Short Term Loans For The Holidays, What Are The Drawbacks

The holiday season is quickly approaching.
A large number of people are scrambling looking for a way to purchase gifts for friends and family. Many of those people are desperate because of their bad credit or financial situation. One popular option is to take out a short term loan for the holidays. Short term loans are very similar to a cash advance. The loans sound like a practical idea on the surface. However, many people report that they might have a few drawbacks.

Short Term Loans
Short term loans are designed for people in a financial crunch that need money fast. This financial need might be due to other money obligations, an emergency, or a celebration. The applicant fills out a form and the loan is approved. The loaning institution adds on a few processing fees. The applicant agrees to pay back the loan in a few weeks or with their next paycheck. Thus, the name short term loan. Certainly, short term loans are gaining in popularity because of quick acceptance and payback. Traditional loans usually require a longer waiting period and installment payments over several years.

Applying for Short Term Loans
Gift giving season is a time that creates a flurry of activity at the short term loan sites. People are anxious to get their hands on cash to buy gifts. Reports show that loans for less than $400 are quickly approved. The process is very straight-forward. The applicant applies at one of the short term loan sites. They fill out the application. Submit details about their employment and supply information about their checking account. The lending institution submits details about the amount of the loan provided. The applicant approves. Once approved, the money is electronically transferred to the applicant’s banking account.

Short Term Loan Drawbacks
Short term loans carry risk. This is something that the consumer should know about before taking out the loan. The lending institutions provide the applicant information about repayment terms, but the applicant might fail to notice the fine print. Often, the fees paid for the short term loan is exceptionally high. The companies realize that the people filling out the application are in a desperate situation. They assume that many are willing to pay high interest fees while others simply are not aware of the fees. The fact is that the applicant might owe more in fees than their initial loan. The financial institutions are betting that some applicants are unable to pay off the loan as originally agreed upon. Therefore, they roll the fees over into a new loan and charge even more interest.

Certainly, short term loans are a financial life saver to some, but the loans also have their drawbacks. If you are searching for a personal loan, cash advance or installment based loan, then it is always recomended to review all of your financial options, go visit a credit union and make sure you never borrow more money than you really need.

Online lending will increase in demand during the holiday season, how to find a good deal

How to Get Best Online Loan during the Holidays

Many people look for holiday loans this time of year to finance their celebrations, buy gifts or go on vacation. These types of loans get very popular during this time frame so many lenders offer incentives such as reduced interest rates, grace periods or sometimes even higher loan amount options.

Here are three things most lenders consider when deciding whether or not they will give someone a loan during the holidays or at any other time of the year:

• Character- Lenders want to know the type of person someone is and if they are trustworthy and have a steady job to allow them to pay back a loan.

• Capacity- Lenders also want to know the amount of debt someone can handle, which means they will check their debt to income ratio. That is calculated by figuring what the person already owes and putting it against their monthly income. Usually, they will want a debt to income level that is low enough to ensure the person is capable of paying it back.

• Credit- Lenders also want to know a person’s FICO Credit score and if it is below about 650, it may mean you pay a much higher interest rate or don’t get the loan at all.

Holiday Loan Seeking Should Start at Your Bank, Credit Union

With the issues caused by the last year or so of financial issues like mortgage defaults, etc., lenders may be more likely to let you borrow money if they have a relationship with you already. Even if you are looking for online lending, your own bank or credit union likely has a website where you can apply for a holiday loan.

You should also compare other online loan companies and see the various deals they are offering. It’s surprising how much one could differ from another in what kind of loan deals they may offer during the holidays. Be sure to take into consideration each one’s interest rates, any fees, the repayment periods, and any possible discounts or special holiday deals being offered.

Try Peer to Peer Lending

A relatively new alternative to getting a holiday loan at a bank or credit union that is online is peer to peer lending sites. These sites get rid of the middleman and you get the loan from another consumer like yourself. Some of these peer to peer loans can go up from less than $100 to more than a few thousand dollars. Plus, these types of lenders can often give you a great interest rate and payment plan as well, and they often will also lend to those who have less than a perfect credit score.

All in all, it is possible to get a good deal on an online loan during the holidays as long as you are willing to take the time to do some comparisons and then take the best deal offered instead of rushing and taking the first loan deal you are offered

How Can Credit Unions Help Borrowers Who Need A Debt Consolidation Loan

Financial hardship, short or long-term, may seem like an insurmountable obstacle. Considering a debt consolidation loan from a credit union may be the boost you need to climb that mountain of debt. Here’s how they can help:

Credit Unions Have A Generous Approval Policy

Unlike banks, credit unions are not-for-profit organizations. Their sole purpose is to administrate the financial needs of their members. Banks have a set formula that measures income, credit history and holdings to determine credit worthiness. If you fall short in any of those categories, you will be denied. Credit unions, however, are able to offer much more personalized service. They will review your situation individually, as opposed to using a one size fits all template. A blemished credit history isn’t necessarily a deal breaker at a credit union. If you are able to show that the situation that led to credit problems has been resolved, or is in the process of being resolved, a credit union has more flexibility to work with you.

Credit Unions Offer Lower Interest Rates

The interest rates offered by a credit union will almost certainly be lower than the rate you are paying on your credit cards or other debts. They can also offer loan terms that are unique to your situation. By offering lower interest rates and more time to re-pay the loan, credit unions can lower your monthly burden. Conversely, if you would prefer to pay off your debt sooner, credit unions have the flexibility to shorten the length of the loan or accept pre-payment, usually without penalty.

Credit Unions Are More Customer Friendly

Most financial institutions focus on profit and nothing else. Large banks have millions of customers. Losing one customer due to poor service is not of any concern to them. Credit unions are smaller and much more focused on keeping their members satisfied. The loss of a single member is more impactful on the smaller structure of a credit union. This gives them incentive to provide service with the customers best interest in mind. If an unexpected expense pops up, calling multiple credit card companies and other debtors is not likely to yield successful results. However, one quick call to your credit union may well result in an authorized payment skip or due date delay that can help you in your time of need.

Offering services that are tailored to the needs of their members make credit unions a great place to start looking for your debt consolidation loan.

Key Differences Between Federal and Private Student Loans

Student loans can be accessed via either a federal loan, which can take a number of different forms, or through private lenders that can include banks and credit unions. There are a number of advantages and disadvantages that exist with both forms of student loans, which should be weighed before an individual makes a decision on which form of loan they wish to take out.

The application process for student loans offered by Federal agencies is usually simpler to complete than the application process used by banks and credit unions. Undergraduate student loans, usually referred to as a Stafford loan is means tested, but does not include a credit approval process and is available to any legal resident of the United States. In contrast, a bank, credit union or other private loan provider will often seek credit approval for a student loan and often require a parent or guardian to act as a cosignatory on any approved loan. Unlike private student loans, Federal agencies in the US also offer a number of loan options for those seeking degrees in different fields, such as loans designed specifically for those seeking a nursing qualification.

One of the major differences between Federal and private student loans is the interest rate charged on the available monies. Stafford and other Federal loans are usually available at a fixed rate of interest that is locked in lower than the average interest rate charged by private financial institutions. Many private student loans are locked in at a low rate for a specific number of years, if the loan is still active when the low interest rate period is complete the interest rate will often rise dramatically.

Federal student loans also offer a number of advantages when an individual is required to repay their loan, which includes the chance to defer payment for a year when financial difficulties strike and repayments are difficult to make. A Federal loan that is deferred usually does not have interest added throughout the deferment meaning the total to be repaid does not rise. Usually private lenders are willing to work with a borrower falling on difficult financial times, but will still expect some form of repayment to take place over the entire life of the loan. Federal loans also offer an advantage in the the fact that in many instances repayments will be made at a level linked to earnings and will not usually until the individual earns more money.

Deciding between these two forms of loans is a difficult decision to make, a fully repaid private student loan will lead to a higher credit level and the chance to take out more and more loans. However, a Federal loan offers advantages in terms of interest rate and repayment options.

The Nightmares of Increased Costs Owing to Bad Credit Score we

One thing for sure is that bad credit score costs you over lifetime, but the question you may ask is how exactly it will cost you. No one want to have a score that is considered subprime or below stellar levels. A bad credit score will actually make life more expensive in a variety of ways. From the higher interest rates, through larger deposits, to the more expensive premiums, consumers may have to deal with many challenges.

No two persons can have same credit appetite meaning that you cannot determine how much it will cost different people. It depends on how they treat their credit worthiness, and the kind of payments or borrowing they make. If you lean heavily on credits instead of using cash payments on things you buy, then you could have to deal with larger penalties.

If you have low credit score, then you are disadvantaged in borrowing mortgage loans. Although you can be granted these kinds of loans, you have to bear the cost of high interest rates. Worst still, you could even be denied the credit facilities if you are in a bad situation as far your score is concerned. Information from Informa Research shows that the average rate of interest that is levied on a 30-year fixed rate home loan or mortgage for consumers who have a score of 760 and above is about 3.8 percent.

However, if you have a score of about 650, then the same mortgage would most likely cost you about 4.9 percent in interest rates. Considering the period of the mortgage, that difference can amount to a lot of dollars. If you have to borrow a mortgage loan, ensure that first you repair your credit. This is a credit facility that can cost more than decades of high interest rates. The same applies to credit card holders.

On average, the interest rates on credit cards are about 15 percent with some issuers charging more. Credit cards debts can prove to be very expensive than any other service you get. The cost of having a poor credit score in relation to credit card debts presents more pronounced costs than other financial services. On a subprime credit, it is not uncommon for consumers to pay more than 30 percent on credit card debts. This is definitely too high and it could lead to financial instability.

Many consumers may maneuver this trap by seeking for credit card transfers offering 0 percent intro rates. However, this might not apply in all situations. If you have a loan that will take you more than two years to repay, then using the 0 percent intro rate cards can be a big challenge. Remember the interest rates from these cards shoot up heavily after the intro period is over.

Any remaining balance on your debt may be charged too high thus bringing you back to the same financial problem you were in before acquiring the new card. If you have a credit card debt of $5,000 and it attracts an interest of about 30 percent, and you make the minimum payments, you might end up paying over $130,000 dollars, and the debt takes about 30 years or so to do away with. This isn’t easy.

Will Online Loans Be Available from Banks in 2014 as Lenders Eye Lucrative Payday Loans?

Almost half of the households across the world find it quite difficult to meet their monthly expenses and mostly rely on monthly pay checks for survival. But still, meeting certain personal, medical and emergency financial requirements often requires additional financial assistance. So, people depend upon bank loans, payday loans, and/or traditional lenders, in order to meet their financial needs.

Payday Loans – A Practical Solution

Though all these sources are usually approached for finance needs, it seems like as we step into 2014 payday loans appeal more to people as it does not involve any lengthy underwriting or approval process or multiple bureaucracy layers that are usually entailed in the case of getting loans approved from banks. So, many of them are now considering payday loans to be a more practical solution for their immediate borrowing requirements, thanks to the very short period of time that payday loans need for approval.

Popular Because They Are Viewed As Being Hassle Free

Today, acquiring such loans takes less than a day through online approval and funds get directly deposited to the bank account of the borrower. It is not wonder that simplicity and efficiency are the main reasons that have been accelerating the popularity of payday loans in the marketplace today as against the time-consuming and very complex methods followed by banks.

Focus is More on Payday loans than Conventional Bank Loans

Taking all these into account and considering the fact that people also favor payday loans more than any other source of financial lending services lenders today are eyeing the lucrative payday loan markets. With everyone giving importance to the payday loan market, it is doubtful whether online loans would be available in banks in 2014.

Well, we would say that this is a significant development for an industry that was started with only a handful of players and quickly developed into a multi-billion dollar business with several thousands of providers today, thus shoving back the banks and other traditional lenders. These figures only indicate that short term personal loans are progressively finding their home away from the banks. There’s nothing to be surprised about these statistics, taking into account the fact that banks may not favor providing a no-credit or short term check loan. Evidently, the online payday loan market would not want to miss out the chance and is introducing millions of deals.
Further, many of the big banks are finding their way out of the short-term, small dollar payday-loan-like business following a warning from the federal regulators that they would check if these high-interest loans were violating consumer protection regulations.

In a Nutshell

With the increasing convenience and proving to be more beneficial to the borrowers, the payday loan market is growing further to greater heights, pushing down the online bank loan markets. If this trend continues, the profitable payday loan market is sure to attract more and more lenders and finally banks may totally lose their influence in the loan markets, but it’d still take quite some time for that happen!

How to avoid getting stuck in the payday loan cycle

One of the phenomenons of modern times, the payday loans cycle is one of the most difficult financial problems to escape from. There are ways of getting out of the payday loans cycle of not being able to pay back a loan and having to extend it or take out an entirely new loan to pay off a previous debt. The main issue customers and consumer groups cite for the problem of payday loans is the high interest rate charged on them, with high interest rates the chance of paying off a payday loan is almost nil for many average American people.

When taking out a payday loan a reputable company should be used, with some protections awarded by lenders who are members of a financial industry consumer group. Where possible the best option is to take out a loan with a lender who offers some form of protection for consumers who cannot make the regular payments they signed up for. An extended payment protection plan can often be worked out with a payday loan lender, which means that an extended payment plan will be worked out between the consumer and lender to repay the loan over a shorter period of time. Regular payments will usually need to be made for this kind of protection to escape the payday loan cycle to remain in place. When a lender is not part of a group offering such protection it is a good idea to discuss the situation with the lender, who may be able to assist in reducing payments to get the loan back on track.

Often the major problems facing a person trapped in the payday loan cycle is often bad budgeting. Across the US charitable groups will often offer individuals, couples and families free financial counseling, this will assist in forming a budget that gets the consumer back on solid financial ground and escape the high interest loans that are the only option to pay off small debts. Many counseling groups will also offer tips on any groups or charities that offer financial assistance to help an individual get back on track with their finances.

Apart from taking the steps mentioned earlier the main options for escaping the payday loans cycle is to tighten the reins on the amount of money spent in outgoings. When this is not possible because of the high interest rate paid on payday loans the other options are to take on extra work to raise more money or seek assistance from friends or family. A friend or family member may offer tips on employment opportunities or be able to offer a loan with no interest or a low interest rate.

Are Regulations For Short Term Loans Different Than Payday Loans

Regulations for payday and other forms of short term loans can be complicated. Different states have different rules regulation both payday and short term loans. However there are a few constants that appear throughout the United States regulating these types of loans. In this article we will learn what payday and short term loans are and what restrictions on these loans are typical throughout the United States.

What is a payday loan?

A payday loan is a typically small, unsecured loan given to someone based on current or former employment history and pay stubs. The difference between a secured loan and an unsecured loan is that a secured loan has some collateral behind it that the lender may repossess in the even of nonpayment. An unsecured loan is given simply based on factors like credit history, net worth, or employment and employment history. Payday loans are typically extended to be people to be repaid within 30, 60, or 90 days after which time interest begins accumulating.

What is a short term loan?

A short term loan is a loan that is extended for a small period of time, usually no more than a few months. A payday loan is a form of short term loan but not all short term loans are payday loans.

Due to the differences between payday and short term loans they do have a number of different regulations. Many payday loan operations are regulated by much more stringent usury (borrowing) laws. These laws prevent the payday loan company from charging excessive interest as well as regulating how and when they can collect money. For example, a payday loan company may not be able to contact a borrower between certain hours or by certain forms of communication such as over the phone.

Unsecured loans are also regulated by city and state governments in order to prevent certain individual borrowers from becoming the victim of confusing or unclear contracts. Many dealings of payday loan companies are scrutinized much more than other forms of short term credit such as pawn shops. Many different payday loan companies are not allowed to operate within certain areas of cities or around military bases due to some perception that these companies can possibly charge too much interest.

To answer the question, yes regulations for short term loans are much different than payday loans. Short term loans encompass a wide variety of forms of credit and lenders, from banks to pawn shops. Payday loans are filled by a specific niche of payday loan companies and they are also based on a specific form of credit which is employment credit. For these reasons the regulatory climate for payday loans is very much different than your typical short term loan.

How Long Does It Take To Be Approved For A Title Loan

Title Loan

From time to time, everyone finds themselves in a financial bind. There are many loan options available to help with the need of obtaining funds. However, many lenders require perfect credit scores before they will even consider lending money. One of the more flexible and fastest ways to obtain money is through a title loan. A title loan is a short term loan that is not based on credit. It is a loan that uses a car title as collateral. In today’s world, attempting to get a loan can be nothing short of difficult. People with less than perfect credit ratings are finding it more and more difficult to obtain many different types of loans simply because lenders are cracking down on who they loan money too. However, our economy is in a state that leaves most people in a situation where obtaining a loan for different purposes is the only way they can make ends meet.

A title loan is a good option if you need money fast.

Obtaining a title is a reasonable quick process. Most people have their money within an hour or two. Since title loan companies do not have to run credit reports, talk to other financial institutions, and do not require you to give them the details of every dollar made or sent over your lifespan, the process is quick and for the most part hassle free. You will, however, need proper documents when you go into a title loan company. Having everything ready ahead of time will ensure that the process goes smoothly and fast. The person who owns the vehicle that money is being borrowed on will need to be the one who applies for the loan. To prove this you will need your identification, preferably a drivers license, and of course the title of the vehicle. Since the amount of money you will receive is based on the equity of your vehicle you will need to have the vehicle with you so they can view it. Other documents you will need to bring with you are proof of residency, up to four weeks worth of pay stubs, or if you are self employed, tax records for the past two years will work. You will also need to bring in proof of insurance so the lender knows that if the vehicle is damaged while you owe them money, they will not suffer a loss. Other than that, you need to have a couple of references with addresses and phone numbers to verify your character and ability to pay back the loan. That’s it! You will have the money you need that same day, and still be able to drive away in your vehicle.

How Short Term Lenders Use Non Traditional Credit Histories When Qualifying

There are short term lenders out there who will use non-traditional credit histories when it comes to qualifying people for loans. Understanding how these short term lenders use these histories can help you when you are applying for a loan.

A non-traditional credit history is a way for loan applicants to prove their credit worthiness if they don’t have a traditional credit history. A traditional credit history basically includes a history of loans and the debtor’s history when it comes to paying back those loans. Not everyone has those types of loans in their past; however, which is how a non-traditional history can come into play.

A non-traditional credit history is basically a showing of a person’s credit history that uses other forms of bills besides loans. To compile a non-traditional credit history, a person needs to get together receipts from large bills they have paid in the past, such as rent checks to the landlord or utility bills. Showing pay stubs is also another important element of compiling a non-traditional credit history.

Basically, anything that shows a history of on-time payments can be used to illustrate a healthy non-traditional credit history that short term lenders will use. There are rent-to-own companies that people use when they are unable to purchase things out right. A history of payments with one of those companies can be used to show a good history.

People often get short term loans for quick emergency funds. Anytime you get a short term loan and pay it back, the paid balance can be used in the future should the need for another short term loan arise. For payday loans, all the lender needs to know if your current income. You secure the loan by providing the asset of your future paycheck as well as automatic access to your bank account. This allows the lender the lend to you on a short term basis. Such a loan is ideal because those types of lenders have no need or interest in one’s traditional credit history or lack thereof.

Not everyone has the FICO Score that they desire but many short term lenders are using non-traditional credit histories as a way to evaluate people and qualify them for loans. There are options out there for people who need short terms and who do not have the adequate credit history necessary to apply for a traditional loan. Many lenders nowadays specialize in using a short-term history.