentage rate or (APR) is generally very high. It is not uncommon for the (APR) to be 100%, 200% or even as high as 400% in some cases.

If a borrower is unable to repay a loan at the scheduled time, the lending institution may agree to rollover the loan allowing more time for repayment. The drawback to rolling a loan over is that additional fees are added to your account. For example, if the fee to borrow $100.00 is $15.00 and the borrower rolled over the loan three times, then the new fee would be $60.00. That is the original $15.00 fee plus three times that fee itself added to each $100.00 borrowed.

WHAT ARE THE REQUIREMENTS FOR A PAYDAY LOAN?

Generally, the only major requirement for a payday loan is that you have a job. Your job is your assurance that you will be able to repay the loan. It is expected that you will be receiving a paycheck, and therefore, the money to cover the loan. Good credit isn’t necessary or even required for the payday loan to be approved. The lending institution only wants to see that you are employed and have a steady income. In essence, your job is your collateral

Getting a payday loan is actually a simple procedure. You apply, and if approved, sign paperwork that indicates your promise to repay the loan on the lender’s terms. Be sure to take the time to carefully read the terms of the loan and do not be afraid to ask questions about what those terms mean. Often, these kinds of contracts are written in a legalized, financial jargon that is not easily understood by the average consumer.

BORROWER BEWARE!

If you feel the lender’s representative is not able to fully answer your questions, please say so! If the terms of the loan are not clear to you, do not take the loan until you fully understand them. Teachers always say that the only stupid question is the one you don’t ask. This is true! Again, if you do not understand all the terms of the loan, do not sign paperwork until those terms have been fully explained to you. Otherwise, you are legally bound by those terms that could prove disastrous for you if you fail to act in accordance with the terms of the loan. We would like to think that everyone is above board, but not all lenders are. Unfortunately, there are unscrupulous lenders out there who intend to make a profit at your expense.

It has been noted by the NAACP and the Department of Defense that payday loan offices have strategically opened offices near military bases and in socio-economically disenfranchised areas where the demographic is largely African American and Hispanic. Many reputable financial institutions, consumer groups, and civil organizations are doing all they can to shut down payday loan offices, but their efforts to date have been largely unsuccessful.

BORROW IF YOU NEED TO, BUT BE SMART ABOUT IT!

With the often strict guidelines used by reputable lenders, many people are getting caught up in the cycle of payday loans because of their immediate benefits. When emergencies occur and cash is needed, payday loan companies offer fast, hassle free cash. More often than not, most have no minimum credit requirements and do not perform background checks. In most cases, all that is needed to secure a payday loan is a recent pay stub and proof of a checking account. In these regards, payday loans and cash advances do offer consumers financial options in emergencies. On the other hand, more and more people are getting caught up in this vicious cycle of borrowing which can lead to financial ruin. This is not good, especially considering that the loan was probably taken out to avert a financial disaster in the first place. With pros and cons like these, it would seem that the best advice would be to borrow if you absolutely must, but do so with extreme caution.

Being proactive is probably the best strategy or, as conventional wisdom holds, “an ounce of prevention is better than a pound of cure”. Take an honest look at your family finances and come up with creative ways to not have to borrow. Consider trimming the fat out of your budget, pledging to save a little money from each paycheck, and reducing credit card and revolving debt.

A little effort on your part can make a huge difference not only in your financial situation, but in your quality of life as well. Nevertheless, if you must take out a payday loan, remember the following key points:

– Payday loans are NOT revolving lines of credit

– Repay your loan on time!

– Do not plan on rolling your loan over. Plan, instead, to pay it off

– The only “stupid” question is the one you don’t ask

– Payday loans have terms & conditions of repayment. Know and abide by them

– Payday loans can ruin your finances and jeopardize your job if you are not careful

– An ounce of prevention is better than a pound of cure