What is a debt consolidation loan?

Sometimes people, who can’t pay their debt, need a help from the lender, in order to refinance their loan, changing the interets they pay. Same situation can happen, when a person has several loans as well. In this case, a debt consolidation loan is needed. Let’s learn more about it.

The main principle of a debt consolidation loan is an opportunity to merge couple of loans togeter, in order to lower the interests, paid by a person. Instead of owing money to two or more lenders, such a client can borrow money from another person, for covering all of the other debts. So that, after this, he will owe the money to just one lender.

In theory, the debt consolidation loan is presented in two types – the secured and the unsecured one. The first one needs some of your assets to be involved. Home or car are used in most cases as a security. If a person, who has a debt, won’t repay it – he or she looses the security. Unsecured debt consolidation loan is a far risky solution for lender.

In general, consolidation loan is a good tool, which can save some money to the borrower. However, it must be used wisely, because it brings risk to lose the home. On the other hand, if you are sure, that you are able to pay all of the debt fees and payments. Besides, you should count the interests with your consolidation loand and the previous loan you took earlier.

Why you need a personal loan? (Part 1)

Personal loans is a pretty convenient tool for solving your financial problems. Using it wisely, you can make some things done with no need to ask your friends, relatives and colleagues for money. Here are some situations, which are the clear signs of your need for the personal loans. Let’s find out.

1.Medical bills

Some urgent medical services are the source of problems for many people. We just don’t have a choice, when such a bill comes – if you car for your health, you just pay it. If you don’t want to have financial problems in the future, spending your savings for dentist, you should definitely take a personal loan for paying the debt.

2.Debt consolidation

Many people take personal loans with a single reason – to consolidate the existing debt. For example, if you have any high-interest debt, which needs to be returned, you can take a personal loan with a fixed rate, in order topay the bill. It will be much more profitably for you.

3.Home improvement

If you want to live in a comfort, you should take care of your home on a regular basis. However, home improvements need some investments, which are not easy to be found usually. Your answer is personal loans, which will be used for repareing or upgrading something.

4.Credit score improvement

If you want to take some big loan, you should definitely have a good credit score. However, it’s not easy, if you have an empty loan history. In order to get some records, you can take a personal loan. It can be some sort of a ‘mild start’ for your loan history.


Why you need a personal loan? (Part 2)

In the previous article we analyzed the signs of your need in a personal loan. These are the life circumstances, which everyone can face. Today we’d like to expand the given list.

5.Wedding and Honeymoon

These are the greatest events of your whole life, which need some cash as well. If you don’t have enough savings for this, it’s not the reason for refusing to have a dream time with your love. You can take a personal loan, in order to cover all of the expenses. It’s a normal way to get money you need.

6.Vehicle purchase

Buying some vehicle for you (a car or a bike or, maybe, a boat) is also a good reason for getting a personal loan. It allows you to use your vehicle ‘here and now’ with no need to pay the whole its cost at once. Besides, it’s a one more chance to get your credit story started.

7.Credit card debt

If you made some mistakes, using your creadit card, you can get into some troubles with CC debt. And, as we know, the interests, provided with cards, can be much higher, than the interests of a personal loan. So that it can be a good solution – to take a personal loan for paying your credit card debt. Its fixed rates will bring you fewer expenses. Refinancing your credit card debt is a smart decision if your card interest-free period is finishing as well.

The Smart Shopper’s personal loan guide

Personal loans market is full of different offers with various conditions. Applying for a loan, you should make some simple steps, in order to get the most profitable one. In this article we’d like to show you these steps, which lead you to the best loan product on the market.

1.Online research

First of all, you should start searching for the proper offers online. Different companies publish their deals, so that you can choose the most suitable for yourself. Such an online shopping for loan will take not so much time, but will definitely show you the picture of the market in general.

2.Applying matters

If you apply for a loan, you should know, that it can affect your credit score. It means, that you should apply only the best offers, which you are ready to work with.

3.Loans for your credit score

Which conditions are offered by lenders for clients with a credit score, similar to yours? You should figure it out! Because sometimes advertising shows only the best conditions for the people with a perfect credit score.

4.What is your job?

Every lender pays a great attention to your job. How long have you been working here? What is the stability of your income? What is its level? If you are planning to get a personal loan, you should not change your job. The longer you work here – the more chances for getting money you have. Keep it in mind.


More than 40% of students don’t repay their loans

The basic idea for student loaning programmes is great – it allows young people to cover their studying debts and to repay as soon as they start working after the graduation. However, the general tendencies for this are not so optimistic. According to the government’s statistics, about 40% of the Americans, who take part in student loaning programmes, fail to pay their debts. Today, as a result, the overall debt of these people is as high as 200 billion dollars. The government representatives are afraid, that the students won’t be able to repay such a huge amount of money. Experts share these opinions.

These 43 of Americans, who have student loans, have already joined the country’s workforce. The real reasons, why these people don’t make their payments and what are their plans for the future with such a huge amounts of money in debt, are still to be found it. Now the federal representatives are working under the financial programmes and plans on refinancing the debts in order to give an opportunity to the students to get rid of them. However, everything is not so perfect.

Some of the experts predict, that the economic situation will become worse in some fields of labor. It will make the idea of receiving a loan for getting a higher education not so rational and perspective, as it could seem. It means, that either the future President of the United States or the members of the state’s government should discuss this issue and solve it, in order to give an opportunity to the young people to build their future.

A credit card or a loan? (Part II)

In the previous part of this article we have discussed some pros and cons of the credit cards. This chapter will include, accordingly, advantages and disadvantages of loans. It will allow us to make some comparison with both of them.

So, let’s start with pros. The amount of money, which is available for you if you get a loan, is much bigger, than if you get a credit card. So that you can afford more, paying pretty low rates (equal to 3% or so). Another great advantage of loans is an opportunity to customize your payments’ schedule. For example, borrowing a big sum, you can spread your repayments for longer term. It gives you a flexibility, which is absent in case with credit cards. Besides, you will definitely know, how much you are still left to repay, in order to get rid of your debts without problems.

However, loans have some certain cons as well. For example, small sums can be borrowed only with higher rates (around 7% or so). According to this fact, you’d better use credit cards, if you need small sums of money for shopping. Another con is high fees, set by the bank. They can be charged, for example, if you want to pay off the loan earlier, than you had to. In most cases, the bank will charge some penalty, equivalent to couple of monthly interests.

In conclusion, we can admit, that either credit cards or loans are powerful financial tools, but they are different either in their purposes, or in their requirements and opportunities.

A credit card or a loan (part I)?

The variety of different credit tools can arise a question, like what should we choose – a credit card or a loan, if we need some additional money? In this article we’d like to learn more both of the variants, in order to define their pros and cons.

So, let’s start with credit cards’ advantages. Many banks offer their clients a 0% rates, which are active for the first time you use your card. Of course, it’s a great opportunity to use your money from the card for your needs, return them there again and pay no interests at all. Credit cards also provide some protection to you as to a customer – banks can make some refunds if your goods are not properly delivered or anything else. Money from credit cards can be easily transferred to any of your account, what means they will be available for any of your needs with minimal fees.

However, credit cards have low credit limits, what means they, probably, won’t provide you with enough amount of money. Plus you should be really careful with cards’ interest charges. They are really high, and if you forget about any amount of money, owed to the bank, you can get some really big financial problems.

In the majority of cases, credit cards are used mostly for purchases.They can be perfectly combined with bonuses and special offers, active in your shop. It can bring you some more benefits as well. The bank sets up high fees for cash withdrawals, so it’s better for you to avoid them.

The student loans are often taken by… parents!

The last years showed, that the student loans in their pure form are not so affordable, as they could seem. According to different researches, the per cent of the students, who can’t pay their loans by themselves, is increasing. One of the biggest private lenders, which provide students with money for college, a Sallie Mae company, offers the solution: now parents can get a loan for their kids’ college.

The author of the Cappex website, Mark Kantrowitz, claims, that his research has shown: more and more parents get such kind of loans in order to help their kids to finish their college and to get the proper job in order to pay the debt.

Why do they do it? As students state, their main loan money is not enough for a complete college study – that’s where parents come for help. But Sallie Mae introduces this good-looking offer to everyone, who wants to take care of their children future.

As the representatives of the company say, this load-product has been created in order to satisfy those parents’ will, who’d like to share the responsibility with their children and to help them as possible.

The conditions of parents’ loans are different; first of all, they depend on the credit history of a person. In general, they are set between the 5.74 and the 12.87 percents. It’s a good rate, which can really bring new clients into the bank, – all of them need to know be sure, that their child will finish his or her college successfully.

The Ins And Outs Of Joint Credit

In the course of living together, numerous couples will at some point or the other take out a joint loan or enter into some kind of shared debt. The main advantage with this is the fact that between the two individuals, they may be able to obtain a larger amount of money. It however goes without saying that this is a big undertaking given that if one of the debtors fails to meet his / her end of the bargain, the remaining one is forced to singlehandedly foot the entire bill.

Firstly it pays to know the types of loan facilities that are available to couples or can be taken out jointly. A popular one is a secured loan, for example, mortgages. Unsecured loans like personal loans are also available for this category. Finally people may opt for joint bank accounts where an overdraft offer is available.

When it comes to joint bank accounts, the most important consideration is to think about whether you would like it set up in such a way that one account holder can make use of the funds without the other’s permission or knowledge. It is usually wise to have a co – signing agreement in which both signatories need to approve any transaction. This way, you are able to keep your expenditure in control and prevent your debt figures from spiraling out of control.

When cosigning on a loan, make sure that you have made a thorough assessment of each other’s ability to pay off the debt. As already mentioned, defaulting by one signatory means the other has to foot the full bill. In essence it is best that at least one signatory has the financial capacity to cover the whole loan amount. The ideal situation is that both signatories are able to pay off the loan, alone but would rather take advantage of the lesser repayment amounts that come with taking the loan out jointly.

The last thing to keep in mind, in order to maintain a healthy joint credit profile is to be honest and upfront with your partner or co – signee. Both parties should meticulously maintain receipts and statements related to the loan. Make it a habit to come together and compare these documents on a regular basis so that there are no nasty surprises which could end up being toxic to the relationship.

When Is It A Good Idea To Borrow From Your Retirement Account?

For most people working in a decent industry or profession, a retirement plan comes as part of the package. Through such a plan, one can at least hope that when they stop working and don’t have a steady income stream, this fund will help cushion that blow. It is usually possible to take out a loan on this retirement fund. Though highly discouraged, there are some instances where taking out a retirement loan actually makes sense, and even be beneficial.

For starters, in a situation where an emergency arises and you have absolutely no other place or institution to turn to, your retirement funds can be a way out. It should be noted that this is specifically for desperate situations, for instance, when your lights, heating and so on are actually being turned off, or otherwise facing something such as eviction.

When borrowing from a retirement fund, it is often the case that the interest rate is quite low. So for individuals who, maybe due to a bad credit history, find it difficult to access low cost finance, this may be a good idea. The balance that is then required is to assess the difference between the gain due to low interest rates versus the lost retirement capital that will need to be paid back.

There are many professions in which job security is quite high. If you are in industry where you skills are scarce and the labor market is not particularly saturated it may not be so detrimental to take out a lon on your retirement account. The reason for this is once you leave your job, you are required to pay the loan in full over a short period of time. As such the more secure you are in your job, the better it will be in terms of repaying the requisite installments.

In investment circles people talk of good and bad credit. If you are borrowing in order to make an investment that has a high level of return then that is a great idea. Starting a business or educating oneself are all activities that fall under this category. With fortune and hard work, it may be possible to pay off the loan from the proceeds of your investment.

Whatever the reason for taking out the loan, it is important to be smart and have a watertight repayment plan.