loans and credit

A personal loan might be just the ticket during tough situations. Something’s happened, and you need to come up with some money in a hurry, but you don’t have it. Maybe the refrigerator is on the blink, or your child needs braces, or some other unforeseen event has happened: what do you do? Are fast personal loans available? The answer happily, is yes, but slow down a minute. Though the situation may be pressing, you still don’t want to jump in to a loan without considering some very important aspects of the loan. Ask yourself the following questions:

What are my options? Is the loan that you need so large that it can’t be gotten in some other way, such as borrowing from family or friends? You’d be surprised how many people overlook this interest free option, even though the amount they need to borrow may be relatively small. Will your employer advance some of your pay for an emergency situation? These are a couple of examples of things to consider right away, if the loan is a relatively small one.

Do you know your credit score? Again, this is such an important factor when it comes to the type of deal you may be able to leverage from personal loan lenders. If your score is high, you certainly shouldn’t be accepting a high rate usually reserved for those with weaker credit. It pays to know where you stand here, and you can get a copy of your report for free every year.

Only borrow what you need. Be wary of being offered a larger loan amount than you originally asked for, as it will cost you more in the long run. Often, the rules are more lax and the profits higher for lenders on these larger loans, so make sure you understand any fine print. Ask questions, it is their job to answer them and it is your money after all.

Look at any hidden charges. Ask the lender to explain each one of them so that you are absolutely clear that you understand them. Additionally, make sure that all that you’ve agreed on is what’s in writing, and not just someone’s word which unfortunately means little from a legal perspective.

One last thing that you want to be clear on is the total cost of the loan, and not just the monthly payments. This is what will give you an idea of what you’re getting into, while shopping for a low rate personal loan. When you take these tips and any others you might find, and shop in a smart way for the best deal, you will save yourself time, frustration, and money.

Consumers are continuing to pay down their debt, which brings up the question: Will as many have to consolidate debt now that saving money and paying down credit card balances seem to have become new trends? It would seem logical that a growing number of consumers would need debt consolidation programs as the national economy continues to struggle. With unemployment high, it’d make sense that consumers would be running up more debt on their credit cards. Instead, the opposite seems to be happening. Consumers are acting frugally. They’re putting off purchases that they can’t afford, purchases that in the past they would have put on their credit cards. It seems the Great Recession may have taught the typical U.S. consumer a bit about the value of savings.

New Debt Numbers

The Federal Reserve reported in early July that total outstanding consumer debt, not including mortgage loan debt, fell $9.1 billion in May to $2.41 trillion. That marks the 15th drop in consumer debt in the last 17 months, according to the Federal Reserve Board. In all, consumer debt has plummeted by $146 billion since 2008 ended. That’s a drop of 5.7 percent. This news comes as a surprise to many; after all, U.S. consumers have long been known for their willingness to run up large amounts of debt. They haven’t been known for patience or for saving money to make purchases later. This is a new attitude, then, by U.S. consumers, one brought about by the worst recession most of them have seen.

Debt Consolidation on the Decline?

You’d think that companies that help consumers consolidate debt or that provide debt consolidation counseling would be thriving today. It’s true that many consumers still need to consolidate credit card debt and that many are still seeking unsecured debt consolidation programs. Business is always steady in the debt consolidation industry. But business isn’t exploding as many financial analysts predicted that it would. The Great Recession, it seems, has brought out the hidden frugality of a growing number of U.S. consumers.

The Consequences of Debt Consolidation

This is good news for consumers. Taking steps to consolidate debt is often the right move for consumers struggling with overwhelming credit card debt. However, unsecured debt consolidation does come with its own negatives. It will cause consumers’ credit scores to fall, sometimes dramatically. And debt consolidation programs are rarely cheap; most companies that provide debt consolidation services charge high origination fees and interest rates for their loans. That’s why it’s encouraging to read that many consumers are taking steps to make sure that they never have to resort to debt consolidation to handle their credit card bills.

Though many consumers have cut back on how many purchases they place on their credit cards, many others still need credit card debt consolidation help. According to a recent story by U.S. News & World Report, the average household with credit card debt has $7,000 of it. It’s not easy to consolidation credit card debt. And it’s especially difficult if that debt is high and the economy is weak. After all, the national unemployment rate hasn’t budged from its perch near 10 percent in months. When people are either out of work or worried about losing their jobs, it’s difficult for them to pay off their soaring credit card debts.

Help From Outside Sources
Consumers who do want to bring down their credit card debt have options. They can try to reduce their debt on their own by not putting future purchases on their credit cards and by only buying items that they can afford to pay for in cash. This can be difficult, and requires a real commitment from consumers. It also requires patience. It can take a long time for consumers to pay off their credit card debt. They have to be committed to changing their negative spending habits for the long-term. Consumers who don’t think they can erase their credit card debt on their own, though, can turn to outside help from debt consolidators. These companies will work with consumers to draft credit card debt consolidation loans.

Debt Consolidation Loans
With a debt consolidation loan, a consumer’s debts are all tied into one monthly payment. The goal is to create a payment that consumers can comfortably afford to pay. As long as consumers make this payment on time each month, they’ll gradually pay down their credit card debt. They’ll also keep the collection agency calls at bay. A credit card debt consolidation loan can also help ease the stress that consumers feel when they’re dealing with overwhelming credit card debt.

Homework
Credit card debt consolidation does come with its own risks, though. For one thing, debt consolidators often charge high interest rates and origination fees. Secondly, consumers will see their credit scores drop when they take out a debt consolidation loan of any type. It’s up to consumers to do the research necessary to ensure that the debt consolidation loan they take out comes with reasonable rates and fees. Consumers should make sure to request these fees in writing from every debt consolidator they consider. Only by doing this, and taking the time to do their proper research, will consumers boost the odds that they’ll end up with a fair and successful credit card debt consolidation loan.

Personal loans are not difficult to acquire these days, for almost anyone with a pulse. On its surface, that is a good thing as funds are available to help people in times of need, but the real question is: what do you mean by “need”? No matter what the reason, it is important to understand that there are good reasons, and not so good reasons. Let’s examine some of the do’s and don’ts of personal loans:

#1: Do have a clear and up to date understanding of what is in your credit report. Without this, you are operating from a severely limited position regarding your ability to shop effectively and to bargain.

#2: Do take the time that is involved to research and shop for loans and the various interest rates that may be offered to you, whether that be traditional banks/credit unions, a small lending company, or one of the many excellent options for online personal loans.

#3: Do consider this type of loan for the right reasons, such as education, home improvements, emergency medical care, help with avoiding a calamity (losing your house) etc. The benefits from these sorts of reasons are obvious as they pay you back in some way; better job and more money from having a degree, your home being worth more, and so on.

But What About Some Not So Good Reasons?

#1: Don’t get the loan for what might be viewed as non-essential reasons, like items that you just want but don’t necessarily need (the biggest, baddest new television on the market and other “toys”) a trip that you can’t really afford, and other reasons that would seriously call into question whether you aren’t trying to live “beyond your means”.

#2: Don’t trade one debt for another unless it’s absolutely necessary, i.e. to pay a bill that saves you a greater amount of money in the long run, or some valuable piece of property that you might otherwise lose.

#3: Don’t get in over your head. This ties back into living beyond your means, and so you must really ask yourself “How am I going to pay for this?” If it’s not an essential need and you can’t really afford it, then you are just making things worse by piling up more debt and potentially trapping yourself for years to come.

How to get a personal loan is up to you. A few last things to consider that could help you decide whether to proceed would be: Am I expecting a raise? Am I close to paying off a car or other item that will free up cash in the near future? As you can see, there are many things to consider.

Personal loans are options for a wide range of money needs, including debt consolidation, home repairs, and simply to pay the bills. Personal loans can and do vary, however, from lender to lender. Many believe that personal loans, especially unsecured ones, carry high interest rates and wild terms and conditions. While some of these personal loans exist, so do personal loans with low interest rates. As is the case when making any major financial decision, when searching for personal loans, take the time to do your homework and pull out all the stops on finding the best personal loan that exists for your needs.

Search Online

Most financial experts agree that the best place to start your search for personal loans is on the Internet. In years gone by, finding personal loans was much more tedious, but today it may only take less than an hour of your time. Not only can you find and compare loans online, but you also have the ability to find personal loans in other areas of the country rather than the ones offered by local banks and financial institutions. With the Internet, it is possible to find personal loans with decent interest rates and more.

Shop and Compare

Once you identify some potential personal loans, it is important to take the time to contrast and compare the options. While you do want to start with the interest rate, your decision should not end with the interest rate alone. Also be sure to compare the terms of the personal loans, which is the length of time that you can borrow the money. While some personal loan lenders offer long-term options (over one year), others may only offer short-term options. After the interest rate and term, review fees associated with obtaining the personal loan. Obviously, the less you have to pay in fees, the better. Finally, review the funding and repayment options. Most online lenders that offer personal loans now offer online funding options, where you can have the funds deposited directly into a checking or savings account. Repayment of the personal loans can be made the same way. Other lenders of personal loans may only offer a pre-funded debit card and mailing your repayments. Depending on your need for the money you’re borrowing, the options may or may not matter.

For example, if you need the money for home repairs, then it may not matter whether the money is in your bank account or on a debit card. Since most repair companies take debit and credit cards, the pre-loaded card option works just as well as a bank account. Creditors may not accept credit or debit card payments to pay bills so pre-loaded debit card wouldn’t work.

Whether you purchase an existing business or start one from scratch, personal loans may be one of the sources of money you turn to for your business venture. Depending on the type of business structure you choose (corporation, sole proprietor, partnership, etc.), it is not unusual for some entrepreneurs to use personal loans to fund a business. Also, if you are starting a small business, it can be difficult to obtain small business financing because many lenders do not offer small business loans for startups. Since most personal loans require you to qualify, preparing to obtain a personal loan starts long before you start to complete the application form.

Preparing to Apply for Personal Loans

Some lenders may ask the purpose of the personal loan while others simply qualify you on your personal credit. Since it is a step you need to take before starting a business anyway, you may want to start working on a business plan. Constructing a business plan can also help you determine how much money you need to launch the business and maintain it until the business can sustain itself. As you are preparing your business plan, also take the time to pull your credit report from each of the three credit agencies. Review your credit report to make sure there are not any negative items that may cause you to be denied for any of the personal loans you apply to receive.

Applying for Personal Loans

The best place to start when requesting personal loans is with the bank that holds your checking and savings accounts. Since you have a personal relationship with the bank, it can help in the approval process for personal loans. For each lender you approach, obtain the qualification requirements for personal loans. Review this list to make sure you meet the requirements. If you do meet the requirements, then complete the personal loans’ application and supply copies of any supporting documents the application requests in order to process the loan. When you submit the personal loans’ application to the lender, make sure you understand how long the processing of the application may take. This helps to set your expectations on when you may receive the money you need to launch your business. One thing to keep in mind about personal loans for business purposes is that even if your business fails, you are still personally obligated to repay the loan. Personal loans, therefore, are different than business loans, where the business has its own obligations that are separate from the individual or individuals who own and/or run the business.

Getting a bad credit personal loan may not be the hardest thing in the world to do, but what about getting a decent interest rate? If you are considering getting the loan for something like debt consolidation, that is especially important. In order to save money on interest, the whole point of debt consolidation is to not only lump all the debt into one lower monthly payment, but ideally to get a better interest rate, and save some money. Of course, not everyone will qualify  for the best personal loan that’s out there, you certainly should try by shopping around. Often, many folks have some debt with outrageous interest rates attached to it, so if you can get rid of that by consolidating under a better rate, you’re already ahead and on your way to helping improve your credit rating.

What are some other reasons that people take out poor credit personal loans?

Home improvements can be a really good use of the money because you will be generating a return on the loan by improving the value of your home. When it comes time to resell, you should see a better profit due to your efforts.

Tuition help. Sometimes you need a little help paying school bills, and again it could be argued that this is a good, responsible use of the money. Sometimes folks will look at it as being a little expensive right now, but an investment toward when they will be able to get a better job, earning more money, and pay it off more easily.

Pay the mortgage on time. Sometimes, you need money in a hurry to offset a more pressing problem, and paying a mortgage on time, or making payment to avoid foreclosure are very pressing needs for some people. We’ve all heard the stories about people losing their homes, and in this tough economy, often any help you can get can be a real lifesaver.

Whatever the need, be it one of the above, other pressing bills, costly medication that is needed right away, etc. it is important to carefully consider all of your options regarding a personal loan offer. Bad credit loans are available, but you will need to do your research and really look around to see who can offer the best possible loan for your situation. Have you considered the services of a financial adviser? Many people find this to be an invaluable resource, but however you go about getting the loan, it should be relatively easy and, if you’ve done your homework, offer you the help that you’ve been looking for.

Are consumers ready to spend again, or are they more worried about a possible future of debt consolidation loans to comfortably open their wallets? Not surprisingly, this is a question that divides not just regular folk, but the people who are paid to analyze such matters. In fact, two of the country’s most important economic figures recently offered differing opinions on the matter in the same news story. It’s just one more indication of how little anyone really knows about today’s fragile – too fragile for most – economic recovery.

Differing Views
A recent story by BusinessWeek quoted Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, as saying that consumer spending has reached the “moderately strong” level. He predicts that consumer spending along with business investment will help boost the country’s sluggish economic recovery. However, the same BusinessWeek story references quotes from Richard Fisher, president of the Dallas Federal Reserve Bank. Fisher said that U.S. households were being cautious with their spending. And that, he says, is one reason why consumer spending will probably slow down in the second half of the year.

Who’s Right?
So, who’s right? It’s pretty easy to side with Fisher, if only because the economy still has so many negatives attached to it. Housing values remain low, falling to 2001 levels. Unemployment remains stuck near 10 percent. Foreclosures and bankruptcy filings are both at uncomfortably high levels. It’s easy to understand why consumers would be frugal with their dollars today. Many of them are worried about losing their jobs. Many others are wondering whether they will need to sign up with a debt consolidation service. When you’re contemplating ways to tackle bad debt consolidation, you’re probably not thinking about buying a new computer or flat-screen TV. When you’re wondering which debt consolidation program to sign up with, the odds are good that you’re not sinking hundreds of dollars into a new living room furniture set.

A Shaky Future?
All indicators point to a shaky near-term economic future. Consumers will undoubtedly struggle to navigate this tough economy. Many, overwhelmed by their soaring levels of debt, will turn to debt consolidation loans to get through this rough patch. Hopefully, these consumers will work with a debt consolidation service that treats them fairly. It’s up to consumers to request in writing a list of these companies’ fees and interest rates. If consumers don’t first do this research, they will increase their odds of paying exorbitant interest rates and origination fees for their debt consolidation loans. And this, of course, will only further weaken their financial health.

Researching debt consolidation companies used to be a challenge. It required consumers to call dozens of companies that offered debt consolidation loans to quiz them about the interest rates and fees they charged. Today, though, the process has gotten far easier. You can thank the Internet for this. The Internet has changed the way people shop, get their news, entertain themselves and communicate with each other. It should be little surprise, then, that it has also changed the way in which people deal with their debt.

Online Homework

When consumers face overwhelming debt today, they can turn to their favorite search engines to start their research on which debt consolidation companies are right for them. They can start by researching companies’ own home pages. These pages often provide basic information about the services that debt consolidation companies offer, the rates they charge and how they determine their fees. But consumers shouldn’t stop there. They should enter debt companies’ names into Google News to see if any negative headlines pop up. They should scan online message boards to see if anyone’s complaining about bad service or unreasonable fees. And, of course, they should visit the online home of the Better Business Bureau to see how many complaints the debt consolidation companies that they are considering have racked up.

Don’t Stop With Online

Online research is helpful for consumers considering debt consolidation loans. However, this type of research should be just the beginning. Consumers also need to do their in-person or by-phone research before deciding to work with any particular debt consolidation firm. This means that consumers need to ask any debt consolidation company with which they are interested in working to provide them with their exact interest rates and fees in writing. They should also ask these companies how long it will take them to pay off their loan and what impact taking out a debt consolidation loan will have on their credit scores. Companies that won’t provide this information are companies that consumers should avoid.

Don’t Be Misled

There are some dangers to online debt consolidation research, too. Consumers, when they search for debt firms, may find several companies promising Christian debt consolidation, free debt consolidation or non-profit debt consolidation. It’s important for consumers to understand that the vast majority of debt consolidation companies are in business to make money. Few, if any, will provide you debt consolidation services for free. Even companies that promote themselves as Christian or non-profit might charge unreasonable rates and fees. Consumers researching online must make sure to keep their guard up for possible scams or exorbitant fees, even when they’re working with non-profit or Christian debt consolidation companies.

If you own a credit card from Discover, American Express or Citi, the odds are good that their penalty practices can hurt your efforts at debt consolidation. A new survey by a credit-card tracking site reported that most major credit card companies still do a poor job of explaining to their customers the way they assess late fees and levy financial penalties. This is particularly disappointing because the federal government’s Credit CARD Act, passed last year with great fanfare, was supposed to revamp these processes. The legislation was supposed to make the penalty structures of credit card companies easier for consumers to understand.

Late Fees, Debt Consolidation

During these challenging economic times, many consumers have had to turn to debt consolidation loans to get a handle on their outstanding revolving debt. Unfortunately, any debt consolidation efforts that consumers take, whether they’re working with companies that promote Christian debt consolidation or for-profit consolidation, can be easily scuttled by unexpected late fees and penalties. According to the financial Web site CardHub, a growing number of consumers are receiving unexpected penalties because their credit card issuers still haven’t explained clearly what consumers have to do to avoid these fees.

Survey Results

According to CardHub, six of the 10 biggest credit card providers earned poor scores when it comes to their penalty practices. American Express did especially poorly in the study, according to CardHub. The company racked up ratings of “poor” in all four categories that the Web site studied, including how clearly the company explained what triggers a penalty, to what portions of consumer balances that penalties apply, what steps consumers can take to move back to their non-penalty interest rate and what APR changes are allowable in the first year that consumers hold their new cards. Of course, American Express wasn’t alone in its poor rating: Citi, HSBC, Bank of America and Discover all earned poor ratings from the survey.

Debt Consolidation Woes

When consumers turn to a debt consolidation company, it’s usually because their credit card debt has become too overwhelming for them to handle. They’re tired of the collection agency calls, and of dreading trips to their mailbox. Taking out a debt consolidation loan is no easy decision; doing so lowers the credit scores of consumers, while many debt consolidation companies also charge high fees and interest rates. It’d be a shame, then, if more consumers turned to debt consolidation loans in part because unexpected penalty fees added to their credit card bills. Federal legislation was supposed to prevent this. So far, though, it doesn’t appear to have done so.