Misconceptions of Bank Loans

Even the savviest consumer can fall victim to bad information once in a while. When you hear people talk about bank loans enough, it’s easy to accept what they tell you as fact when it may be little more than opinion. To stay educated on any subject, it’s important to review your facts and assumptions on a regular basis. Finance is no exception to this guideline.

“Banks offer the best rates.”

Once upon a time, this was the case. Borrowers sought out bank loans for all their needs and avoided finance companies as though life itself depended upon it. In the technological times of the World Wide Web, the way you do business and think about borrowing money is no longer the same. Online lenders now claim a large chunk of industry lending dollars.

This does not mean your local bank will never offer the lowest rates for your situation; just that it is not your only affordable option. Not having a local established presence means online lenders must work harder to earn your business. Lower interest rates and waived application fees are the primary tools. Your local bank doesn’t often use these tools because the overhead they pay for the building and staff exceeds that of the online company. Your bank branch also trades on its reputation and stability to justify higher interest rates or fees.

“Banks only lend to people with perfect credit.”

If you avoid your bank in favor of high interest lenders because of a spotty credit history, it’s time to give your bank another look. Financial institutions adjust their credit models on a regular basis to provide better service to the communities they serve. When the average American credit score dips below the level widely acceptable to lenders, they take notice. Although bank loans for people with bad credit will never features rates that rival what they offer to A-credit borrowers, you’ll find people with lower credit scores can now receive loans from the bank.

“Your banker has the final say about the loan.”

To a degree, this is still true of smaller, locally run banks. The national financial institutions often use a central underwriting and processing center to determine whether you receive the loan. Banks do this to keep the process as fair and unbiased as they can. Rather than a loan officer who can approve or deny bank loans on a whim, they employ professional underwriters capable of looking at the facts in your credit file to determine your ability to repay the loan.

http://www.superpages.com/supertips/bank-loans.html

READ MORE >>

Getting Out of Payday Loans

When you need a small amount of money for a short period, payday loans can be valid options. The problem borrowers run into is that short terms and high fees make these loans difficult to repay, forcing them to take out new loans each payday to cover the original amount. If you’re in this situation, it can feel like you’ll pay this loan’s high fees for the rest of your life, but there are simple steps you can take break the cycle for good.

Consult your budget

At this point, it doesn’t matter if you started using payday loans because of an expensive emergency or you weren’t managing your money in a responsible manner. Getting out of the payday loan cycle is your focus. Before you can do this, you must revisit your current spending habits.

Review your household budget and your bank statements to uncover areas of overspending. Even if you can only cut out $100 in expenses each month, that’s enough to make a dent in most payday loans and begin slashing the amount of fees you’ll pay from each paycheck. Maybe reviewing your spending means you’ll forgo eating out, cable or trips to the movies until you repay your payday loan debt, but the result is well worth the sacrifice.

Compare your loans

Depending on the expenses that led you to use payday loans, you might have multiple loans with various lenders if you were unable to get enough money from one. Fees for so many different high interest loans make it even more difficult to get out of debt, but it’s not impossible. Read all your contracts and find out which loan charges the highest fee per $100 borrowed. Make it your goal to repay that one first to save the most money.

Cut back on your borrowing

Just because your first payday loan was $500 with fees totaling $50 doesn’t mean you must borrow the full $500 each payday. In fact, some lenders will let you borrow money in $25 increments. Borrow as little money as you can afford at each check. For example, borrowing $400 instead $500 will cut your fees by $10, giving you $110 you don’t need to repay from your next check. Be diligent with your spending habits and chip away at your payday loans with every payment until your balance is gone.

No matter how you entered the cycle of payday loans, never forget that you can get out of this debt. As long as you make it a priority, you will succeed.

http://www.superpages.com/supertips/pay-day-loans.html

READ MORE >>

Getting Low Interest Loans

No one begins the search for loans with the intention of obtaining the highest rate possible. While getting the amount of money you need is of primary concern, finding low interest loans is a close second on the priority list. To ensure you get the best possible deal, there are steps you can follow to make this desire a possibility.

Know credit management guidelines

Although no one can give you the exact model of building and maintaining a perfect credit score because the major credit bureaus hold that secret close to the vest, you can follow a set of credit management guidelines that will help you get low interest loans when you need them. The basics include:

• Make your payments on time, every time
• Use no more than half of your total available credit
• Maintain a good mix of credit products, including mortgage, auto and credit cards
• Keep your credit accounts open when you pay off the balance to help your debt utilization ratio
• Focus on credit longevity by using the same credit card for a number of years
• Never apply for credit and store charge cards when you already have enough to meet your needs

Understand credit scoring

Credit bureaus use the FICO score, named for the Fair Isaac Corporation that developed the scoring model. FICO scores run from 300 to 850, with 850 being the best possible score. While the goal is to reach the illustrious perfect score, excellent credit is generally in the mid- to high-700s. Anything below 600 constitutes a poor credit score.

Understand your credit file

The information contained within the file is just as important as the score when qualifying for low interest loans. High and perfect credit rarely features blemishes of concern, but average credit does. Your lender will take interest in:

• The amount and age of repossessions or foreclosures
• Whether you consistently pay bills late
• Collection activity
• If the amount of available credit is proportionate with your income
• Defaulted student loans
• Number of recent credit inquiries

Keep in mind that even individuals with stellar credit scores can make mistakes when applying for low interest loans that hurt approval chances. If a lender sees a dozen recent inquiries, but cannot determine if you’re shopping rates or obtaining accounts, they may offer a higher rate on the assumption you’re going on a spending spree you might not be able to repay.

http://www.superpages.com/supertips/low-interest-loans.html

READ MORE >>

Getting Instant Loans at Tax Time

In the fast food society that wants everything yesterday, there’s a mystical appeal to products that give consumers something right then and there. The instant loans offered during tax season are no exception. Although these instant refund anticipation loans provide fast cash, they may not be the best alternative in your situation, regardless of the sales pitch.

Facts About Instant Loans

If you listen to the radio or watch television around the income tax filing deadline, you’ve heard the promise of walking into a tax preparer’s office and walking out with a check in hand. While instant loans might appear too good to be true, they’re 100 percent legitimate. They also carry a hefty fee for the convenience.

Without going into detailed specifics that vary by company, the gist is you’re borrowing against your own money. When the company prepares your income tax return and determines you have a refund coming, you get this instant cash option. Rather than waiting for the government to send you your full refund amount, the company offers you an amount less than your refund. In exchange for walking away with your money, you agree to let the government send the company your full refund, thus repaying your loan in full, including the fees. That’s why this instant loan is called a refund anticipation loan.

Alternatives to Instant Loans

If the idea of paying an effective interest rate in excess of 200 percent for the privilege of using your own money doesn’t appeal to you, there are alternatives to instant loans. Keep in mind that while you will not receive immediate benefit of the funds, you will enjoy the full amount due to you. In this case, patience is not just a virtue; it’s a money saver as well.

Take advantage of timesaving options available during tax season. You may be the kind of person who enjoys putting pen to paper when figuring your taxes, but mailing your return to the IRS takes extra time. Tax preparation software programs often come with a free eFile option. If using forms from the IRS website, you can often eFile without fee through the same site.

Use the direct deposit option. Again, waiting for a check to arrive in the mail is time-consuming. The IRS deposits refunds into accounts on Friday of each week after processing. As long as you beat the rush and file early, you can have your full refund within as little as two weeks. When it comes to the IRS, two weeks may as well be instant.

When you find yourself in a financial bind, instant loans from the tax preparer may be a better option than waiting the two weeks. Carefully weigh the advantages against the disadvantages to determine what’s right for you.

http://www.superpages.com/supertips/instant-loans.html

READ MORE >>

Getting a Business Loan Using Personal Credit

Starting a business is a noble endeavor pursued by countless Americans each year. Unfortunately, it’s an expensive undertaking that causes most to seek a business loan to cover the unexpected expenses. For fledgling businesses, securing financing is not easy, but there are options available.

Business Loans

You can walk into any financial institution and find a department to handle the processing of your business loan. You’ll also find that business lenders require proof you’ve been in business and generating cash flows for a specified period. Once your business is up and running, securing a business loan or line of credit for operating and expansion expenses is a good option. In the beginning, however, it’s not an option at all.

Small Business Administration (SBA) Loans

The Small Business Administration is a government organization that funds businesses in the early stages of development. To qualify for an SBA business loan, you must prove you’ve done your research on the industry and found a viable customer base for your product or service. You’ll need a marketing plan, business plan and projection of income for the next seven years. If you plan to start a business in the same industry you’ve worked in for the last 20 years, you have a better shot at approval than a long time stockbroker looking to open a bakery.

Personal Loans

The most common method of funding your business is to obtain a personal loan for your business expenses. Some people try to use their personal credit cards for business expenses, while others take equity from their home to cover costs. You can outright get a personal loan for your business, but you must be careful in the way you do it.

For example, it’s inadvisable to walk into your bank and say you want to apply for a personal loan to start a business. For some financial institutions, it’s an automatic decline because you’re really applying for a business loan, not a personal loan. Other companies may view your request as high risk because there’s no guarantee you’ll make enough at the new business to repay the loan, especially if you quit your existing job.

By no means should you lie to your bank about the purpose of your loan when asked, but consider your words and the nuances of what you say. While you may be starting a business, are you really leaving your current job to work at it full-time? Or are you investing in a business opportunity in addition to your current employment. The difference is slight, but there is a difference. If you have a good relationship with your lender, talk openly about your plans and find out what lending options the bank has available for your situation.

Whichever route you go for your business loan, the point is to not get so bogged down in the details that you forget to start the business. The more you work at your business venture, the more options will become available to you.

When you need a business loan to pay for new business expenses, it’s difficult to get what you need. Rather than focusing on a specific kind of business loan, explore your options and use whatever’s available to you.

http://www.superpages.com/supertips/business-loan.html

READ MORE >>