monthly payments – Sendika12 http://sendika12.org/ Mon, 14 Mar 2022 20:48:29 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://sendika12.org/wp-content/uploads/2021/10/profile-120x120.png monthly payments – Sendika12 http://sendika12.org/ 32 32 Liz Weston: How buy now, pay later loans could alter credit https://sendika12.org/liz-weston-how-buy-now-pay-later-loans-could-alter-credit/ Mon, 14 Mar 2022 12:21:40 +0000 https://sendika12.org/liz-weston-how-buy-now-pay-later-loans-could-alter-credit/ Expanding access to credit is a laudable goal. Too many people can’t get a mortgage or an emergency loan at a reasonable rate because they can’t show a strong credit history. They may pay more for insurance or make large security deposits to obtain utilities or rent an apartment. Recently, the three major credit bureaus […]]]>

Expanding access to credit is a laudable goal. Too many people can’t get a mortgage or an emergency loan at a reasonable rate because they can’t show a strong credit history. They may pay more for insurance or make large security deposits to obtain utilities or rent an apartment.

Recently, the three major credit bureaus announced plans to incorporate “buy now, pay later” plans, a hugely popular type of point-of-sale financing that until now has mostly stayed outside the traditional credit ecosystem.

But no one should expect purchases now, paid later to instantly open the door to better credit. If you want reliable access to the greatest number of lenders, building credit through traditional means is still the best route.

BUY NOW, PAY LATER LOAN POPULARITY RISES

If you’ve purchased something online recently, you’ve probably come across a “buy now, pay later” option that offered to split your purchase into a few installments. Retailers partner with lenders such as Affirm, Afterpay and Klarna to offer payment plans, which typically don’t require rigorous credit checks and may not charge interest. With the popular four installment option, for example, you pay off your balance in four equal, interest-free installments due every two weeks. Instead of charging interest, lenders get a percentage of what you spend from the retailer, similar to interchange fees charged by credit cards.

Like any easy credit, these plans can tempt people to overspend. Buy now, pay later loans are also largely unregulated and lack the consumer protections that cover credit and debit card purchases. Additionally, the Consumer Financial Protection Bureau is investigating how buy now, pay later lenders are using the payment and purchase data they collect from customers.

CREDIT OFFICES ALWAYS WORK ON THE DETAILS

Credit bureaus want access to this payment data, hoping they can offer traditional lenders insight into how these borrowers might handle other types of credit.

Offices are not altruistic, of course. These are private companies that want to make a profit. But in doing so, the bureaus could help expand access to credit by identifying borrowers who could likely manage credit among the millions of “invisibles” – people with no credit history – as well as those who have too little information in their file. files to generate credit scores. TransUnion’s Pagel called buy-it-now, pay-later data the biggest opportunity for financial inclusion in a generation.

How the offices will go about this is still in the works. Two of them, TransUnion and Experian, say that for now the information will not be included in regular credit reports, but lenders will be able to request it. The third bureau, Equifax, says it will feed the data into people’s credit reports.

But the leading credit-scoring company, FICO, is still studying buy-now-pay-later data to see how well it predicts how people might handle further credit. There’s not even agreement yet between the bureaus on whether the loans should be treated as revolving debt, like credit cards, or as installment loans, which typically last much longer.

“This is such an important question because how it’s reported makes a definite difference in its impact on the score,” says Ethan Dornhelm, vice president of scores and predictive analytics at FICO.

HOW YOU CAN BUILD BETTER CREDIT NOW

If you’re currently trying to build or rebuild your credit, you probably don’t want to wait for those details to be ironed out.

Consider asking someone responsible for credit to add you as an authorized user to their credit card. Other options include a credit builder loan or a secured credit card from a lender that falls under the Tri-Bureau.

Credit loans, offered by credit unions or online, put the money you borrow into a savings account or certificate of deposit that you can get back after you’ve made all the monthly payments. A secured credit card usually gives you a line of credit equal to the deposit you make with the issuing bank. These aren’t instant fixes for bad credit or no credit, of course, but they are proven ways to expand your own access to credit now.

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This column was provided to The Associated Press by personal finance website NerdWallet. Liz Weston is a NerdWallet columnist, certified financial planner, and author of “Your Credit Score.” Email: lweston@nerdwallet.com. Twitter: @lizweston. NerdWallet writer Bev O’Shea contributed to this report.

RELATED LINK:

NerdWallet: Could a buy now, pay later loan affect my credit? https://bit.ly/nerdwallet-buy-now-pay-later-affect-credit-score

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Alternatives to Debt Consolidation Loans https://sendika12.org/alternatives-to-debt-consolidation-loans/ Fri, 25 Feb 2022 08:00:00 +0000 https://sendika12.org/alternatives-to-debt-consolidation-loans/ Debt consolidation loans are personal loans used to merge high interest debts such as credit cards, payday loans or other bills into a brand new fixed rate loan. Once you have received the funds for this loan, they are used to pay off your other debts. If you pay off the loan on time, get […]]]>

Debt consolidation loans are personal loans used to merge high interest debts such as credit cards, payday loans or other bills into a brand new fixed rate loan. Once you have received the funds for this loan, they are used to pay off your other debts. If you pay off the loan on time, get a lower interest rate, and don’t incur any additional debt that you can’t handle, you might be able to pay off your debt faster and save a ton of money on interest.

However, while using these loans is a good way to consolidate payments and hopefully lower the interest rate on your debt, there are several debt consolidation loan alternatives for people who don’t. may not qualify for a debt consolidation loan or those looking for lower interest rates. .

Debt Consolidation Loan Alternatives

A debt consolidation loan is not for everyone. Since debt consolidation loans are unsecured personal loans, lenders may have stricter eligibility criteria or the loans may not be large enough for the types of debts you are trying to consolidate. Here are some debt consolidation loan alternatives:

  1. Balance Transfer Credit Card: A balance transfer card allows you to transfer debt from other credit cards – usually credit cards from other companies only – or use a balance transfer check to combine other forms of debt into one 0% interest rate. This promotional low rate period typically lasts 12-21 months, and a good to excellent credit rating is required for approval. Once the introductory period is over, you will be responsible for paying the card’s standard interest rate on the remaining balance. Additionally, most cards will charge you a balance transfer fee on the total amount you transfer, usually 2-5%.
  2. Home equity loan or HELOC: Home equity loans and home equity lines of credit (HELOCs) allow you to borrow against the equity in your home. While a home loan has fixed monthly payments at a fixed interest rate, a HELOC works like a credit card and has a variable interest rate. Both can be used to consolidate high-interest debt, but you risk losing your home if you can’t pay them off. Also, both require you to have some equity in your home. Compared to debt consolidation loans, home equity loans and HELOCs often have longer repayment periods, larger loan amounts, and lower interest rates.
  3. Refinancing by collection: A cash-out refinance replaces your existing mortgage with a brand new mortgage for more than your current outstanding balance. You can withdraw the difference between the two balances and use it to improve your home or consolidate your debts. As with using a home equity loan or HELOC, you risk losing your home if you cannot repay your new loan.
  4. Debt settlement: Debt settlement takes place when you negotiate with your lender to pay less than what is owed to settle the debt. You can negotiate with the debtor yourself or pay a fee to a debt settlement company or lawyer to negotiate on your behalf. Even if you, a lawyer, or a business successfully negotiate a settlement, your credit score can take a hit.
  5. Bankruptcy: Filing for bankruptcy involves going to federal court to have your debts canceled or reorganized to give you time to pay them off. While you can pay off your medical debt, personal loans, and credit card debt in the event of bankruptcy, paying off your student loans and tax debt is incredibly difficult. Before choosing this alternative, keep in mind that your credit score will take a hit; it may take years for him to recover.

The bottom line

While using a debt consolidation loan to merge your high-interest debts might make financial sense if you can get a lower interest rate, it’s not your only option. In some cases, choosing an alternate route may be a better choice. For example, you might be able to get a lower rate by taking out a home equity loan, since it’s a secured loan backed against your home.

However, it is also important to know the risks involved in choosing such an alternative. Shop around the different options and compare interest rates, repayment terms, and the trade-offs you’ll make with each before continuing.

Learn more:

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If you’re deeply in debt, shouldn’t ‘settlement loans’ help you? Not necessarily, experts say https://sendika12.org/if-youre-deeply-in-debt-shouldnt-settlement-loans-help-you-not-necessarily-experts-say/ Fri, 18 Feb 2022 08:23:18 +0000 https://sendika12.org/if-youre-deeply-in-debt-shouldnt-settlement-loans-help-you-not-necessarily-experts-say/ Dubai: It is often seen as the last resort for someone deeply in debt to settle their debts by negotiating and agreeing with the creditor to accept less than the amount owed in full payment. If you’ve taken on more debt, you’ve also been frequently contacted by debt collectors wanting a timeline on when you’ll […]]]>

Dubai: It is often seen as the last resort for someone deeply in debt to settle their debts by negotiating and agreeing with the creditor to accept less than the amount owed in full payment.

If you’ve taken on more debt, you’ve also been frequently contacted by debt collectors wanting a timeline on when you’ll pay your arrears.

If you don’t want them to keep harassing you for overdue money and worry about being sued for debt, “debt settlement loans”, also known as “debt relief” or “debt adjustment”, can help you.

What is meant by “debt settlement” or “debt negotiation”?

Debt settlement, also known as debt negotiation, involves clearing debt by paying off a portion of it in a single lump sum.

What does a “debt settlement” agreement mean for the borrower and the lender?

How does the borrower benefit from such an agreement? A debt settlement agreement can provide the debtor with financial relief and put them on the path to rebuilding a damaged credit history.

Meanwhile, a debt settlement loan agreement allows creditors to receive at least some of the money owed to them rather than no money at all.

Also, it may mean that the borrower can avoid filing for bankruptcy. Although, according to some credit experts, filing for bankruptcy may be the best alternative in some cases.

What does a “debt settlement” agreement mean for the borrower and the lender?

Although it sounds like a good deal, debt settlements can be risky because such loan deals can irreparably damage your credit.

Moreover, reaching a settlement can take a long time, often between two and four years. This can be expensive if you use a debt settlement company, as you will pay fees. So it’s a last resort.

How much will a debt settlement agreement cost you?

Once you have chosen a debt settlement company, find out how much they charge to settle your debts with a loan agreement. However, provide transparency and ensure that the company does not sidestep your cost questions.

Debt settlement companies typically charge a 15-25% fee to settle your debt; it can be a percentage of the original amount of your debt or a percentage of the amount you have agreed to pay.

Let’s say you have a debt of 100,000 Dh and you settle for 50%, or 50,000 Dh. On top of the Dh50,000, you may be required to pay an additional Dh7,500 to Dh12,500 in fees to the debt settlement company – which, while significant, will seem worth it to those desperate to close their exorbitant loans.

The Risks of Debt Settlement Outweigh the Benefits

Although settling a debt through a debt settlement company can reduce the amount of your debt, relieve creditors and debt collectors, and even help you avoid bankruptcy to some extent, it There are risks that can easily outweigh the benefits.

If you’re deeply in debt and looking to settle your loans, a major risk you don’t consider is that your creditors might not agree to negotiate or settle with your debt settlement company.

This means that there is no guarantee that the debt settlement company will be able to come to a settlement for all of your debts. Moreover, there have been several reports that some creditors even refuse to negotiate with debt settlement companies.

Can I be charged a fee by my debt management company even if all of my debt is not settled?

If you stop making payments on a debt, you may end up paying late fees or interest. So while your debt settlement company takes an extended period of time to negotiate a lower debt with your creditor, late payment fines will pile up — not to mention countless calls from debt collectors.

Keep in mind that debt settlement companies cannot collect fees until they have entered into a settlement agreement, you have accepted the settlement, and you have made at least one payment. to the creditor or debt collector as a result of the agreement.

But you could still end up paying part of the debt settlement company’s full fee on the rest of your unsettled debt, experts reveal. If you have five or six creditors and the company settles any of those debts, they may start charging fees as soon as they receive a result.

If a debt settlement company has settled a proportion of your total debt listed in their program, they may charge you for that same proportion of their total fees. Suppose your total debts are Dh100,000 and Dh50,000 of the total amount has been settled, you may be charged 50% of the total agreed fee.

negotiation

Can I be charged a fee by my debt management company even if all of my debt is not settled?

Another key risk: any delay in negotiating a debt settlement could negatively impact your credit score

A debt settlement company can encourage you to stop paying your debts while you save money for a lump sum payment.

But at this point, your creditors may not have agreed to anything, which means all those missed payments may end up as overdue accounts on your credit reports.

Your credit ratings could be affected as a result of any overdue payments, and the creditor could also send your account for collection or sue you for the debt.

So coming to a debt settlement loan deal with a company that specializes in negotiating them should basically be your last resort. So always look for alternatives to debt settlement.

Key points to remember

Before approaching a debt settlement company, credit experts advise you to first try to negotiate settlements yourself with credit card companies or other creditors. Offer an amount you can pay immediately, even if it’s less than you owe.

If you have credit card debt, consider a balance transfer. A balance transfer is the transfer of debt from one credit card to another, usually to take advantage of a zero rate introductory offer on the new card.

Balance transfer cards have zero percent introductory rate offers for a specified period of time and may charge a flat fee or a percentage of the amount you transfer. But check to see if you’ll pay more money on interest payments on your current card than the cost of the balance transfer fee.

Addition debts:

Before approaching a debt settlement company, credit experts advise you to first try to negotiate settlements yourself with credit card companies or other creditors.

And you should also try to pay off the balance before the card’s promotional period expires to avoid paying interest on your balance. There are other debt relief and management options if you can’t get a large lump sum to pay the debt settlement or if the credit card company won’t negotiate a settlement.

You can also attend debt counseling sessions to deal with this situation. By talking with a credit counselor, you can explore your options. But if you opt for these settlement services, the debt management programs are structured to reduce the debt ratio of the borrower.

(The debt-to-equity ratio is the ratio of the total amount of monthly payments or credit card, loan or other monthly repayment commitments to an individual’s total income.)

Moreover, the negotiation skills of the experienced mediators of a debt settlement company certainly provide an added advantage.

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How can you benefit from the lowest interest rates on personal loans? https://sendika12.org/how-can-you-benefit-from-the-lowest-interest-rates-on-personal-loans/ Fri, 18 Feb 2022 04:29:47 +0000 https://sendika12.org/how-can-you-benefit-from-the-lowest-interest-rates-on-personal-loans/ Select’s editorial team works independently to review financial products and write articles that we think our readers will find useful. We may receive a commission when you click on links to our affiliate partners’ products. Personal loans are a convenient way to borrow small or large amounts of money. They can be used to cover […]]]>

Select’s editorial team works independently to review financial products and write articles that we think our readers will find useful. We may receive a commission when you click on links to our affiliate partners’ products.

Personal loans are a convenient way to borrow small or large amounts of money. They can be used to cover a variety of expenses – like a wedding, funeral, vacation, surprise medical bill, home repairs and more. And the money is usually paid directly to your bank account in just one day, so you can start spending when you need it. Personal loans have also gained a reputation for lower interest rates than credit cards.

Personal loan APRs average 9.09%, according to the most recent Fed data. In contrast, the average credit card interest rate is around 16.44%. However, some lenders, like LightStream, offer rates as low as 2.49% and offer additional annual percentage yield rebates for signing up for autopay so that your monthly payments are automatically deducted from your bank account.

LightStream Personal Loans

  • Annual Percentage Rate (APR)

    2.49% to 19.99%* when you sign up for autopay

  • Purpose of the loan

    Debt consolidation, renovation, car financing, medical expenses, marriage and more

  • Loan amounts

  • terms

  • Credit needed

  • Assembly costs

  • Prepayment penalty

  • Late charge

A lower interest rate can save you hundreds or even thousands of dollars when paying off a loan. This is why it is beneficial to benefit from an interest rate that is as low as possible.

Generally, the best way to get some of the lowest interest rates on a personal loan is to make sure you apply with a great credit score. The better your credit score, the more favorable the terms of your personal loan will be.

This is because lenders consider applicants with higher credit scores to be more creditworthy, i.e., more likely to make all payments on time and repay the loan amount in full. Thus, they are considered less risky borrowers and lenders will be more inclined to collect lower interest charges from them.

That doesn’t mean you won’t be approved for a personal loan if you don’t have great credit (in fact, we’ve rounded up the lenders who will always accept applicants with lower credit scores). You might not get the best rates and terms.

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If you have time to plan ahead before taking out a personal loan and you’re not too confident about your credit score, you can try taking steps to raise your credit score before submitting your demand.

Continue to pay down your credit card balances to reduce your credit utilization rate. Credit usage is the ratio of the amount of credit you use to the total amount of credit you have. Your credit usage is the second most important factor in your credit score (behind payment history).

The general rule is to keep your credit utilization rate below 30%, but a FICO study found that consumers with credit scores of 750 and above use less than 10% of their total available credit limit.

It may also be worth checking your credit report for any errors that could lower your credit score. You can use Experian to sign up for a free account and check your credit report and receive credit scores from all three bureaus: Experian, Equifax, and TransUnion. Experian also offers a credit monitoring service (also free) that can help you detect possible cases of identity theft, which can affect your ability to get approved for new lines of credit.

Also, be sure not to ask for too many new lines of credit at once. Too many serious new inquiries around the same time can also lower your credit score and make it even harder for you to get approved for your desired personal loan interest rate.

While it may seem like a lot of work, especially if you’re totally new to personal loans, it can also be beneficial to shop around with different lenders to find the lowest rate you qualify for.

With this comparison tool, all you need to do is answer a few questions and Even Financial will determine the best offers for you. The service is free, secure and does not affect your credit score.

This tool is provided and powered by Even Financial, a search and comparison engine that connects you with third-party lenders. Any information you provide is given directly to Even Financial and it may use that information in accordance with its own Privacy policies and Terms of use. By submitting your information, you agree to receive emails from Even. Select does not control and is not responsible for the policies or practices of third parties, and Select does not have access to the data you provide. Select may earn an affiliate commission on partner offers in the Even Financial tool. The commission does not influence the selection in the order of the offers.

And if, despite these steps, your credit rating is still not where you think it should be, you might consider using a co-applicant for your personal loan application. A co-applicant is someone who applies for the loan with you and is also responsible for repaying the full amount of the loan. Co-applicants are often referred to as co-borrowers and can usually be added to your personal loan application form.

Applying with a co-applicant who has a higher credit score than yours can help you get approved for a lower interest rate and other more favorable loan terms. Remember that not all personal lenders accept co-applicants, so you will need to check with the lender before submitting your application. SoFi and OneMain Financial, for example, are two lenders that allow co-applicants, and borrowers can request up to $100,000 and $20,000 respectively.

SoFi Personal Loans

  • Annual Percentage Rate (APR)

    5.74% to 20.28% when you sign up for autopay

  • Purpose of the loan

    Debt consolidation/refinance, home improvement, relocation assistance or medical expenses

  • Loan amounts

  • terms

  • Credit needed

  • Assembly costs

  • Prepayment penalty

  • Late charge

OneMain Financial Personal Loans

  • Annual Percentage Rate (APR)

  • Purpose of the loan

    Debt consolidation, big expenses, emergency expenses

  • Loan amounts

  • terms

  • Credit needed

  • Assembly costs

    Flat fee from $25 to $1,000 or percentage ranging from 1% to 10% (depending on your state)

  • Prepayment penalty

  • Late charge

    Up to $30 per late payment or up to 15% (depending on your state)

At the end of the line

Lower interest rates make personal loans an attractive way to borrow money for major expenses. However, to ensure you get some of the lowest rates offered by a lender, you will need to apply with a very good credit score. Reducing your credit usage and checking your credit report for errors are just a few steps you can take to boost your credit score just in time to submit an application. But if you’re short on time or these actions aren’t as effective as you thought, you might consider finding a co-applicant with a higher credit score.

Check out Select’s in-depth coverage at personal finance, technology and tools, The well-being and more, and follow us on Facebook, instagram and Twitter to stay up to date.

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.

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Affordable debt consolidation https://sendika12.org/affordable-debt-consolidation/ Wed, 16 Feb 2022 23:09:09 +0000 https://sendika12.org/affordable-debt-consolidation/ Credit card spending has increased in the United States due to financial constraints caused by COVID-19. Texas leads the pack behind California for states with the highest increase in credit card debt, according to a Sept. 21 study by WalletHub. And low mortgage interest rates haven’t translated into low credit card interest rates. Surprisingly, the […]]]>

Credit card spending has increased in the United States due to financial constraints caused by COVID-19. Texas leads the pack behind California for states with the highest increase in credit card debt, according to a Sept. 21 study by WalletHub. And low mortgage interest rates haven’t translated into low credit card interest rates. Surprisingly, the median interest rate on all credit cards in the Investopedia Card Database for October 2021 is 19.49%.

These high interest rates can create financial hardship for people who have significant credit card debt. High payments can make it impossible to cover rising living expenses. Debtors who have fallen behind face relentless collection calls and sometimes debt collection lawsuits. Fortunately, there are solutions to this crippling debt. Let’s look at the most common options.

Secured or unsecured debt consolidation loans:

Unsecured debt consolidation loans involve taking out a low interest loan to pay off higher interest credit card debt. Since these loans have no collateral that the lender can seize or repossess, they require high credit scores and excellent debt-to-income ratios to reduce their risk. Most secured debt consolidation loans use home equity as collateral. In Texas, your home must be maintained at less than 80% when using equity, so not all of the equity is available through a refinance or 2nd mortgage . However, if you have sufficient equity, the credit score requirements are lower than for an unsecured loan because your home is collateral.

Debt management plan with credit counseling:

A credit counseling program can offer some of the benefits of a debt consolidation loan, including the need to make one monthly payment and lower interest rates. There is no need to take out a new loan since the rates on your existing debts are reduced, so good credit scores are not required, but you must afford the monthly payments. However, this is considered a “hard” program, so if you want to take on more debt (and have the ability to pay for it), then this is not a program you should consider. Based on your current interest

rate, the monthly payment is likely to be lower than your combined minimum payments, and these programs are designed to pay off the debt in about five years or less.

Debt Negotiation for Debt Relief

Debt negotiation, also known as debt settlement, is another common way to resolve crippling credit card debt and personal loans. This is a hardship program, and similar to credit counseling, it is not an option if you plan to apply for more debt before completing the program. These programs are usually structured to last around 24 to 48 months, depending on your monthly budget and negotiated amounts. Monthly program payments can cost less than half of minimum payments. A reputable program will not charge trading fees until a debt is settled.

The savings are the result of not making monthly payments to your creditors. Instead, money is deposited in an FDIC-insured special purpose account while debts are negotiated and settled for less than the total balances, one at a time. The program is ideal for those who are about to fall behind or those who have already fallen behind, as failure to make minimum payments will negatively affect a credit score. However, it can be a great alternative to bankruptcy, and since the program can be completed much faster than most other options, you can also start rebuilding your credit score quickly. All debt negotiation programs are not created equal. Debt Redemption trading fees are often 20-40% lower than foreign firms. They also have special resources to help Texans who have been sued by a creditor or debt collector.

Chapter 7 or 13 Bankruptcy:

Bankruptcy may be the shortest and cheapest way to settle a debt if you can qualify for Chapter 7. Many people with large incomes or non-exempt assets have issues that prevent Chapter 7 filing and Chapter 13 might be the only form of bankruptcy available. In some cases Chapter 13 will be more expensive than a debt negotiation program, and in other cases it will be less expensive. If you are considering this option, consultation with a Texas bankruptcy attorney is necessary. Debt Buyback does not provide legal advice.

Get Free Debt Relief Consolidation

Affordable Debt Consolidation in San Antonio, TX also has several offices in the Lone Star State to help Texans struggling with crippling debt. If you’re considering debt consolidation loans, credit counseling, or debt settlement, a Texas Debt Specialist can provide you with a free, no-obligation phone or office consultation. We can also refer to Texas bankruptcy attorneys when needed. Learn about your options for resolving your debt today so you can start living your debt-free life. Call 800-816-1003 or visit https://affordabledebtconsolidation.com

For more coastal life, visit our website or follow our Facebook and Instagram.

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The pros and cons of home equity loans versus HELOCs https://sendika12.org/the-pros-and-cons-of-home-equity-loans-versus-helocs/ Wed, 16 Feb 2022 19:00:00 +0000 https://sendika12.org/the-pros-and-cons-of-home-equity-loans-versus-helocs/ Enter Wall Street with StreetInsider Premium. Claim your one week free trial here. NEW YORK, Feb. 16 12, 2022 (GLOBE NEWSWIRE) — A home equity loan and a home equity line of credit (HELOC) are two entirely different products, each with their own advantages and disadvantages. Ultimately, the pros and cons vary from person to […]]]>

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NEW YORK, Feb. 16 12, 2022 (GLOBE NEWSWIRE) — A home equity loan and a home equity line of credit (HELOC) are two entirely different products, each with their own advantages and disadvantages. Ultimately, the pros and cons vary from person to person and may also depend on current rates. You should check the latest rates on lenders’ websites, such as Discover’s Current Home Equity Loan Rates.

Advantages and disadvantages of home equity loans

Home equity loans offer a fixed interest rate, so monthly payments don’t change and stay the same for a set period of time. Home equity loans are typically used to consolidate debt, make home improvements, or finance one-time major expenses. Home equity loan terms tend to last anywhere from 10 to 30 years.

ADVANTAGES

  • Fixed interest rates, which means the home equity loan rates and payment amount remain the same for the life of the loan.
  • Borrowers receive the funds in a lump sum at closing which can be used for a variety of different needs like home improvement, debt consolidation, weddings, etc.

THE INCONVENIENTS

  • Home equity loans are a lump sum, while HELOCs provide funds as needed.
  • Since the rates are fixed, the rate may be higher than the initial HELOC variable rate

Advantages and disadvantages of HELOC

A HELOC works like a credit card. The owner is given a credit limit (which is usually based on their net worth) and can withdraw as much as they want during a drawdown period. Usually, HELOCs have a drawing period of 5 to 10 years and repayment terms of up to 20 or 30 years.

ADVANTAGES

  • Owners only pay interest on what they withdraw.
  • Typically, initial interest rates will start lower than home equity loans, but may increase.
  • The credit rotates as the principal balance is paid off, providing flexibility to access funds as needed. The principal balance is the amount owing before interest.
  • Can be used for a variety of reasons similar to home equity loans.

THE INCONVENIENTS

  • The interest rates are variable and not fixed, which means that they can increase, as well as the amount of the monthly payments.
  • Generally speaking, HELOCs can be riskier for those who lack financial discipline given their variable interest rates and payment amounts.
  • The revolving credit allows the balance to be carried over to the next month, and the owner can decide to pay a minimum instead of the balance. This means that it will accrue interest on top of the principal balance, which may accumulate over time.

Conclusion

Home equity loans are often used for large one-time expenses and home improvements, while HELOC loans are often best suited for those who need an extra line of credit with a relatively low interest rate. .

Both home equity loans and HELOCs can be helpful depending on each homeowner’s situation. It is important to understand that they both use a home as collateral and it never hurts to consult a licensed professional for any financial advice.

Contact: michael.bertini@iquanti.com

This content was posted through the press release distribution service on Newswire.com.

Source: Discover Home Loans

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6 reasons why a personal loan is ideal for debt consolidation https://sendika12.org/6-reasons-why-a-personal-loan-is-ideal-for-debt-consolidation/ Thu, 10 Feb 2022 11:32:42 +0000 https://sendika12.org/6-reasons-why-a-personal-loan-is-ideal-for-debt-consolidation/ Image source: Getty Images The right personal loan could make your debt much cheaper and easier to pay off. Key points Personal loans allow you to borrow money for almost any reason. They often come with affordable interest rates. Personal loans can be used to consolidate debts. This means that you take out a new […]]]>

Image source: Getty Images

The right personal loan could make your debt much cheaper and easier to pay off.


Key points

  • Personal loans allow you to borrow money for almost any reason.
  • They often come with affordable interest rates.

Personal loans can be used to consolidate debts. This means that you take out a new personal loan and use it to pay off several existing creditors. You can use a personal loan to pay off credit cards, medical debts, other personal loans, etc.

But why would you want to do that? Here are six main reasons why a personal loan can be the ideal tool to use to consolidate your debts.

1. You can use the loan proceeds for anything you want

Most personal loan providers offer great flexibility in how the borrowed money is used. They may not even ask you what you will do with the loan proceeds.

Therefore, after borrowing, you are free to pay off just about any debt you want, from credit cards to medical debt to other personal loans.

2. Personal loans often offer competitive interest rates

The interest rate on a personal loan is often much lower than the rates for other common types of debt, such as credit card debt.

If you can lower the interest rate on your borrowed funds, repayment should be less expensive over time because you won’t have to give the lender so much money to have the privilege of accessing credit.

3. Many personal loans allow you to borrow a large sum

It is often possible to borrow a large sum of money when taking out a personal loan – sometimes as much as $50,000 or $100,000, depending on your income and other financial qualifications.

Since you can borrow a lot, you should hopefully be able to use your personal loan proceeds to pay off most or all of your outstanding debt. This will simplify the debt consolidation process since you won’t have to choose which debts to pay off with your consolidation loan, and you won’t end up with multiple creditors when you’ve completed the process.

4. You can lock in your interest rate with a personal loan

Many lenders offer you the option of choosing a fixed rate personal loan. If you refinance variable rate debt into a fixed rate loan, you won’t have to worry about rising rates and your debt going up.

You’ll have complete certainty about what you’ll be paying each month because your monthly payments and borrowing costs will never change.

5. Personal loans come with fixed repayment schedules

When you apply for a personal loan, you decide on a fixed repayment schedule for your personal loan, such as three years or five years. This time frame will not change once you sign your loan agreement and commit to borrowing.

As a result, you’ll know exactly when you’ll complete your debt repayment plan and be free of any debts you’ve consolidated.

6. You don’t usually put your assets at risk when you take out a personal loan

Typically, you will use an unsecured personal loan when consolidating debt. This means you don’t need to use any assets as collateral, unlike a home equity loan, where your home secures the loan.

Each of these benefits distinguishes personal loans from other debt consolidation options, such as home equity loans or balance transfers. If you’re hoping to consolidate your debt this year, a personal loan should be considered when deciding what new credit to take out to pay off your existing lenders.

The Ascent’s Best Personal Loans for 2022

The Ascent team has scoured the market to bring you a shortlist of the best personal loan providers. Whether you’re looking to pay off debt faster by lowering your interest rate or need extra money to make a big purchase, these top picks can help you reach your financial goals. Click here for the full rundown of The Ascent’s top picks.

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TransUnion: Auto loan terms lengthen as interest rates rise https://sendika12.org/transunion-auto-loan-terms-lengthen-as-interest-rates-rise/ Fri, 04 Feb 2022 11:38:16 +0000 https://sendika12.org/transunion-auto-loan-terms-lengthen-as-interest-rates-rise/ As the Federal Reserve raises interest rates this year, the trend of longer terms for new and used auto loans will likely accelerate, says Satyan Merchant, Senior Vice President and Chief Automobile Business at TransUnion. Borrowers seek to compensate for the rise in prices due to scarcity. “The term is really the only thing,” he […]]]>

As the Federal Reserve raises interest rates this year, the trend of longer terms for new and used auto loans will likely accelerate, says Satyan Merchant, Senior Vice President and Chief Automobile Business at TransUnion.

Borrowers seek to compensate for the rise in prices due to scarcity. “The term is really the only thing,” he said in a phone interview.

“That’s one of the few affordability levers that’s left is to extend the term. Going back to the end of last year, we know the Fed is going to raise interest rates, so the rate isn’t as effective a lever,” Merchant says. (photo below left).

Average interest rates had been a positive factor in affordability. In the third quarter of 2021, average car loan rates were down slightly for new and used, Merchant says: 8.2% for used compared to 8.5% a year ago; 4.1% for new, against 4.3% a year ago.

Meanwhile, as new and used vehicle inventories persist, prices and monthly payments are expected to remain high in 2022.

The good news is that delinquencies of 60 days or more accounted for 1.59% of the total for Q4 2021. That’s virtually flat, in fact down slightly, from 1.61% a year ago.

The average amount financed on new vehicle loans reached a record $38,344 for the third quarter of 2021, an increase of 8.4% over the previous year. “That’s a significant number, reflecting higher vehicle prices and costs,” Merchant says. The third quarter is the last period for which TransUnion has detailed origination results.

For used vehicles, the average amount financed was a record $25,876 for the third quarter, up 22.3% from a year ago, according to TransUnion.

Average monthly car loan payments also hit record highs in the third quarter: $625 for new, up 8.4%; $472 for used, up 17.7%, according to the Chicago-based credit bureau.

Monthly payments would have been even higher, but borrowers took out a higher proportion of loans at 72 and 84 months. In the third quarter of 2021, loans of 84 months or more represented 17% of new vehicle loans, compared to 15% a year ago, or 13% in the third quarter of 2019 pre-pandemic.

For used vehicles, loans of 84 months or longer were 8% in the third quarter, compared to 5% a year ago, similar to 2019. Most of them were loans of 84 months, says Merchant.

Loans of 72 months to 83 months, mainly 72-month loans, accounted for 52% of used vehicle loans in the third quarter of 2021, compared to 48% a year ago, or 46% two years ago, according to Trans Union.

It’s also a positive that demand remains high and credit is readily available, Merchant says. “It’s an indication that consumers are ready to buy and finance whatever is available,” he says. “The merit is there; lenders are comfortable granting these loans.

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It’s time to prepare for higher interest rates https://sendika12.org/its-time-to-prepare-for-higher-interest-rates/ Sat, 29 Jan 2022 08:01:09 +0000 https://sendika12.org/its-time-to-prepare-for-higher-interest-rates/ Opinion Do you have variable rate debt? If so, you got a reprieve this week when the Bank of Canada decided to leave its overnight rate at 0.25%, an all-time low that was hit shortly after the start of the pandemic. However, with the inflation rate for the past 12 months at 4.8% and around […]]]>

Opinion



Do you have variable rate debt?

If so, you got a reprieve this week when the Bank of Canada decided to leave its overnight rate at 0.25%, an all-time low that was hit shortly after the start of the pandemic.

However, with the inflation rate for the past 12 months at 4.8% and around 75% of economists calling for a rate hike, expect rates to rise over the next month unless there is there is a significant drop in the next inflation report. .

Anyone with variable rate loans might want to consider their options for securing the interest rate slightly higher for an extended term. This will lock in today’s rates and provide predictability for payments in the future.

The most common variable rate debt is a line of credit, where the interest rate is based on the prime rate or the stated lending rate of a bank or credit union. The interest rate you pay will change as official rates change.

The biggest debt most people carry is a mortgage. Mortgage payments are usually the largest monthly payment for anyone who has had to borrow to buy a home. With a variable rate mortgage, an increase in interest rates can mean an increase in monthly payments and a significant effect on the family budget.

On the other hand, some mortgage agreements maintain a fixed payment when rates rise, but less of the payment is allocated to principal and more to interest. This means that you repay less of the loan during the current term.

The challenge, of course, is deciding how much more you want to pay for certainty. Given that rates are generally expected to rise, interest rates offered on longer-term mortgages have already risen, although variable rates have remained low.

For example, variable mortgage rates are generally between 1.55% and 1.75% this week. Locking for five years will cost you around 2.75%, assuming you have good credit and negotiate a better rate than the one posted.

On a $200,000 mortgage, locking in for five years could increase monthly payments by about $120, but would provide certainty for those five years.

If variable rates rise more than 1% over the next few years, locking in would seem like a wise move.

So how much will rates increase over the next two years? Sorry, I can’t tell you (and, of course, you wouldn’t want me to tell you anyway, because that would make the decision too easy…).

But the Bank of Canada and the US Federal Reserve announced that they would start raising rates in March. In the United States, the markets anticipate four increases in 2022.

These indicators suggest that anyone with an adjustable rate loan should do a bit of deciphering and budgeting. Don’t ignore the problem.

If you’re shopping for a home now, get your mortgage pre-approved (which you’ve probably already done) and make sure the approval includes an interest rate guarantee for at least 90 days. You can decide the duration when your purchase is complete, but at today’s prices.

As with all financial (and life) decisions, there are always unknowns, but careful thought and planning almost always gets you ahead.

Dollars and Sense is intended as an introduction to this subject and should in no way be construed as a substitute for personalized professional advice.

David Christianson, BA, CFP, RFP, TEP, CIM is a Fellow FP Canada™ (FCFP) recipient and has been repeatedly named one of Canada’s Top 50 Financial Advisors. He is a Senior Wealth Advisor and Portfolio Manager at Christianson Wealth Advisors at National Bank Financial Wealth Management, and author of Managing the Bull, A No-Nonsense Guide to Personal Finance.

David Christianson

David Christianson
personal finance columnist

David has been a financial planner and life advisor since 1982, specializing in helping clients identify and achieve their most important goals and then managing all of their financial affairs, including investments.

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What is a debt consolidation loan and how does it work? https://sendika12.org/what-is-a-debt-consolidation-loan-and-how-does-it-work/ Thu, 27 Jan 2022 12:23:00 +0000 https://sendika12.org/what-is-a-debt-consolidation-loan-and-how-does-it-work/ Debt consolidation loans are often misunderstood. They are not always bad. However, you should only take them after careful consideration. If you plan to subscribe best debt consolidation loans then you need to understand what they are and how to get it. The use of debt consolidation loans is to help consumers consolidate their debts […]]]>


Debt consolidation loans are often misunderstood. They are not always bad. However, you should only take them after careful consideration. If you plan to subscribe best debt consolidation loans then you need to understand what they are and how to get it.

The use of debt consolidation loans is to help consumers consolidate their debts into a single loan. This means that instead of paying several creditors each month, you would pay one creditor per month.

How Debt Consolidation Works

Consolidating your debts is not the same as filing for bankruptcy. While this can sometimes be helpful in dealing with overwhelming debt, there are some important differences between these two options. Therefore, here’s how debt consolidation works – 1. You take out a new loan and use it to pay off all or most of your existing credit card balances. 2. You pay off the remaining balance on the consolidated loan over time at a lower interest rate than you were paying before.

What is the concept of debt consolidation?

Consolidating your debts into one loan can save you time and effort. It also helps you get rid of high interest rates and fees. If you take the right steps before applying for a debt consolidation loan, you can avoid ending up with an expensive loan.

Therefore, here are some tips on the best way to use the debt consolidation loan:

Understand your finances
Before applying for a debt consolidation loan or any other type of loan, understand your sources of money. Check if you will qualify for a loan based on your current financial situation.

Know the loan options available
There are many types of loans available today. Some people prefer to use credit cards while others prefer to use cash advances. Many people like to combine the two types of loans in order to better manage their finances.

Consider all options before applying for a loan
You don’t necessarily need to go through all the lenders in your area first. Instead, you can check various websites online for free information on different types of loans.

Choose an interest rate that suits your budget
You can find different types of interest rates when looking for a loan. However, there are two main categories of interest rates: the fixed rate and the variable rate. Fixed rate loans generally have higher monthly payments, but lower overall costs. Variable rate loans generally have lower monthly payments, but higher overall costs.

Look at different payment plans
When choosing a payment plan, you need to consider your budget. Most people who borrow money do so because they want to pay less in the long run. Therefore, you need to think about how much you can afford to pay each month.

Check your ability to repay your loan
If you decide to apply for a debt consolidation loan, make sure you can afford to repay the full amount. Otherwise, you could end up paying thousands of extra dollars each year.

Be aware of loan fees and costs
Some banks charge additional fees when you take out a new loan. These fees include things like application fees and set-up fees. You should research these fees before taking out a loan.

Shop for the best deal
Once you have decided on the type of loan that is best for you, you need to search for the best deal. You can compare interest rates by visiting different websites.

Get pre-approved if possible
Getting pre-approved for a loan is one way to ensure you get the lowest interest rate possible. This means you can start saving money immediately after receiving approval.

Borrow what you need
It is very easy to fall into the trap of taking on too much debt. When you do this, you might be tempted to spend more than you earn. Once you’ve taken out a loan, you might feel compelled to spend even more money.

Debt consolidation loans are a great option for those with high levels of debt. They allow you to consolidate multiple debts into one low-interest loan. By paying off your existing debt, you can save money and avoid future problems.

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