Personal Loan

The 4 Golden Rules of Debt

2008-07-19T09:44:00.000-07:00

Be Wary of Borrowing More Money

The idea of borrowing money has become too lose in practice; it is tempting to pay with a credit card, but the card holder isn’t really paying for the purchase. In actuality, he is borrowing money. He may also be borrowing it at a very high interest rate. None-the-less, he is paying some interest and in a sense that money is just wasted for the sake of convenience or instant satisfaction. Other ways of borrowing money are getting personal loans, store cards, and mortgages. Also interest-free, bank overdraft, and no-repayment-terms are different names for borrowing money. So the consumer ends up paying interest, charges, and fees instead of just paying for the product and paying taxes.

If the consumer decides to borrow more money he should consider these factors: Examine the types of interest like variable interest, ongoing interest, fixed interest, and interest-free days. It’s important to know what they mean and how this will affect the transaction. The consumer can save money by saving up and paying for his purchase with cash. He may also get a lower price for cash as some merchants offer this benefit.

It is best to stay away from borrowing money from payday loan businesses. They usually charge high interest rates and the term is very short for borrowing less money.

Don't Ignore the Problem

If the consumer does get in over his head with debt from borrowing and then not being able to keep up with the payments he does have some options. Ignoring the problem only lets it get worse.

Maximize Your Income

Another answer is for the individual to maximize his income. Some suggestions for maximizing income are to get a second job and to budget the income he has. Budgeting involves listing all of his expenses that are vital like food, shelter, and utilities first and then adding his other expenses and that means everything. Then see how to cut down on spending. To help himself with budgeting he can use the debt to income ratio. It can be found on the internet.

Speak to a Free Advice Service

He can get advice and help from a nonprofit counseling agency. There are many of them and some are government sponsored. He has the choice of getting advice from a forum designed for helping people in debt. These forms of help can be found by researching the internet for “nonprofit counseling agencies.” The debtor can find good advice about finding a good nonprofit credit counselor at the Federal Trade Commission website. If he needs bankruptcy counseling he can go to the US Trustee Program website. There’s a list of counselors for each state that are government approved. He will need to see one of them before going into bankruptcy because of a law enacted in 2005.

A lot of useful information can be found online using search engines. Just type in some of the following keyword phrases e.g. debt resources, bankruptcy options, credit resources, legal resources, financial resources and other information.

If a person is in trouble with his debt he should quickly speak to someone that can provide credit card debt management and develop better financial habits if that was the origin of his problems.

Debt Management: Sources of Effective One-to-One Help

2008-07-18T09:43:00.000-07:00

The first step is to decide if the situation is critical or if the debts are just large. Does this person have the incoming funds to meet the minimum payment requirements? If not, this is a critical situation. If he can it is bad but not yet critical. When the situation is that bad the debt will worsen quickly if not handled properly.

If the consumer is not yet at the critical point, a debt counseling agency isn’t his best solution. They use methods individual voluntary arrangement (IVA) or bankruptcy. These are severe measures and are for people with limited resources. The problem here is that his credit score and ability to access financial products can be hurt.

If the consumer is in critical debt mode he needs to get help. He needs one-on-one counseling with a person that isn’t trying to make money off of him. These are several places to contact that can help: Community Legal Advice, National Debtline, Consumer Credit Counseling Service, Citizens Advice Bureau, and Christians Against Poverty. They have websites for websites for the debtor in crisis to contact them for counseling.

Another non-profit organization offers one-on-one debt counseling is InCharge Debt Solutions. All of these organizations will ask for in depth information on the individuals debt condition, finances etc. With this knowledge the counselor will help the individual to work out a solution to getting all of his debts paid and getting him on his financial feet again.

The counselor will know if debt management program is the best answer the counselor will help the debtor design one. If that isn’t a person’s best solution he will get him started with money management education, help him design a budget and refer him to social service agencies if that is something he qualifies for.

If homeowner has a HUD loan and is in a financial crisis (not able to pay bills on time, or have a job or health emergency) he can call a counseling agency that HUD approves and get advice. Another choice is to join a forum like Debt Management Talk, which can be found at https://www.squidoo.com/reduceyourdebt. There are non-profit servicing in various stated like Advantage Credit Counseling Service in Alabama that is a member of the Better Business Bureau and NFCC. They have forty years of experience in as a nonprofit and have help over 400,000 consumers in their struggle to eliminate all of their debts.

These are some more sources of nonprofit credit counseling programs: military bases, universities, housing authorities, credit unions, and branches of the U.S. Cooperative Extension Service. The Department of Housing and Urban Development can help homeowners in debt to find counseling services.

There are numerous places to get the debt help and advice of nonprofit counseling organizations. Some of them are private nonprofit agencies, some are government agencies and there are forums where a debtor can gain advice from other people who have been in his shoes and have learned some tips and techniques that will help the debtor become debt free.

Debt Consolidation. Good Idea or Bad Idea?

2008-07-17T09:41:00.000-07:00

Debt consolidation can be a good idea for a consumer that is strapped with a lot of debt e.g. credit card debts. This means that the individual consumer has had his debts put into one bill or consolidated his bills and he pays one monthly payment. There are different types of debt consolidation: debt consolidation loans, credit counseling, and balance transfers.

When a consumer is distressed about his finances he can go to a debt management company and get the counselor to address getting his unsecured debt restructured. The company will then take a monthly payment from the client and pay his creditors. The deal the counselor strikes with the client is called a debt relief plan. These plans do several things for the client: reduce or eliminate interest rates, terminate late fees, and lower monthly payments.

The consumer’s credit cards can be transferred to cards with lower rates as long as the new rates don’t rise a great deal in a few months. Therefore, he should be careful about introductory rates. If the consumer already has a card that has a low interest rate he could have the balance of a high interest rate card transferred to his lower one. The consumer may not be able to get the full balance transferred. He should take note of whether or not a transfer fee is involved and if it is high or low.

Another way for a consumer to consolidate his debt is with a consolidation loan. It can be unsecured meaning no collateral is called for or secured meaning he must have some collateral. The consumer trades several debts for one debt and needs to see if the interest rate is lower than what he is already paying. He should also consider the term of the loan and the payment to see if this will work for him. It could save him money while he is paying the loan (life of the loan). If the interest rate and term are in his favor.

While he is consolidating his debt the consumer would be wise to close his credit card accounts. Though leaving one open for emergencies is a good idea if he doesn’t use it for other purposes. He can easily do this if he gets a loan to pay off the others. Closing those other accounts will give lenders in the future a good impression.

When the consumer can’t get a loan from a credit union or bank he may consider a finance company, but he should be careful. There could be extra fees included in the deal, the interest will probably be high, and the tern might be long. All of these things would have a negative impact.

Some aspects of debt consolidation are good for anybody like closing out some credit card accounts with a credit card debt consolidation loan. The debtor should look his situation over very carefully and consider his options wisely. The pros and cons should all be thought out. If the pros outweigh the cons for an individual then debt consolidation is in his favor.

Consolidate All Your Debts With a Remortgage Loan

2008-07-16T09:39:00.000-07:00

A homeowner that is fighting with and juggling debts is getting really stressed out. Besides the immediate problems the possibility of a bad credit report looms large in his horizon. He’s dealing with penalties and high interest rates. This homeowner needs another choice. This homeowner may want to look into an adverse credit re-mortgage.

This means that he gets a new mortgage and uses some of the money to pay off his debts or the mortgage he already has. His property can be used as collateral so the lender feels comfortable that he will sell his house and pay the new loan, if he can’t repay otherwise. The interest on re-mortgage loans is lower now and because of so much bad credit new ways to help homeowners have been tailored.

This allows the consumer to consolidate his debts and he gets a lower interest rate so it is easier to pay off. The best person to speak with about an adverse credit re-mortgage is a specialist mortgage broker. This broker knows how to research the market to find the best deal for the homeowner. He can be the homeowner’s advocate to his lender and he’ll paint the best picture of the homeowner’s situation to get his client the best deal from the adverse credit re-mortgage lender, though the homeowner will have to be able to handle the payments. He won’t negotiate something the homeowner can’t handle.

He may be able to even negotiate better terms for the client like reducing restrictions on his mortgage. The specialist mortgage broker is will informed in all types of loans and loss litigation and interest rates. He has the ability to be objective and get the homeowner the most promising deal for his scenario.

The consumer can use this plan to pay off credit card debt or a personal loan. Mortgage interest rates are usually lower than credit card or personal loan rates. To be eligible for a re-mortgage loan the homeowner has to have some equity. That means that the present value of the homeowner’s property has to be higher than his mortgage. If he does consolidate his debt this way then some of his equity will be deducted and more debt will be added to his mortgage. Thus, the total of his home loan is increased and this has to be accounted for by higher monthly repayments or he’ll have a longer term for his loan.

In the process of working out a re-mortgage the homeowner’s loan many times goes to another lender. Typically a mortgage is fixed for about two or three years in todays market. Then the homeowner must choose a different mortgage package or his mortgage will return to the lender’s standard variable rate.

Before a consumer decides to use this plan to pay off unsecured debts it is wise to remember that he’s putting his home in jeopardy if he later can’t repay. The consumer is advised to look around for the best rates. By doing so he can avoid debt consolidation loans which have higher interest rates than a remortgage.

Can a Debt Management Program Really Help Reduce Debts?

2008-07-16T09:38:00.001-07:00

A good debt management program is designed to help the individual in debt with a solution that is built for his or her own specific problems and needs to resolve it for the debtor uniquely.

The counselor’s job is to evaluate the person in debt’s financial situation, provide assistance and advice in developing their budget, and he will discuss and negotiate all terms of payment with the debtor’s creditors. The counselor is there to discuss forgoing late fees and getting interest rates lowered. A debt management program usually lessens the payoff time and gets the payments negotiated to a more manageable level.

Plus, gets the debtor’s payment s consolidated into a single monthly payment that is the unsecured debts. Usually, the debt management company takes the money as monthly deposit and then they parcel it out to their client’s creditors. They normally use an automated service to deduct the payment from the client’s account each month and then they pay the creditors. There are scenarios wherein they can re-age their client’s account and that can stop late fees from accumulating.

How does a person know if a debt management program can help his situation? To answer this question the debtor needs to consider these questions: Are the bills beyond a monthly total that can be paid easily? Are the interest rates keeping the balances up though the bills are paid? Does borrowing money to pay the bills seen like the answer? Does it seem impossible to catch up because of an unexpected bill like an emergency car repair or doctor bill? Is the minimum the only payment made each month on credit card bills?

When someone can answer positively to any of the above questions a debt management program is a good idea for them. One positive answer means that the others could soon follow suit and then the bad situation has gotten worse. The good news is that such a program can reduce payments each month by 25-50%.

Another huge warning sign that a consumer needs the help of debt management counseling is when he thinks of bankruptcy as his answer. If the consumer is considering bankruptcy he should bet some counseling first because he may be able to solve his financial problems without resorting to bankruptcy.

The debt management counselor can get the consumer get back in control and teach him how to stay in control of his debt. He can help him see what the warning signs are that say his financial train is about to derail. One tool that is used to see if a consumer has too much debt is a debt to income ratio. To see what the ratio is, the mortgage or rent is excluded from the figures. The monthly payments otherwise are totaled. That total is divided by the total monthly income and that figure is converted into a percentage.

This can be as a guide, when the percent is higher than 20 reducing the figure is in order. The bills besides the rent or mortgage shouldn’t be as high as 20%. This type of budget can sink the consumer’s ship. The consumer should ask his debt management program counselor about using this calculation as well as other advice to help him rid himself of excessive debt.

Collection Process on Personal Loans

2008-02-11T02:32:00.001-08:00

Personal loans are available for a variety of uses. Most individuals who obtain them have every intention of repaying them as outlined in the terms of the loan. However, we all know that life can have plans for us that differ from what we envision for ourselves. There are also individuals out there who suck the life from any financial resource available, with absolutely no intention of repaying the funds.

There are many courses of action lenders can take in an effort to collect unpaid personal loans. If you find yourself in a situation where you can’t repay your personal loan, it is in your best interest to contact the lender immediately. They are more willing to work with you than to turn you into collections. Being honest about your situation will help them explore all the available options with you. In some cases, you can revise the loan to have lower payments or even skip a few payments without it causing a negative impact on your credit report.

The collection process for each lender is different. It is an area you should familiarize yourself with prior to accepting the terms of the loan. If you obtained a personal loan using the assistance of collateral attached to the personal loan or a co-signer than you in a dire situation that requires your attention to remedy it as quickly as possible.

Most creditors don’t care who repays the loan, as long as the funds get paid. Therefore, they have every intention of holding a co-signer liable for the balance due on the loan when the borrower is in default. The creditor may still desire to pursue legal action against the borrower. This can be done by taking the borrower to court. However, due to the time and cost involved they will likely just choose to pursue the co-signer for the funds. If a co-signer refuses to pay, then the creditor is likely to take both the borrower and co-signer to court or send the account to a collection agency.

Neither option works well for the borrower or co-signer. Court costs are expensive and you may need to pay for legal representation. The court can mandate you pay a set amount of money each month, or face the consequences of the legal system. Collection agencies generally will continually hound both the borrower and co-signer with phone calls and letters. They can also choose to garnish your paycheck, greatly reducing the amount of take home income you have.

Secured personal loans that go into default mean the creditor will be taking the asset you tied into the loan. This can be property, a vehicle, or other type of asset. Keep in mind that just because they have that asset, your loan may not be settled. Often, they will sell the asset for whatever amount they can get, and then apply that amount towards the balance due. The remaining balance will still be your responsibility, thus it could result in court proceedings or collections.

To prevent your personal loan from spiraling out of control, make sure you only borrow the amount of money you absolutely need. This will help keep your monthly payments low. Budget each month for repayment of your personal loan. If you have extra funds, consider paying in advance or placing the money into a savings account for emergencies.

Lenders find court proceedings and collections a costly and time consuming part of doing business. They will also collect on any collateral you put forth to secure the loan. They don’t enjoy it, but will take such action as means of recovering the money they lend. It is very important that you contact your lender immediately if you are not able to make a payment. This will allow them to work with you before the issue gets out of control. If you find a lender can’t help you, consider contacting a consumer counseling agency for further assistance.

Books on Personal Loans

2008-02-11T02:26:00.001-08:00

Personal loans and all the terminology that goes with it can make your head spin after awhile. However, it is very important to educate yourself with the ins and outs of personal loans if you are considering obtaining one for any financial reason. Doing so can help ensure you get the right loan for your needs as well as prevent heartbreak down the road for you.

There are many wonderful books on the market today offering information on personal loans. Several of these books are a great investment for ensuring you will make solid financial choices in the area of personal loans after arming yourself with the facts of the industry.

The “Beginners Guide to Real Estate Investing” by Gary W. Eldred is of course geared towards real estate. However, it does have excellent information regarding personal loans. If you are considering a personal loan for real estate related issues including fixing up homes, then this book will give you quality information in both areas.

“The Book of Inside Information” explains the world of personal loans in very simple terms, making the process much easier to understand than books full of industry jargon. This book is a great financial resource. In addition to providing you will information about personal loans, it discusses the areas of family finances and managing family spending. One of the newest books out there is “The 21st Century Family Legal Guide: The Law You Must Know to Protect Yourself and Your Family”. This book is more technical, but still offers excellent information regarding personal loans.

In addition to quality books offering you information about personal loans, there are a few that provide you information on how to pay off debt, including credit cards and personal loans. “Live Debt Free” (3rd Edition) is full of level headed advice for doing so. This isn’t a book that promotes pyramid schemes or get rich quick schemes. Instead, the book offers forward budgeting and money management tips to help individuals devise a realistic plan that fits their income. The plan will help individuals reduce their debt in the areas of credit cards and personal loans.

Quality magazines including Reader’s Digest and Money Today often run articles on types of loans. You can research the internet to find great articles from these magazine and many others that discuss personal loans. Don’t forget to look for reviews including those published by the National Consumer Council on the issue of personal loans.

Personal loans are a great financial tool when used properly. Take the time to read some quality books in the area of personal loans to establish a strong understanding of how the process works. To get the best results, choose books that are unbiased. You want to read the good, the bad, and the ugly about personal loans. The more you know, the better decisions you can make regarding your financial dealings with personal loans.

If you already have personal loans, consider reading books that provide excellent information for ensuring those loans are repaid as well as how to eliminate personal loan debt with effective debt management systems. The information is very straightforward and worth investing your time and energy into reading. The internet is a great place to search out such important books on the issue of personal loans. You can also ask for them at your local library.

Being a Co-signer on a Personal Loan

2008-02-11T02:24:00.000-08:00

Being a co-signer on a personal loan for a friend or family member is a very generous offer as it will likely mean the difference between them being able to qualify for such a loan and not being eligible. However, the decision of being a co-signer for a personal loan should not be made lighter. It is the responsibility of potential co-signers to educate themselves about how this situation affects them, especially with regard to their responsibility to the loan should the borrower default.

Most co-signers don’t realize that this loan is going to show up on their credit report. Keep in mind that this might affect your ability to get your own loan down the road as the personal loan you co-signed on with by used to calculate your debt to income ratio. It can also affect the interest rate you get your own loans at. If you feel it is a good idea to co-sign a personal loan for a friend or family member, do so with the understanding that after a set amount of making on time payments the borrower will attempt to redo the loan under their own name only. The more money you co-sign for, the longer you can expect to be a part of that loan.

Since the loan can both positively and negatively impact the credit rating of the co-signer it is important to set the loan up so that they co-signer can access the account information. This will allow you to find out what has been paid on the loan and what is still owed. Make sure the lender will inform you of any late payments or non-payment issues with the borrower as soon as they happen. Too often co-signers aren’t aware there was an issue with the loan until it has already impacted their credit.

While co-signing a loan for a friend or family member can help them, be aware of how it will affect not only your credit but your relationship as well. Nothing can sour relationships faster than money issues. It is important for a co-signer to look at the circumstances that lead to the individual needing one in the first place. If it comes down to simple money mismanagement, then you aren’t doing them or yourself any favors. However, it is the result of circumstances they had no control over you may want to consider it.

To minimize your risk as a co-signer, don’t make it habit of offering to do so for friends and family. The word will spread like wildfire with more requests heading your direction. If you don’t feel your own credit and finances can’t hold up if the borrower doesn’t repay the loan, then do not co-sign for a personal loan. It can be difficult to say no, but it is important you are able to.

You might consider having the borrower provide your with verification that payments are being made including regular statements or cancelled checks. To further reduce your risk as a co-signer insist the borrower purchases personal loan insurance that can cover loan payments for a particular amount of time due to unemployment, illness, or death.

Co-signing a personal loan for someone is more than giving your signature. You are putting your financial history and worthiness on the line for that person. It is important that you carefully review the borrowers need for the money as well as their spending patterns. If they owe other people money or continually live beyond their means, walk away with a clear conscious. There are times that being a co-signer on a personal loan is the right thing to do. Only you can make that decision. If you decide to go forward with it make sure you can afford the cost of any missed payments and that the lender is going to keep you informed on the payment status on the personal loan.