Monthly Archives: October 2016

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.