Four Alternatives to Payday Loans
May 30, 2010 by admin
Four Alternatives to Payday Loans
The economic slump is almost over but there are still traces of its effects everywhere. The unemployment rate, which began in 2008 and peaked in 2009, still has to be completely addressed until today. Even as more businesses have opened and the global market continues to grow, people are still at a loss in figuring out where to find a stable job to provide for themselves and their loved ones. In addition to the unemployment issue, the cost of commodities are something people have difficulty facing with today, and those who were fortunate enough to keep their jobs during one of the world’s most difficult times still have to contend with very high prices of goods and services.
The effects of the crisis have left people in tough financial situations, and many of them have sought the help of payday loans to make ends meet. However, as convenient and easy as this loan may be for most of us, there are other alternatives that you can use to loan money from, especially if you are under no urgent or emergency situation.
1. Creditors
Consumers can negotiate with their creditors for payment plans if they are having difficulty paying off their mortgage or other loans that they have. Creditors are more than willing to restructure your loan especially if you have established a good business relationship with them, and this option offers considerably lower rates.
2. Family and Friends
If possible, borrow from people you know and trust. That way, you will not even have to deal with any interest rates and fees at all. If family and friends have the means to lend you money, do not be afraid to approach them. Just make sure to pay them as soon as you can.
3. Credit Cards
Having a large credit limit may actually be to your advantage because this allows you to borrow money via their cash advance option, which is usually 30% to 50% of your credit limit. Credit card companies charge a standard fee for the cash advance transaction, plus interest rates but this is more often than not lower than that of payday loans.
4. Employer Cash Advance
Many companies provide an option for their employees to borrow money during times of emergency. Check with your Human Resource Office to see if this is available in the company you work for. Usually, they do not charge any fee for a loan, and payments are deductible from your salary over a pre-determined duration.
If the above options are not available to you, then you can always choose to avail of a payday advance. Although there have been lots of negative publicity on payday advance loans, as long as you pay in full and on time, there is really nothing to worry about when getting this short-term loan.
Things to Consider Before Applying for a Personal Loan
May 26, 2010 by admin
If you are thinking about applying for a personal loan there are a few things you should consider beforehand. These days it can be difficult convincing lenders to hand over some cash so it is best to mull things over fully before taking this step.
Do You Really Need a Personal Loan?
This is a very important question that you need to be asking yourself. Not only because getting into debt is never a good idea but also because the lender is sure to want an understandable answer to this question. If you can’t fully justify the need to yourself you can probably forget about justifying it to a lender. This is something you want to think long and hard about.
Are there any family or friends who could loan you the money?
Asking family and friends for a loan can feel a bit like begging but these days it makes a lot more sense than the official lenders. This method of borrowing money will not only work out cheaper for you but it is also safer as your family is unlikely to want to take your house if you can’t meet the repayments. Asking friends and family for the loan of the money is also good practice for when you do have to face a lender with your cap in hand.
What is the minimum amount you need to borrow?
The less you need to borrow the better the chances you have of getting the money. Lenders are very cautious and they will need to know exactly how the money is going to be spent – you will need to account for every cent. Don’t overestimate the amount you need because not only will it make the lenders less likely to give you the money because of the amount but also because it makes you look like you don’t know what you are doing; it is a lender’s job to know the cost of things.
Can You Fully Explain How You Will Repay the Money?
If you can’t do this and provide evidence to back your claims up you may as well just forget about applying for any loan. The lender will expect you to provide exact details of your personal expenses and you need to be able to demonstrate where the repayment money will come from. Make sure you provide plenty of paperwork to back your claims. Remember that the lender will also be looking closely at your FICO credit score.
May 25, 2010
May 25, 2010 by admin
The dramatic global selloff in equities is eerily reminiscent of the stock market collapse that started in September of 2008 and last for almost six more months. Markets across the globe continue to nosedive as fear and panic are pushing equity investors out of stock and into bonds or cash positions. Global markets have dropped nearly ten percent in the past thirty days, and the DOW in the U.S. dropped below the 10,000 point level in mid-day trading on Tuesday. The sole beneficiary to the dramatic market sell off are consumers and businesses that are able to secure historically low financing rates as a result of the sharp increase in demand for bonds.
Long term mortgage rates, already at historical low levels are now in the mid four percent range with almost every major national mortgage lender. Interest rates on fifteen year loans are close to dipping below four percent and jumbo mortgage rates are now under six percent, showing a broad market correction and providing yet another great window for homeowners to refinance and homebuyers to lock in great rates on purchases.
Finding a direction to the volatility seems unrealistic in the short term as markets continue to move up and down in 2-4% daily increments, making the average investor extremely nervous about remaining in the markets, further complicating the liquidity exodus. U.S. home sales had a major jump in the month of April, thanks to the rush to lock in the governments tax rebate. Home prices showed a decline in the month of April in most major U.S. markets and the real estate industry will be adjusting to a market without incentives and tons of excess inventory, so their is a strong likelihood that home prices will continue to decline in the near term. Home foreclosures have yet to show a sign that they will slow down, and expect the government to ramp up scrutiny of the failed loan modifications programs with national loan servicers.
Tips for Improving Your FICO Credit Score
May 22, 2010 by admin
Since the economic meltdown in 2008 it has become more difficult to borrow money. There is a new sense of caution among lenders and it seems likely that this will remain long after the economy gets fully back on its feet again. Lessons needed to be learnt from the economic crisis and one of these is the importance of lending money to people who are likely to be able to pay it back.
Tips for Improving your FICO Credit Score
Having a good FICO credit score has never been as important as it is now; without this you will find it difficult to borrow money. Here are some tips for improving your FICO credit score.
- Make sure you always pay your bills in a timely manner. Having a history of late bill payment can lower your FICO score. Missing a payment should be avoided if at all possible.
- If you do manage to miss a payment or end up late on a payment you should try to rectify things as soon as possible. It is important for this not to become a habit.
- If you find yourself falling into debt and can’t see your way out you should go to a professional debt councilor. This professional will tell you exactly what you need to do to improve your financial circumstances.
- You want to create a credit history but you don’t want to get a bad reputation in the process. It is a good idea to apply for a credit card but you will need to make sure that you use it wisely. Don’t apply for multiple credit cards in the hope of improving your FICO score. Only apply for credit cards as you need them.
- It is worth checking your current score and doing so should not affect your FICO score in any way. Knowing where you currently stand can be a great incentive for improving things.
- If you have a poor credit history it is not too late to change things. Opening new accounts and behaving responsibly will soon have a positive impact on your FICO score.
- It is probably best that you try and pay off your debts rather than moving them from one lender to another. It is this ability to pay your way that has the greatest impact on your FICO score.
Above are just a few tips to help you improve your credit score. Remember that the better you can improve your fico scores, the more likely you will qualify for better mortgage rates, auto loans, insurance programs and most fiannce programs.
May 20, 2010
May 20, 2010 by admin
May continues to be a wild roller coaster ride for the markets. Mortgage rates remain the sole beneficiary of the markets volatility as rates have officially dropped to twelve month low levels. National mortgage lenders are offering refinance and purchase thirty year mortgage rates around 4.7%. Thirty year loans have seen a decline of over half of a percent since mid March, fueled by the volatility in the makret and investors pulling money out of equities and going headfirts into the bond markets. Yields on closely monitored treasury bonds (ten year bond) have dropped over fifty basis points and the ten year closed at 3.26% on Thursday. The stock market has again shown it has concerns over the elevated threat of a financial collapse spreading out of Europe and the inability of governments to continue borrowing money to prop up their economies. The effect of Greece has yet to go away, despite nearly a one trillion dollar committment from the ECB. The news is eerily similar to the fallout of the U.S. Stock Market following the governments $800 Billion Dollar bank bailout in 2008, that saw the stock market lose half of its value over a six month period.
Banks and financial companies remain a focal point for political reform as the Senate today passed a bill that would begin to reform the financial markets, bring oversight to derrivatives, create processes for banks deemed to big to fail as well as increase fees for the largest of the financial institutions. Banks have had a rough run over the last two weeks, starting with the Greek Credit Crisis and news that home foreclosures and mortgage delinquincies are continuing to increase higher. Lenders have yet to develop a meaningful loan modification program and it appears ever more likely more homeowners are simply going to continue to walk away from homes that they are upside down on financially.
Some interesting facts about credit cards
May 19, 2010 by admin
Getting trapped in credit card debts is mostly due to lack of control and lack of knowledge about how credit cards work. This is why we will provide you with all the necessary information you need to be able to use your credit card properly.
Eligibility Requirements
Credit cards can be obtained by any person who is currently employed or manages his own business. Approval would depend on credit worthiness and company discretion. Unemployed individuals (such as students and stay at home parents) can still get a supplementary card through a family member who is an existing cardholder.
Which Credit Card Company to Apply for?
When scouting for credit card companies, it is essential for a person to always look for the best deals being offered. Many would entice you with very good initial offers (teasers) and would then trap you into paying skyrocketing fees after just a few months of membership. Sign up with a company that gives you the lowest APR (annual percentage rate). A 7% APR is already considered low, considering that others can go as high as 13% or more.
If you already have an existing credit card and found out that you are being charged more than you should, in terms of fees and interest rates, you need to talk with your credit card company and persuade them to give you a better rate. If not, you can always resort to balance transfer schemes with other companies.
How Are Monthly Payments Calculated?
Your account balance is calculated by dividing the minimum due per month with the total amount due. For example, if the total due is $1,000 and the minimum monthly percentage is at 2%, then the minimum amount you need to pay every month is $20. The computation can be affected by other charges such as a late fee or a finance charge. If you do not pay your total amount due every month, your balance would keep on going up because of the interest.
Aside from those mentioned above, there also other factors that are considered very important. These are:
Transaction Fees and Other Charges
Cash advances, late fees, exceeding credit limits, among others are what could add up to your credit card debt. On average, Americans are paying $32.95 in late fees, and some of them have to deal with up to 41% increase in their interest rates, as imposed by their credit card company because of paying late.
Grace Period
This is the set time between the end of your billing cycle and the date when your payment is due. Depending on which credit card company you sign up for, the grace period is between 20 to 25 days. After your grace period ends, you will pay interest if the total amount due has not been paid.
May 17, 2010
May 17, 2010 by admin
Extreme volatility has been the theme of the month of May, stocks have bounced up and down by over 1000 points for the month. The lone beneficiary to the market uncertainty is the mortgage industry. Fixed rate home loans have dropped to their lowest levels in the last two years, as fixed rate home loans were being offered at 4.75% for thirty year loan terms with most national mortgage lenders. Fixed mortgage interest rates have dropped by over ½ percent in the last sixty days, following a drop in the bond market. Yields on Ten year treasury bonds have moved from a high of 3.8% down to the mid 3.46% range where they closed on Monday.
The market has been greatly influenced by Europe this month. Concerns over the debt levels of Greece, Spain, Portugal have been weighing on the markets for over thirty days. Despite a promise by the ECB and a financial commitment close to one trillions dollars, their remains a lingering concern that the financial markets in Europe could drag down the U.S. economy. The opinions of the European debt crisis are varied in the U.S. Citigroup has projected a drop of 20% in the down, John Paulson (famous for his involvement in betting against the U.S. housing market) believes that the debt will have minimal impact on the U.S. economy. The one fact that will be impossible to dispute is that much like consumer have been borrowing on their lifestyle and living beyond their means. Economists believe that Greece has been borrowing about 6-8% of their gross GDP over the last three years, which will greatly impact spending as this has been forced out of their budgets with their recent debt reforms. Countries that have been supporting their GDP through borrowing pose a large risk to the overall global economy if the secondary banking industries pulls back on financing, forcing these countries to become illiquid.
The volatility in the market will be worth following for investors and consumers looking for financing in the future. Interest rates appear to be the biggest beneficiary to the market. Its hard to image rates moving lower than their present levels, but all historical bench markets have been dismissed during the past twenty four months, and there is no telling what direction rates could head in the near term.
Consumer Protection – What You Should Know About Payday Loans
May 15, 2010 by admin
Payday loans have become quite popular among people who need quick cash. With waiting period of less than 24-hours and not needing to run credit checks, it is the best choice for those who have bad credit rating and no other means to borrow money.
But before you scour the Internet looking for payday lenders, here are some bits of useful information that you should know to keep you protected against predatory lenders. Note that payday loans are not bad at all- they can save you from an emergency financial situation. It is how you manage your debt and to whom you avail it from that make all the difference.
1. Know everything you can about the lending company. Payday lenders are mushrooming all over the Web, bombarding you with all sorts of marketing campaigns that makes it really difficult to distinguish the good lenders from the predators. One good sign to look for is the company’s adherence to the disclosure requirements of the Truth in Lending Act. A good lender will give you a clear picture of the true cost of the loan and not charge you with hidden fees.
2. A good lender should inform you of your payment due date, and you as the borrower should make timely arrangements otherwise, as soon as the 14-day payment period has lapsed, your loan will rollover and you would have to pay double the charges.
3. Do not be swayed by all the advertisements you see and read. Scrutinize the terms and conditions provided by the website, and go over the agreement a few times before pushing through with the loan. Sometimes, when we are in a hurry to get the money because of an emergency, we commit one costly mistake- not reading the agreement!
4. Be familiar with the state laws regulating payday loans so that you as the borrow will know what’s legal and what’s not before signing into any agreement. Ignorance of the law is not an excuse, and with something as valuable as money, it pays to be informed.
The Better Business Bureau says that there are good payday lenders out there, and just because many have been victimized by scamming lenders does not mean you should just avoid payday loans completely. As long as you are careful with whom you are dealing with and take all the necessary steps to ensure you are dealing with a trustworthy lender, you should be okay.
Number of U.S. Households Drops and Americans Say Buying a Home is Difficult Today
May 11, 2010 by admin
A study done by the University of Southern California has found that the number of U.S. households declined by 1.2 million between the years 2005 and 2008 in spite of the fact that the population grew by nearly 3.5 million in eighty of the largest cities and their suburbs during that period of time.
Many U.S. young people are opting to live with their parents nowadays and are putting off leaving home – which is one reason for this drop. Young people who have parents whom are financially secure are the most likely group of youth to decide to remain living with their parents. Also, more families are choosing to combine households due to economic woes which includes those who have lost their homes due to not being able to make mortgage payments. This rather dramatic drop in U.S. households makes it very apparent that the recession really took its toll, forcing people to combine families under one roof. This decline also is the reason there are so many apartments and homes available for sale today.
The study’s findings also suggests that the housing market as well as the mortgage industry will be feeling the effects of this drop in the number of households for well into the future. Also, the recession caused overcrowding rates to increase five times more than what they used to be. Any household that consists of more than one person per room is considered to be one that is overcrowded.
The Fannie Mae National Housing Survey results have found that 60% of Americans report that purchasing a home today is much harder than it was for their parents. Sixty-eight percent of those asked said that they believe it will be even harder for their children to purchase homes in the future. Yet 65% would much rather own a home than rent – showing that consumers are still very much interested in becoming homeowners. Today’s consumers are much more likely to use a lot of caution when thinking about buying a home and are not very wiling to take risks.
Twenty-three percent of people who rent say that they are now putting off purchasing a home, even though they had hoped to become a homeowner as soon as possible. The main factors that leads people to purchase homes are related to the quality of local schools and neighborhood safety, before financial considerations. Even though homeowners have witnessed home values dropping significantly during the past few years, most still say that purchasing a home is a safe investment.
Market to turn attentions to reform with Goldman Sachs on the hotseat
May 10, 2010 by admin
With the economic stabalization plan announced today for Greece and the strengthening of the EURO, the market will soon set its sights on reform for the U.S. financial markets, and Goldman Sachs will again be the lightening rod to get things moving. Goldman Sachs has always been considered the cream of the crop and king of the hill of Wall Street. The company is widely known for only hiring the brightest minds and this practice has always paid off as it registered a $13.4 billion profit in 2009 – which broke a record for a securities firm on Wall Street.
But, in mid April 2010, the golden standard was tarnished as the United States Securities and Exchange Commission charged the giant with fraud. Because of this, the stock took a beating by dropping down 13 percent, resulting in a loss of $14.2 billion in market capitalization.
The fraud charges are based on the allegation that Goldman Sachs let one of its clients – Paulson & Co., choose the assets that go into AAA synthetic collateralized debt obligations or CDOs. Paulson decided to go with the lowest quality AAA and packaged it into toxic CDOs. Goldman Sachs marketed the CDOs and the SEC is saying that the company knowingly ripped off some clients.
As the company is trying to defend its rather dubious business practices in front of the U.S. Congress, Goldman Sachs seems to be trying to tell the world that everything that has occurred was due to some type of a major misunderstanding.
A panel set up by Congress attempted to paint the picture that the investment bank was much like a big casino that was cheating customers out of money. Goldman Sachs made some risky investment choices during the housing market fall in the United States which resulted in it assisting to send the economy into a serious recession. The investment bank denies any wrong-doing and says that its customers were simply given the option of managing their own business and investments.
The big Wall Street bank’s problems are growing. The criminal investigation and civil case are just a couple factors that can further mar Goldman Sach’s reputation in the months to come. If the Senate adopts changes to set limitations on derivatives trading and specific investment activities at banks such as possessing hedge funds, Goldman’s bottom line could suffer significantly. The company has taken some really hard hits in the court of public opinion and many are saying that Goldman’s board is too comfortable and lacking in the financial know-how needed to oversee top management. Goldman’s board consists mainly of former heads of companies who paid large amounts of money to Goldman such as James Johnson, former head of Fannie Mae.