Getting a Personal Loan

Women with tablet computer

 

The Federal Reserve has stated that “Nearly half of Americans don’t have $400 saved for an emergency.” The vast majority of these Americans are employed full-time, but struggling to make ends meeting. And if you don’t have a little cash stowed away for a rainy day, then you could easily get caught off guard by a car repair, medical bill or other unplanned expense. If you haven’t been able to borrow the money from a family member or friend, then a personal loan could be a good way to get you through it.

The top reasons people get personal loans though are for credit card consolidation, debt consolidation, and home renovation. If you are having a hard time getting ahead and making no progress on paying down multiple credit card balances or medical bills, the consolidating all of these into a single payment with a lower rate can help a lot.

You will need to meet a few requirements to be approved for a personal loan though.

Personal Loan Requirements

1. A decent credit score – If your credit score is lower than 700 you may need to get a co-borrower to co-sign on the loan. This is usually a relative or spouse.

2. Income – In order for a lender to loan you money you must have a fairly stable employment history, so that the lender be sure you can pay back the loan.

Beyond the basic requirements, you should ask a potential lender if they offer any discounts. I know what you’re thinking, what kind of discounts could a lender give?

Personal loan discounts
1. Co-borrower – As stated earlier, if you don’t have the best credit or income, you may include a co-applicant, co-signer, co-borrower, whatever you want to call it, to get the loan. If for no other reason – you may get a much lower rate by adding a co-borrower.

2. Direct Pay Discount – What is a direct pay discount you ask? If you are getting a personal loan to pay off credit cards or other debt, then have the lender pay off those balances directly with the loan will ensure you are not just taking on more debt and going to use it for some other reason. Thus – The lender will give you a discounted rate for doing so.

3. Retirement assets – If you have $30,000 or more in retirement assets you can sometimes get a reduced interest rate as well.

You can also get an ever lower rate by bundling these discounts, so be sure to ask the loan officer your working with about discounts, because they could end up saving you quite a bit.

Regardless of the reason, if you need some money in a fairly limited amount of time, then a personal loan may be what you need. Be sure to do your homework and ask lots of questions.

3 Things To Consider Before Refinancing Student Loan Debt

 

Having your college days behind you can be a great feeling, but managing your student loan debt can be harder than expected. Post college life can include expenses you didn’t realize would be there, so not paying anymore than absolutely necessary on your student loan debt can really help.

Refinancing your loans should be a slam-dunk, but there can be things that could make you not so attractive to a potential lender. There are a few things you should consider before talking to lenders to be sure you’re ready.

1. Do You Earn Enough – Lenders may have specific requirements around how much you bring in each year to be eligible for a student loan refinance.

2. Is Your Credit Score Too Low – Having a low credit score never helps when trying to finance anything, and the same is true with student loans. You may need to get your credit back on track before exploring a student loan refinance or consolidation.

3. Is Your Debt-To-Income Ratio Too High – Companies that lend money almost always look at your debt-to-income ratio as a sign of potential financial problems. If you have taken on more debt than you maybe should have, lenders may not want to give you money. Basically, if your monthly expenses are too high compared to your income, then that makes lenders less likely to lend to you.

If you don’t feel like you may be the best candidate, you could still have an option. Getting a co-signer or co-applicant (usually a parent or close relative) that is a better financial situation can do the trick. This person will be accepting responsibility for your loans if for some reason you don’t pay, so it’s not something to take lightly.

After considering these three factors you feel like you are in a good place, then exploring student loan refinancing or student debt consolidation could be a great way to save some money each month.

Pros and Cons of Consolidating Student Loans

 

If you’re like most people with student loan debt, then you probably had to get multiple loans to cover all of the expenses that come along while attending college. It ain’t cheap after all, and you never want to borrow any more than necessary.

Having multiple individual loans isn’t a big deal, but you may have an opportunity to save yourself some money each month by consolidating all of the student loans into a single one. There are benefits to doing this, such as reducing interest rates or just the convenience of only having to manage a single loan instead of multiple ones. You may also have loans with different companies, which can add some complexity to managing your student debt.

Beyond the benefits of saving money and convenience, there could also be a down side to consolidating or refinancing your student loans. The first is that you will usually be extending the payment period. That may not be a concern to you, but consolidating student loans can also cause you to lose certain borrower benefits–such as principal rebates, interest rate discounts, or loan cancellation benefits—that may be associated with your current loans. You could also lose any income-driven repayment plan forgiveness or Public Service Loan Forgiveness if you participating in one of these programs.

When it comes to refinancing or consolidating your student loan debt, be sure that you do your homework and are aware of any benefits that you may be walking away from before moving forward. The benefits of consolidating your student loans could save you money each month, if the rate is lower and the payment is work better for you.

For more information regarding consolidating your loans, visit www.studentaid.ed.gov

Refinancing Student Loan Debt

 

There’s nothing more gratifying than finishing college and moving onto the next phase of your life, but paying high rate student loans can be hard to deal with month after month.

Refinancing student debt into a lower rate loan can help lessen the pressure that comes with making payments and save you a lot of money over the life of the repayment period.

In order to refinance or consolidate your student loans you must have a credit score in the mid-600’s or higher and a consistent income, or have someone that can co-sign on the loan with you.

To learn more about refinancing your student debt, visit a reputable lender or www.studentloans.gov

2017 Credit Card Trends You Should Know About

 

Looks like there is a lot going on in the credit card space these days. The industry is looking to raise rates and the subprime market is growing.

Apple Pay had a good year in 2016 and I’m not surprised. I started using it in 2016 and try to use whenever I can. The growth came from in-app, online and in-store point of sale.

That new Citi Costco credit card I got last year is really paying off well for Citigroup. There Q4 earnings release is showing good growth because of there takeover of the Costco credit card partnership.

There’s a lot of other interesting news on the credit card front in this article on www.forbes.com.

Credit Card Balance Transfer

 

Balance transfers on credit cards can be an attractive proposition for both consumers and credit card companies. For consumers that are carrying a considerable balance and no immediate path to paying it off, it can allow a period of time where they can pay down the debt, while temporarily lowering, or even eliminating, interest payments. For credit card companies, they use this hook to acquire new customers from competitors. There are definitely things to keep in mind when considering a credit card balance transfer.

Things to keep in mind:

Transaction fees – Many balance transfers include an incentive period with a lower interest rate, sometimes zero percent, but many include a fee of 1-5% of the transferred debt.

Incentive periods – the length of the incentive period can vary, but is usually 12-18 months. After this period of time, the standard interest rate of the card usually kicks in and you will have to start paying finance charges on whatever balance remains.

Interest rates – Be sure you are considering the APR of the new credit card you are transferring your balance to, because many times new purchases will incur finance charges at the regular rate of the card and not be included in the incentive period.

Travel reward credit cards

 

The idea of taking semi-last minute vacations to Europe and getting to stay for free, at amazing hotels, is enough to get anyone applying for a travel reward credit card. All joking aside, earning travel miles, points or rewards, are a fantastic way to get free flights and hotels, but they aren’t for everyone.

Interest Rate – Most travel reward credit cards have relatively high interest rates, so you have to be pretty good about paying off your balance each month, otherwise you’re throwing away your own money while you try to accumulate miles.

Annual fees – Most travel reward cards charge an annual fee of $89 to $450, which can really start to bite into your overall travel cost savings.

Miles expire – You have to be pretty good about using your reward miles before they expire. Nothing worse than building up a reserve of miles for a nice trip with your spouse, and then find that you waited a couple months too long and half of them have expired.

If you’re not great about paying off your full credit card balance each month, or don’t have a ton of flexibility in your schedule to take a solid vacation every year, then this type of card may not be for you.

Pros and Cons of Credit Cards

 

Having credit cards in the 21st century is a necessity if you hope to build a solid credit history with the credit agencies. Many people assume, because you have credit cards, you will have credit card debt and pay interest on debt unnecessarily. Let’s look at a few reasons why credit cards can be good and bad.

Pros of having credit cards

  • Convenience – Super easy way to make purchases without having to carry around cash
  • Rewards – The ability to earn cash back, travel miles, and other reward perks
  • Credit history – Helps establish credit history and increase credit worthiness
  • Emergencies – It’s nice to be able to pay for things in a pinch if you don’t happen to have the cash pay for a surprise expense or need a cash advance.

Cons of having credit cards

  • Interest – Carried balances incur finance charges
  • Convenience – Some people can’t resist the urge to purchase things they can’t actually afford and
  • Fees – Late fees can be brutal if you forget to make a payment and could result in higher interest rates as well.
  • Credit history – Over utilization of your credit cards by building up large balances can hurt your credit profile and result in a lower credit score with major credit agencies.

In the end, having credit cards can be very beneficial and convenient if used correctly. Traveling for free using airline miles and receiving cash back checks can be very rewarding, but if misused, credit cards can inflict some financial pain and stress. Credit cards are not going anywhere soon and will continue to be necessary in for years to come.