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Why More Consumers are Using Personal Loans for Home Improvement Projects

Many consumers prefer online personal loans when coming to funding their home improvement project because of the faster approval time. The downside of a bank loan is that you have to make a trip to the bank and wait a long queue to submit the application. You should not expect that your loan will quickly get approved by the bank in a few weeks. The bank will take a few months to go through all your documents to make sure that you meet every single one of their criteria.

It can be frustrating waiting for your loan to get approved by the bank and it will cause you to have to postpone your home improvement project. Some home improvement projects are urgent for example leaking of the plumbing system that cause flooding in your home. If your home improvement project is urgent, it is best that you apply an online loan. With online loans, you can apply from the comfort of your home by simply filling an online form. It takes only minimal time for the loan to be processed and approved. The average time of receiving the fund is 1 – 2 days after the application is approved.

It is cheaper to use online personal loans to fund your home improvement project because of the low interest rate. The interest rate usually depends on your credit score. With a good or excellent credit score, you should be able to get qualified for a low interest rate. Online personal loan lenders charge cheaper interest rate because they don’t have a lot of costs such as renting a physical office. Most online personal loans have fixed interest rate so you will pay the same interest rate during the loan term. The majority of them are also unsecured personal loans that don’t require you to put any collateral.

Another reason is that online personal loans offer sufficient funding for covering even a big home improvement project. You can borrow a loan amount in between $2,000 – $100,000 from online lenders and the average loan term is 1 – 5 years. The amount you can get approved will depend on your income. They will require you to submit the pay slip for the past few months so it is important to have a steady job prior to apply for the loan.

You can only be eligible for the bank loan if the entire loan amount that you apply gets approved.
There is a type of online lending platform called peer to peer lending that allows your loan amount to be funded by individual investors. In peer to peer lending, your loan can still get approved even if only 60% – 70% of the individual investors fund your loans. This means that you at least can borrow some of the money out of the actual loan amount you apply for.

Pitfalls of Short Term Loans Around the Holidays

The holiday season is the time when people go shopping and spend a lot of money. Even though it is fun to spend money in Christmas season, you should not have to get a short term loan to pay for your shopping expenses. Getting a short term loans can be risky because they have high interest. Short term loans requires you to pay back within a short period of time like 2 weeks.

The fee can quickly add up when you don’t have money to repay the short term loan when the time comes for you to repay the loan. The amount you owe will keep roll over to the next due date. For example, if you borrow $1,000 and the fee is $150 per 2 weeks, the interest rate is 15%. The fee can add up to $3,600 if you delay for 1 year and did not manage to pay it back on time.

If the loan is secured, you have to use your property as a collateral. You could lose your property if you cannot come up with the money to pay back the loan. It is best to always use money that you have saved to do your shopping in Christmas. The Christmas festive holiday season can be a temptation for you to borrow a large loan amount for your shopping expenses. Once you have borrowed the loan, you can’t refund it and you will be responsible in making the repayment.

If you are interested in getting a short term loan, make sure you ask them for a complete list of fees including interest and penalty fee. You should find out with your creditor when you are supposed to pay back and what will happen if you are late in making payment. Before applying for the loan, you must be sure that you can come up with the money to pay back both the principle and interest at the due date. You can borrow the money from your friends if you are not sure that you are going to have the money to repay the loan but you need the money to do your Christmas shopping.

The advantage of short term loan is that you can get the money you need quickly. Short term loan will be helpful if you are just temporarily short of cash and you know that you can expect the amount of money you need for paying back the loan at the due date. If you obtain the loan from a bank, you have to wait for a longer time for your application to be processed. The bank has stricter loan application procedure so it can be harder for you to get approved.

How Quick After Bankruptcy Can You Get a Personal Loan?

It can be hard for a person who have filed for bankruptcy to obtain a personal loan from a bank. This is because the bank has doubts that you can repay back the loan given you are already in a difficult financial situation. In order to get approved for an unsecured loan, you must take some steps to increase your credit score.

One way to improve your credit score is to apply for a secured or bad credit credit card. Secured card does not have any credit score requirement but it does require you to deposit some money as collateral. The amount of money that you put in as collateral equal to your credit line. You will be able to develop a good payment history if you keep on making repayment for 12 – 18 months. It is recommended that you work on building your credit score for at least 6 months prior to applying for a personal loan.

If you need money urgently, you can first apply a secured loan from a bank or credit union. The difference between a bank and credit union is that the credit union’s interest rate is lower so you pay lesser in the monthly repayment billing cycle. The personal loans offered through the credit unions can only be applied by the people who join its membership. There are several criteria to meet before you can become a member of the credit union.

Secured loan is easier to apply because there is a collateral protecting the lender. In the event that you fail to repay the loan on time, the collateral will be used to repay back the loan. To easily get approved for a secured loan, you should try to put in as much money as possible in the collateral. Secure loans means higher interest rates even though the repayment term may be longer.

You will lose the collateral if you can’t meet the repayment on the due date so you must confirm that you have the financial means to repay the loans. Aside from the amount you put into the collateral, there are also other factors that determine the approval of the unsecured personal loans for example, loan amount, repayment time and how much increase in the credit score after you file for bankruptcy.

Even though the bank would not approve your loan request, there are other smaller loan companies that are willing to approve your loans quickly without checking your credit score or background.
For example, you can take out a loan with a payday loan company or apply for an online loan through a P2P platform. Payday loans is a loan up to $1000 that you need to repay by the next pay day. P2P loan is an investors’ funded loans that does not require collateral but the lender will look at your credit history to decide whether they want to approve the loan.

So What Do All Of Those Numbers Mean Anyway?

600, 700, 800, we’re all familiar with credit scores but have you ever wondered exactly what all of those numbers mean? They have to mean something, right? Every other number we see means something so why would credit scores be any different?

The signs that say 55MPH mean we’re not supposed to go past 55 miles per hour (yeah, right). The sign that says $5.00 means that whatever we are buying is going to cost us 500 pennies. If our report card says that we’ve gotten straight A’s then that means that we’ve earned an average of 90 (or more) of the points available during the school quarter or semester.

So what do those pesky little credit score numbers mean? Have you ever thought about it?

We all know that a higher score is better. But, according to whom?
According to lenders and insurance companies, that’s who.
Any time you ask someone other than a lender or insurance company (or me ☺) “is my score good?” or “what’s a good score?” The answer should always be prefaced with…”according to the companies that use credit scores…”
Anyone who isn’t a lender or insurance company really can’t answer either of those questions with 100% certainty.
Here’s an example…

“John, is 725 a good score?”
I think we all recognize that a 725 isn’t a bad score but is it really a good score? It might surprise you to know that it’s no better than average compared to your peers.
If you asked a lender if a 725 is a good score then they may or may not say “yes.”

Here’s how I would define a good score…
“Any score that gets you approved at the best terms that the lender or insurance company has to offer.”
Other than that it really doesn’t matter. As long as you get what you want at the best price available…that’s what matters.

If, in order to get the best terms, I need a 725 then yes, it’s a good score.
But lenders and insurance companies (and any other company that uses credit scores as a component of making a decision) don’t all use the same minimum score requirements.
You should familiarize yourself with the term “score cutoff.” Score cutoff is a term used in the lending and insurance industries. It’s essentially whatever minimum score they will require of you in order for them to give you credit or insurance. Simple enough.

Most score users have several cutoffs for each of their products. Let’s make up an example. We’ll use a fictitious product from a fictitious bank. In this case we’ll use a platinum card from John’s Bank.
Here are the terms for the John’s Bank Platinum Credit Card, which are based on several score cutoffs.

750 or higher – no annual fee, 7.9% APR and a $25,000 credit limit
700-749 – no annual fee, 8.9% APR and a $20,000 credit limit
675-699 – $25 annual fee, 12.9% APR and a $15,000 credit limit
650-674 – $40 annual fee, 15.9% APR and a $10,000 credit limit
649 or below – Application declined

Ok, so what we’ve just done was to create a set of score cutoffs and terms specifically for the John’s Bank Platinum Card.
In this example is 725 a good score? If you used my definition from earlier then you’d have to answer “no.” No, because you wouldn’t have gotten the best deal.
Not all lenders will use the same cutoffs as John’s Bank so a good score will vary from lender to lender and product to product.

So back to my original question…what do all of those numbers mean?

In order for any lender or insurance company to create a successful score cutoff table they have to have a very solid understanding of what each of those numbers mean.
It’s certainly not arbitrary to set credit terms based on random cutoffs.
There’s a significant amount of research (and money) that goes into creating a table like the one above.

Here’s the deal…

Each of those scores represent the odds of you going delinquent. The higher your score the better your odds of not going delinquent on your accounts. The lower your score, the better your odds of going delinquent.
That’s why John’s Bank is willing to give you better terms the higher your scores are. They feel comfortable about your credit risk. They feel comfortable that you will make your payments on time so much that they’re willing to give you availability to more unsecured credit.

Think of the trust involved here. If I qualified for any of those platinum cards I could get the card, activate it, use up the entire credit limit and never pay John’s Bank back.

And since you can’t repossess dinners or vacations it’s likely that John’s Bank is never going to recover everything owed.

That’s an incredible amount of trust to give, in part, to a single number. Think about that for a moment. My 750 equated to $25,000. Would you ever be comfortable letting me borrow that kind of money simply because some number says that I’m good for it?

Items You May Overlook That Reference Your Credit History

It’s 4:00 on a Friday afternoon: do you know where your credit is? Far from just credit card companies, insurers and lenders, a wide variety of businesses now use your credit report and score information to make decisions about you. Did you know that the following people can check your credit?

Cell phones
– Cell phone companies will check your credit score before deciding to grant you a service plan. People with credit issues may be asked to put down a large downpayment or pay extra for their service contract. There are cell phone services available that do not require a credit check. Some contracts include terminology that allows the company to review your credit at any point. Be aware that a cell phone application inquiry will appear on your credit report and can lower your credit score.

Child support enforcement agencies – Child support enforcement agencies can check the credit histories and child support payment records of delinquent parents. This inquiry will not appear on your credit report and will not damage your credit score. Child support non-payment is also reported by these agencies to the credit bureaus and can damage your credit score.

Employers – Employers must get written permission before they can review an applicant’s credit report. Usually employers review your credit report for major negative records or discrepancies. If an employer decides to take “adverse action” based on information your report, they must notify you first and provide you with a copy of your credit report. Employers can also check the credit reports of existing employees as long as they have disclosed that this was a possibility in the past. When an employer checks your credit report it does not cause a damaging inquiry to be reported.

Government assistance and licensing – Technically, any government agency can access limited information from your credit files without your permission (name, address, former addresses, current and former employers only in most cases). But thorough credit checks may be required if you are applying for government assistance or specific licenses.

Utility Accounts – Electricity, cable and other utility companies may check your credit report with your permission when determining your rates. People with credit issues could be required to put down a deposit, add a co-signer or pay higher rates for their utilities. In states with community property laws (such as Arizona, California and Texas) the utility company may even check your spouse’s credit history as part of their evaluation. Inquiries from utility applications do not harm your credit score

Stay tuned to TexasPersonalLoansLender.com for up to date money saving tips and guides with credit, consumer lending and persoanl finances in 2015!

Why Car Title Loans May Be Your Best Personal Loan Option

Save Your Family From Financial Hardship

If you need quick access to cash, then consider using the equity in your car to get a title loan. If you have your car’s title then you can use it to borrow the amount of money you need, many times without a credit check. Don’t let financial issues cause you and your family hardship when you can get the money you need to get back on track in as little as a day. Consider the following benefits of a title loan the next time financial hardship strikes your family.

cars

You Keep Your Car
One of the greatest benefits to a title loan is that you are able to keep your car after you borrow money against it. This means you can have access to the cash you need without interfering with your daily routine. While the loan company will keep your title and a set of keys to your car in their possession, you are free to drive your car without any limitations. The next time you are in a financial bind, consider a title loan so you don’t have to part with your hard earned possessions.
No Credit Check Required

While traditional loans require you to successfully pass a credit check, with a title loan, your title is your credit. Whether you have bad, little or no credit at all, you can get the money you need by using your vehicle as collateral. While poor payment history can keep you from getting a traditional personal loan, with a title loan you won’t have to worry. Don’t expose yourself to the embarrassment of being turned down by a bank. Visit your local title loan office so you can get the cash you need today.
Get The Money You Need Fast
With a title loan you can have access to the money you need in as little as a day. Don’t waste your time trying to get a loan you may be denied for at a bank. Get the money you need without the hassle by borrowing against the value of your vehicle. Many times, a title loan company can present you with a check or direct deposit, which means you have instant access to the cash you need.
The next time a financial hardship strikes your family, let a title loan get you back on track. With no credit check and a turn around time as little as one day, getting a title loan can be a smart decision that can help give your family peace of mind.

Should You Consider Personal Loans When Looking To Finance College Expenses

It is never to early or to late to start planning financially for college. The question most people have when it comes to college is how to pay for it. There are scholarships, but even these are unlikely to cover all the costs and expenses, such as room and board, meals, books, and materials associated with college.

The first loan option is student loans. The federal government has quite a few student loan options available to everyone, regardless of income. Federal loans are guaranteed loans, and these are often offered in your colleges financial aid office. These loans tend to be the best option to start out with as they are lower interest. Federally guaranteed loans interest rates are set at lower-than-market levels. These loans are also often subsidized by the federal government, so interest will not begin accruing until you are out of school. You can even get extensions and renegotiate payment amounts that are due monthly with these loans. If you want to take advantage of one of these loans, file out an FAFSA (Free Application for Federal Student Aid). You will at the very least qualify for an unsubsidized Stafford loan.

If your parent or if you are a parent looking to help finance your child’s college education, a home equity loan may be a good option to consider. A home equity’s loan interest is much better than the 15% plus charged for private student loans. These are also known as a second mortgage. These can be a better solution than some of the federal student loan programs as well, depending on which federal student loans you qualify for. You can often deduct the interest rate of your mortgage at tax time, thus lowering your effective interest rate, which in some cases will be even lower than that of a PLUS or even a Stafford loan. Another option is a home equity line of credit (HELOC). These can be tapped into as needs arise such as tuition and expenses, and you merely pay back interest on the amount advanced, however in today’s market, housing values are plunging and a lender can shut down your line of credit if this happens. The other draw back to a HELOC is that the interest rates are variable, while your second mortgage can be set at a fixed rate. However you can sometimes get a HELOC that has an option to fix the rate at one or more points during loans lifetime, however these are harder to find.

The last option for funding a college education would be private personal loans. personal loans are great if you do not qualify for federal aide other than a Stafford student loan, and a Stafford loan will not cover all of your expenses, merely some of them. Private student loans however it should be noted, are not subsidized or guaranteed by the federal government. The interest rates on these loans are determined by the lender and are based off of your credit worthiness, not you financial need. While like a federal guaranteed loan you can get payments deferred until you leave college, interest begins the moment you take one of these loans out.

A home equity loan can often times be the best option if you do not qualify for the best of the many and various federal student loan programs based of income and need. The best advice is to do some solid homework before choosing a lending option.

What Are The Regulations In Texas For Car Title Loans

Lots of people get into a financial bind and right away think ‘car title loans’. Then the reality of the costs begins to sink in once they start checking things out. Not to say that they aren’t good in the right situation, just not for all situations.

When you take out a car title loan you leave the title of the car as security against the loan. If you fail to pay back the borrowed money, then the company takes possession of your car. Consumers have very little protection in these matters. These types of loans are for short-term help only. They were never designed for any kind of long-term strategies. The fees are very high. Interest rates of 200% are quite common.

In the case of car title lenders in Texas, their lending laws give fairly generous regulation and fee structures. Still, many car title lenders avoid these kinds of provisions and pose as CSOs (credit services organizations). That adds an unfair advantage to their side of the equation in regard to lending. When they pose as CSOs they are able to operate outside of set rules and regulations that were meant to govern car title loans. All other lenders within the state of Texas have to follow them, however, these shrewd businessmen are exploiting a law that was intended to give protection to consumers in need of credit repair help.

This practice of avoiding the rules continued for a span of five years without resistance. Finally, the loophole had to be closed, and the playing field had to be leveled. Today, regardless of whether a cost gets classified as being ‘fees’ or ‘interest’, state laws says the cost to borrowers will be the same. This is a result of the Federal Truth in Lending Act, which requires both fees and interest be combined, and then disclosed to consumers as being an APR (Annual Percentage Rate). All credit costs must be disclosed as being APR according to Federal Law.

Existing Texas lending laws specifically permit car title loan companies to accept a borrower’s car title against loans for collateral. Also under existing Texas law, car title lenders, like all the other types of brokers and consumer lenders, are now subject to the oversight of the Texas OCCC (Office of Consumer Credit Commissioner).

While it is true that CSOs are all subject to private oversight and litigation by the Attorney General, they have been deemed as being insufficient for properly protecting consumers against abuse. The CSOs are the sole entities engaging in consumer lending and transactions of that type, who escape the compliance with, and oversight of, the requirements of the Texas OCCC. Finally the wrongs have been righted, and consumers need to do their part as well, by staying informed about the practices of the companies they deal with.

How Lenders Verify Credit Through Non Traditional Channels

Most if not all lenders will look into your credit history to determine if you are worth the risk of a loan, and to determine what interest rate any loan they might give you should be. The better your credit history, the higher the chance that you will be approved for a loan with a good rate. The main source of information regarding your credit history is your credit bureau report. There are three major credit bureau report agencies, Experian, Equifax and Transunion. The higher your score, the better rate you will get with a loan and the higher the chance is that any loan you apply for will be approved. Lenders can see not only your credit score via a credit report, but also how many loans you have applied for. With every application for a loan or credit card, your credit report will record another inquiry. Each inquiry will slightly lower your credit score temporarily.

Online loans today however often use more than just traditional credit bureau reports. Online loan companies have evolved quicker than traditional brick and motor loan lenders such as banks. More and more today, lenders are also turning to non traditional methods to determine someones risk factor in deciding to provide a borrower with a loan or not. Many lenders are now processing digital records like the history of a borrower’s phone bill, rent payments, and even social media history. Using these methods, lenders use data analysis to identify reliable borrowers. We are living in a digital age, in this digital age, we leave foot prints everywhere. There are many data bases in which creditors can access to get a better picture of who they are lending to. If you wish to know what methods your lender is using to determine your credit worthiness, visiting their website or contacting customer service to speak with a loan officer is your best bet.

According to Douglas Merrill, Founder and CEO of Zest Finance, all data “has the potential to be credit data”. Douglas Merrill invented software that many online lenders use today to determine potential credit worthiness. Industry experts claim these new options into looking into a borrowers credit worthiness generate a more accurate assessment of a borrowers credit worthiness as well as the ability and intent to repay a loan. While these methods invariably eliminate many borrowers from the pool of borrowers, it does however lead to lower rates, up to 50% lower than traditional loans. These new methods are now changing how a person qualifies for mainstream credit sources, and indeed helping people build credit up, as many people are now approved for loans where using solely credit bureau reports they may have been denied a loan.

It is important to note that your credit score can vary between each credit bureau agency, and if you are applying for a loan, you should first check your credit score among all 3 credit bureau report agencies. This is important to do, as you can contest inaccurate information with any of these credit bureau report agencies. If you do find inaccurate information and contest the inaccurate information, the reporting agency has 30 days to verify the information contained in their credit report on you or strike it from the report.