10 things you need to know before consolidating a payday loan

1. Quick Access

 

We all know how annoying and unbearable debts can be. You realize that it’s hard to repay all the debts that you have. One type of debt is payday loans. You are expected to repay a payday loan when your next paycheck comes your way. It’s a short-term loan which requires you to pay the whole lump of cash all at once. Reason for taking up such a loan could range from being broke in the middle of the month before the next payday or due to an unexpected financial emergency. While loans could be life savers up to a certain extent, it could ruin your life too.

2. Payday cycle

 

Take help of a debt consolidation plan

Take help of a debt consolidation plan

So you may be wondering, how one actually gets into a big debt crisis, so big that it would need payday loan consolidation. For instance, you may take up a small payday loan, hoping that you will be able to repay it immediately once you get your next paycheck. Suddenly, an emergency hit. Perhaps you also need to pay your kids’ school fees, or have a medical bill which your insurance does not cover. So you take up another payday loan. Both loans are expected to be paid back when you get your next paycheck.

However, you realize that you cannot afford to repay both. Thus, you roll over the loans. Rolling over typically gives you a little more time to repay with paycheck you get the following month. However, there is a catch. The interest rate for the rollover amount will increase and so will the fees you have to pay. Subsequently, your debt increases. You are stuck with the lender and having to repay large sums of money. Due to the roll over, you can’t keep up with the loan payment. The increasing amount of debt is about to stifle you.

Lenders love this situation. You need to get out of this situation with the help of a debt consolidation plan. Hence, you should consolidate payday loans and use that to your advantage.

3.  Outline your financial goals

 

To get out of the debt, you first have to know your financial goals. You have to plan where you want to be, where you are currently and how you want to get to your target. You should sit down and analyze your financial situation carefully.You to look at all your income sources, then compare them to what owe your lenders. Doing this math will help you establish your financial status.

4. Consolidation

 

 Consolidation

Consolidation

Having established your financial situation, it’s time to start thinking about the solutions. Typically, you want to get out of debt as soon as possible. Payday loan consolidation is one of the best ways to get out of recurring debts and increasing interest rates. However, it is important to be specific about what you actually want. There are 3 main types of debt consolidation companies.

1. Debt consolidation companies: they give you a loan to pay up all your debts and then you repay them slowly.

2. Debt management: these act as third parties who try to re-negotiate the interest rates that you are paying for your current debt.

3. Debt settlement: they are also third parties, but they negotiate to lower the principal balance of your debt.

This means that you have to be very precise with the type of plan you want.

 5. Research

 

Having decided the type of consolidation plan you want to embark on, you need to look at specific consolidation companies. It is always advisable to allow yourself as many options as possible. You could decide to pay them a visit and try to get all the details on the type of consolidation plans they offer. By giving yourself enough options, you have flexibility.

6. Review

 

countercheck the credibility of the company

counter check the credibility of the company

You mostly want to rely on the companies that care nonprofits. You have to look at what actually fits your current financial situation and can help you out of the payday loan debt trap. Nonprofits are the most suitable companies, mostly because they are not after making money from borrowers. Whatever awesome adverts you may have seen, remember that what you see may not be what you get. Thus, it is always important to countercheck with financial authorities to confirm the credibility of the company you are interested to work with.

7. Interest rates

 

The annual percentage rate of the payday loans is about 300%. This means that the interest rates are quite high. While deciding on consolidating your payday loans, you have to look at the interest rates of every consolidation company. See if it fits your financial goals. The lower the rate, the better. Go through all the options you have until you find the best one.

8. Fees

 

lower the fees, more advantageous it is for you

lower the fees, more advantageous it is for you

It is important to look at the fees that come together with the consolidation loan you choose. You could be talking about fees that are incredibly high, so you need to look for the lowest fees among your choices. The purpose of the consolidation loan is to let you improve your financial situation while you pay off your consolidation loan. Thus the lower the fees, the more advantageous it is for you.

9. Terms and conditions

 

A consolidation loan definitely comes with a contract. Signing it will let you be bound by whatever terms which are stipulated in the contract. The terms include things like the time of repayment, the interest rates, and the penalties if you don’t pay up. You have to look for terms that are as flexible as possible. Also, you have to negotiate for breathing space, for if you leave the whole responsibility to the lender, he may decide to suffocate you as you try to look for a way out of the debt situation. This could leave you in worse situations that you were initially.

10. Doing the math

 

The most important thing is simple to keep up with the numbers. For a good loan solution, you have to weigh the possibilities and make a sound financial decision. It’s all about knowing your numbers and taking them into consideration before making any Payday Loan debt consolidation decision.

Payday loans vs installment loans

A loan refers to money borrowed by a debtor from a creditor that is to be paid back at an agreed time at an agreed interest rate. There are different types of loans for the borrower to choose from depending on which type suits his financial circumstances best. These loans include car loans, payday loans, personal loans and consolidated loans. Most of these loans are considered installment loans since the borrower pays the lender back in scheduled monthly payments. Borrowers should understand the differences between payday loans and installment loans to know what loan works best to their advantage.

Payday loans

 

 short-term unsecured loan

short-term unsecured loan

A payday installment loan is also referred to as a payday advance. It refers to a short-term unsecured loan that is given to a borrower where he is expected to make payments on his next payday. Payday loans are usually associated with high interest rates as compensation for creditors who face dangers of the borrower defaulting repayments. The creditor cannot perform collection activities if the borrower does not make payment as payday loans are of an unsecured nature. Hence, they do not require you to put up property as collateral.

Payday loans have a simple but expensive application procedure which. It involves you writing a personal check for the amount of money you want to borrow. You are also expected to pay a certain amount of money for borrowing as application fee. Payday loans take a very short time to be processed. Borrowers receive their funds in their checking account electronically, fast enough to meet their immediate financial needs. Lenders of payday loans ask for few verifications which make qualifying for payday loans quite easy. Payday loan lenders require verification of employment or income which is determined through recent paystubs and bank statements. This financial information acts as a guarantee that the borrower is in a position to make repayments.

Online payday loans offer consumers fast application and upon approval the funds are deposited directly into the borrower’s checking account. The repayment procedure involves financial charges being withdrawn electronically on the borrower’s next payday. Payday loans come with certain advantages that appeal to many borrowers.

Advantages of payday loans

 

Payday loans are easy to get

Payday loans are easy to get

1.Easy to get: Payday loans do not involve tiresome procedures and complicated requirements. This makes it easy for borrowers to get a loan. The basic requirements are quite simple and the lender only requires you to have a stable job and a recurring income to qualify.

2. Fast to get: Most payday loans are transferred electronically into the borrower’s checking account. Upon filling out an application form and having your loan approved, you will have the cash you need really fast.

3. Convenience: Payday loans are convenient as they are readily available. Payday loan companies are located throughout most cities. Availability of online payday loans has made it easier for all borrowers to access this loan online.

Disadvantages of payday loans

 

Payday loans can harm your credit score

Payday loans can harm your credit score

1. They are expensive: This is a major reason why most people shy away from payday loans. Interest rates of a payday loan are extremely high which is linked to the risk faced by the creditors if the borrower defaults payment. Application fees are also charged to borrowers which makes borrowing a payday loan expensive.

2. Payday loans can harm your credit score: As payday loans are expensive, borrowers are often burdened by this high cost. So they may delay in making payments which would adversely harm their credit score.

Installment loans

 

Installment loans considered to be less risky

Installment loans considered to be less risky

An installment loan is a type of loan where the principal amount and interest are repaid back in scheduled payments known as installments. Compared to payday loans, installment loans are considered to be cheaper and less risky.

Installment loans are either secured or unsecured, depending on the type of installment loan. Mortgages and car loans are secured where the borrower is expected to put up his house or vehicle as collateral to get the loan. Personal installment loans, on the other hand, are unsecured and their borrowing is based more on the borrower’s creditworthiness and proof of income.

Advantages of Installment loans

 

do not have credit checks

do not have credit checks

1. Fixed interest rates: It is quite distressing when you wake up to hiked interest rates. Some traditional forms of borrowing have varying interest rates which would in the long run, thereby increasing the borrower’s sum of repayment. With fixed interest installment loans, your payments remain the same since its interest rates are fixed right from the beginning. You know exactly how much to pay every month. With this knowledge, you can budget your finances carefully so that you can make repayments promptly every month.

2. Longer terms: Long term installment loans can be as long as 30 years. During this period, the borrower can spread out their repayments over the loan term at his or her convenience. This makes installment loans more flexible than other short-term loans.

3. Easy and fast to acquire: Once you have applied for an installment loan and it is approved, you can get the money when the lender deposits the funds directly into your checking or saving account. Qualifying for an installment loan is very simple. The borrower has to meet the minimal age requirements of 18 years and older. You should also have a recurring income source. You must also provide a valid checking or savings account where you can receive your funds.

4. No credit checks: Some installment loans do not check the borrower’s credit score. Borrowers with bad credit or no credit can borrow payday installment loans.

Installment loans disadvantages

 

Risk of losing property

Risk of losing property

1. High Interest rates: Due to the fact that interest rates for installment loans are fixed, some lending companies may take that opportunity to charge outrageous rates. This would adversely increase your loan repayment amount. With the help of an installment loan calculator, you may avoid this pitfall. The installment loan calculator estimates for you the monthly payments and interest rates you are required to pay for the type of loan you choose.

2. Risk of losing property: There are installment loans that require borrowers to put up a collateral in order to secure a loan. In the event that he delays repayment, the creditor has the legal right to call for collection activities. In the long run, the borrower could lose his collateral.

Differences between payday loans and installment loans

 

Difference B/w payday & installment loans

Difference B/w payday & installment loans

Both payday and installment loans are associated with high interests and they can be easily available without subjecting the borrower to any credit checks. Despite their similarities, they also have their differences.

1. Payday loans are unsecured while installment loans can be both secured and unsecured depending on the loan type.

2. Payday loans are short-term loans that should be repaid on the borrower’s next payday. Installment loans provide longer term borrowing of up to 30 years.

3. Payday loans are paid using a post-dated check. For installment loans, lending companies electronically withdrawn or the borrower pay using a check every month.

4.  Payday loans have extremely hefty interest rates that may be as much as 390% whereas an Installment loan can only go up to about 90%.

How to choose the best loan for yourself

 

There are certain things you should consider before deciding on the type of loan to use. These include:


Interest rates

 

choose loan with lower interest rate

choose loan with lower interest rate

It is imperative that you choose the type of loan with a lower interest rate. This is because with a higher interest rate, you may end up paying much more in the long run which may force you to take out another loan to repay the former one. Installment loans have considerably lower interest rates compared to payday loans.

Effect on your credit score

 

Both types of loans may have a negative effect on your credit score if you delay in making payments or in the event that you default. However, making your installments on time every month can help repair your bad credit score. Payday loans, on the other hand, do not improve your credit score.

Repayment preferences

 

Payday loans are short-term loans. This means they have faster maturity dates and you are expected to repay the loan within a short time, usually by your next payday. Long-term installment loans can take up to 15 years, hence allowing you to plan manageable repayment schedules. This makes installment loans more flexible compared to any other forms of short- term loans. Get an installment loans calculator and see what you are missing on!

10 Things you need to know about installment loans

When facing financial constraints, most people may be forced to approach lending companies. They may not have carefully thought about whether they may end up losing more or sinking further into debt and even hurt their credit score. With the current economic situation, there are various forms of lending which are out there to make profit.

Borrowers should be careful not to borrow from such companies to avoid regretting the poor choice they made. Borrowers need to have better understanding and knowledge of the type of loans they want to take out. There are certain things you need to know about installment loans before deciding whether they are suitable for your financial needs.

  • What is an installment loan?

Installment loans are repaid in scheduled payments

Installment loans are repaid in scheduled payments

An installment loan generally refers to any type of loan that is supposed to be repaid in scheduled payments known as installments. Installment loans relieve the borrower of the burden of having to repay a whole lump sum at one go like other types of loans such as payday loans.

  • Installment loans can be secured or unsecured

There are various forms of installment loans such as auto loans, mortgages and personal loans. These loans are both of a secured and unsecured nature. Mortgages and auto loans are typically secured loans. In both cases you put up your house or car as collateral in return for a loan. In the event that you default in payment, the lender has the legal right to sell your house or car to recover the outstanding amount.

Personal loans, on the other hand, are unsecured. This means to apply for a personal loan, the creditor does not require you to put up any property as collateral. Instead, the creditor checks your creditworthiness which is determined by your credit score and proof of income which guarantees that you are in a position to make repayments in the future. Installment loans are more flexible as they allow borrowers to distribute payments throughout the loan term.

  • Requirements for application

Requirements for application

Requirements for application

Before applying for an installment loan, you need to meet a few set requirements to secure this loan. These requirements include: minimum age legal age of at least 18 years. Secondly, you must reside in the state you choose for your loan option so you cannot approach a lender in Ohio when you reside in Colorado. If you are applying for online installment loans, you must provide your social security number and a saving or checking account. That is because upon loan approval, your funds will be transferred directly into your savings account. Upon meeting these requirements, then you are eligible for an installment loan.

  • You do not have to be employed to get an installment loan

Most people shy away from loans as some of them require you to provide a letter from the employer as proof of employment. Installment loans relieve you of such pressure. With an installment loan, you do not need to be employed as long as you have a steady source of recurring income. This guarantees the lender that you are in a position to make scheduled repayments (installments) throughout the loan tenure.

  • Additional fees  

It is always important to consider the cost that you are likely to incur while applying for a particular loan before you even start the application process. When applying for installment loans, make sure you’ve checked the interest rates and other fees such as application fees and processing fees.

  • Installment loans have fixed interest rates

Installment loans have fixed interest rates

Installment loans have fixed interest rates

Very often, borrowers suffer from rising interest rates. Some traditional forms of borrowing have varying interest rates such that they end up paying more in the long run. This makes it even expensive for the borrower such that he/she may delay in making payments which could adversely have a negative effect on the credit score. By providing fixed rates, installment loans give borrowers a golden chance to budget their finances over the repayment period, hence keeping them more at ease. This is one of the differences with payday loans.

  • Installment loans improve your credit score

Borrowers strive to maintain a clean credit score for future borrowing. A good credit score opens up avenues for borrowing and somehow acts as a guarantee that the borrower cannot default in making repayment. There are forms of traditional borrowing which could hurt your credit score if you are late in making payments or if you default altogether. Installment loans improve your credit score with time. With every payment or installment made, your credit score improves. Borrowers with bad credit therefore can redeem their creditworthiness. Installment loans have no credit check.

  • Installment loans do not have credit checks

do not have credit checks

do not have credit checks

For those who are haunted by a low credit score, installment loans offer a ray of hope to them. Borrowers on this bumpy road of bad credit installment loans can apply for bad credit installment loans from installment loan direct lenders who do not check your credit score but transfer your funds directly to your bank account.

  • They are fast

Installment loans with bad credit are tailored for emergency situations such as unexpected medical bills, funeral expenses or car repairs. Installment loans transfer funds to the borrower’s account on the same day or on the next business day. Application of an installment loan also does not require a lot of documentation, making the loan processing much faster.

  • Installment loan companies

This is a very important aspect to consider before applying for an installment loan. Borrowers should carry out research to ensure that they are dealing with a licensed company. Rogue lenders are on the rise nowadays and borrowers need to be more vigilant. The borrower should ensure that the lending company is licensed by the state before borrowing from them. Direct lender installment loans are the most preferred option.

Installment loans basics

What Are The Fundamentals Of Installment Loans?

More often than not, people are caught financially strained during a financial crisis. It is not uncommon to wake up to exorbitant bills, income taxes or unexpected medical bills.Your first instinct may be to seek financial aid from lending institutions, which may turn out to be a good option.

The money lending process could be fraught with pitfalls and you to be informed to make a sound decision. There are many traditional forms of lending which you can seriously consider and choose the one that meets your needs. You should also check the repayment period of the loan, how flexible it can be, all costs involved, its interest rate to make sure that you approach a trusted lending website or store.

Most installment loans have fixed interest rate

Most installment loans have fixed interest rate

Most people often choose installment loans. Installment loans online include any type of loan that is required to be paid back over time with scheduled repayments or a series of installments rather than in lump sum. This staggered payment is an advantage for individuals who cannot afford to pay back the loan in one whole lump sum. Installment loans may take the form of auto loans, personal loans or even mortgage loans. There are differences between payday and installment loans and depending on the length of time you want to borrow for you should know the difference.

Most installment loans have a fixed interest rate. This means the interest charged over the term of the loan does not change and remains the same as it was at the time of borrowing. Due to the fixed repayment amount, it is easy for the borrower to sort out his finances to make repayments  promptly.

Installment loans are either secured or unsecured. Secured loans are those that have collateral attached to them. In the event that the borrower defaults payment, the lender has the right to sell the collateral to to recover the outstanding amount. Secured installment loans include mortgage loans and auto loans. When requesting for an auto loan, your car is used as collateral while for mortgage loans, you put down your house as security. There is another type of loan where you can actually use your car as collateral, these are called title loans and you can check out our section on these if you want to drive your car and have a loan.

Unsecured loans do not have collateral attached to them. Such loans are determined by the borrower’s credit score and proof of income. If the borrower has a bad credit score, then chances of securing a loan are small. Consequently, unsecured loans always come with higher interest rates compared to secured loans. This is because the lender faces the risk of non-repayment from the borrower. Personal loans are one example of unsecured loans.

simple & fast process

simple & fast process

Most people like to apply for Installment loans as they have a simple and fast approval process. Applying for an installment loan is quite easy. The borrower fills out an application with the lender. The lender then takes the borrower through the terms of the loan, repayment schedule and the payment amounts.

The lender then advises the borrower to make higher down payments and take out a loan for a longer term to enjoy lower interest rates and lower monthly repayments. For the borrower to qualify for the loan, the lender reviews his creditworthiness to determine the amount of credit to extend. In addition to interest charges, borrowers are expected to pay other fees such as application fees, processing fees, loan origination fees and potential extra fees such as late payment fees.

Nowadays, borrowers can also apply for installment loans online. Online installment loans are quite easy to qualify for. You must have a checking or savings account that has been open for at least one month. This is because online installment loans are transferred directly into your savings account. Secondly, you must be at least age of 18 years to be eligible for an installment loan. Thirdly, you must have a steady and regular income as this guarantees that you are in a position to make repayments promptly.

Lastly, when applying for an installment loan online, you must provide a valid Social Security Number or Individual Taxpayer Identification Number.

Installment loans and bad credit

Installment loans & bad credit

Installment loans & bad credit

Most people have a messed up financial past which adversely affects their credit score which makes convincing a lender to lend them money quite hard. Installment loans save you from this hassle as it approves payday installment loans online for borrowers with bad credit and even those with no credit. Installment loans can be used to repair credit for people with installment loans for bad credit as they create a history of prompt repayments over time.

Merits and demerits of installment loans

Installment loans are an option for many due to the benefits they bring. They are fast and are obtained at substantially low interest rates than other forms of lending such as payday loans. Installment loans are flexible especially when they are long-term as they are tailored best to match the borrower’s ability to repay the loan.

Despite the merits, the borrower is at risk of losing his property in the event that he defaults payment. In this case, his credit score is also likely to get hurt. If you want to keep reading check out this 10 Things you need to know about installment loans

How to save money with loan consolidation

Debt is not new topic for most people. It has helped some people through difficult times. However, debts have also trapped some people in a vicious cycle. Debts should be managed carefully. They are headaches to deal with and it is worse if you have more than one debt to repay.

Debts come in all forms, from car title loans, payday loans, student loans, credit card loans, cash advances and the list goes on. All In all these have to be paid back in full. This is where problems happen. With the high interest rates on these types of loans, you will be spending a lot of money on loan repayment.  

With debt consolidation loans, you have a chance to reduce the amount of money paid. Consolidated loans work in such a way that the lender grants you a loan to repay all the debts that you may have, then you are left to slowly repaying that loan back slowly.

How can loan consolidation help?

 

  1.     Lower interest rates
How can loan consolidation help?

How can loan consolidation help?

Typical loans have quite high interest rates. Interest rates are even higher in loans such as  payday loans and car title loans. These loans typically have annual percentage rates ranging from between 250%-450%. This translates to between 20% and 38% of the loan amount. If you have more than one loan with such high interest rates, you are definitely going to feel the pressure.
Loan consolidation could help to solve these issues. It gives you the chance to get out of all these debts, and gives you a reasonable interest rate that matches your monthly income. In doing so, you save a lot of money on interest rate.

Every borrower dreads the inability to repay a loan due to rising interest rates. A consolidation plan keeps you out of such situations. All it requires from you is to do the math and make sure that the consolidation plan works for you and not against you.

  1.     Roll overs and payday cycle
 the ultimate way out of debt

the ultimate way out of debt

Assuming you took two or more payday loans. Now you know that when it come to payday loans, you have to make the payments in a lump sum all at once. However, you may be facing hard times and you are forced to apply for a postponement of repayment. This leads to the rollover situation which involves pushing the repayments to the next month. The lender may also subsequently review your interest rates and add other fees and penalties. If roll overs are done frequently, your debt grows and you may fall into a payday cycle scenario which you have to keep coughing up money every month to servicing loans that seem never ending. This is where you need to consolidate loans

For this reason, consolidation loans have become the ultimate way out of debt and at the same time save a large sum of money. The consolidation loan lets you clear up the debts that you have and help you avoid the lethal payday cycle. You have just a specific amount of money as to pay each month, for a specific time until you can repay back the loan.

  1.     The “good credit” factor

Financial decisions are and should always lean into the future of the individual in question. By saying this I mean you have to make a decision that ensures that your future is guaranteed to be easier that the situation you are presently. Look at it this way, you may require to take up an unsecured loan. Depending on your credit score, the interest rates will lean in that direction. If bad, then the interests will be high, but if it’s good, the interests will be lower.

Debt consolidation helps you build up a good credit score. This is because it moves you away from the numerous monthly payments that you are prone to skipping or forgetting. You now have just one monthly payment to focus on. When you follow up all repayments on time, you get to improve your credit score. This may mean you have a brighter financial future. With a good credit score, you can get a traditional bank loan with affordable interest rates. You have less to pay when it comes to loans in the future, thus saving you money. A debt consolidation loan is a great money saver for most people who know how to get the best out of it. Bad Credit Consolidation loans are also available with few lending institutions

Benefits of debt consolidation

Debts have heavy burdens for a lot of people in the recent years. Debts can range from payday loans, credit card loans, student loans and cash advance loans, among others. All of them have one thing in common – stressing you out financially and emotionally. It’s never easy to get out of debt, more so if you are juggling repayment of two or three debts. The situation is worsened by roll overs where the outstanding amount is rolled over to the following month and interest rates increase as a result.

Most people decide to look for ways out before they are crippled by their financial woes. One alternative is consolidating your payday loans. This plan involves getting a loan that covers all your debts and their interests, then repaying it back slowly.
Direct loan consolidation comes with a lot of benefits as it is a lifeline for your financial difficulties.

  1. Single payments

Single payments

Single payments

Here we are talking about the borrower getting the ability to move from numerous debt consolidation, to just one. As it is the arrangement of debt consolidation, the borrower gets a loan that covers all the debts that he may have. He repays all of them and is now left with just one single payment to take care of. The borrower now just needs to service one loan monthly, as opposed to having juggle several loans..

  1. Less stress

Debts are stressful. Debt consolidation loan helps relieve the financial stress you are having. The fact that you now only have one loan to service may relieve some of your pressure. It gives you some breathing space to get your financial situation in shape. It lets you focus your energy on other meaningful aspects of life and not just worrying about drowning in debt.

  1. Lower interest rates

Lower interest rates

Lower interest rates

Loans like payday loans, cash advances, credit cards loans all have very high interest rates. Imagine the terrible financial situation if you have more than one loan to repay. In the instance of a payday loan, it usually has an annual percentage rate of about 300-350%. This translates to about a very high 25% interest rate monthly. The stress would be unimaginable should you have to repay 2 or 3 of such loans.

Now if you have a consolidation plan for the loans, you have a huge burden taken off your shoulders. You can move from paying large sums of money monthly in interest to just one monthly payment with a lower and standardized interest rate. Repaying your debts becomes easier.  

  1. Stop collection calls

Stop collection calls

Stop collection calls

One of the worst things that could happen should you have debts is the debt collection calls from collection companies. You have debtors breathing down your neck all the time.Imagine the pressure you would be facing every time the phone rings. Living with such anxiety is unbearable. Your best option is to get out of these debts as fast as possible.

Debt consolidation can help you eliminate the number of debtors coming after you. Debt consolidation allows you to negotiate your stand and try to match it with the current financial situation that you may be in. Debt consolidation loans help you get out of debt so that you could be leading a normal, debt-free life again.

  1. Credit score

Loan consolidation can improve financial situation

Loan consolidation can improve financial situation

Many people have bad credit scores. Credit scores are badly affected by making late payments all the time. It could worsen to a point that you cannot apply for a traditional loan and get a good interest rate anymore. With nowhere to get a loan, bad credit score may push you into getting loans that are more risky than the traditional bank loan, which is akin to jumping from the frying pan into the fire. You may just plunge into worse financial situation.

Loan consolidation is a solution that could improve your dire financial situation. You get a loan that repays all the debts you had in the past. Before taking up a consolidation loan, you had so many loans to service that could lead to late repayments. With a consolidation loan, you just have one repayment to make every month. Now, if you keep up with that one repayment every time, your credit score actually improves. This could mean you could qualify for a traditional bank loan with good interest rates in the future.

Debt consolidation puts your finances in order and it makes quite a good long term financial plan.

Debt consolidation: the basics

Debt is no fun. It puts you under tremendous pressure. The cause of debt may be an individual’s  careless spending habits or unexpected expenditures such as accidents. You may decide to take up one loan after another in an attempt to solve your financial problems and that unfortunately suck you into a debt trap. So how do you get out of it?

Debt consolidation is one of the most suitable ways to get out of multiple debts. It is a form of debt refinancing that lets you take up one loan to pay up all the other loans that you may have, then repay it slowly. Basically, it requires you to calculate the total amount of money you owe all your debtors, including the interests of the debts, then taking one loan that services and clears all of them, then leaves you to just deal with one loan repayment instead of the numerous that you may have had initially.

Debt consolidation loans is one good way to help you clear multiple debts and give you a little breathing space. It could be a lifeline and save your from the following problems.

1. High interest rates

 

Debt consolidation, saves from high interest rates

Debt consolidation, saves from high interest rates

With debt consolidation, you save yourself from paying high interest rates. For example, you have a few debts with high interest rates. You are forced to pay a substantial amount in interest every month. Taking up a debt consolidation plan means that you combine those debts with high interest rates into one consolidation loan with a new rate that is lower. This means you can actually manage to slowly clear the debt consolidation loan. The lower interest rate of the consolidation loan helps you save a tremendous amount of money every month.

2. Late payment charges

 

When you have a lot of debts to service, you are prone to making late payments or could not afford to repay at all. You could find yourself getting penalized for not paying on time. Moreover, the debtors may also review your interest rate and increase them. With a debt consolidation plan, you can avoid such financially catastrophic outcomes and keep your head above water.

3. Bills confusion

 

Less bill confusion

Less bill confusion

With a debt consolidation loan you have less to worry about. As you have combine several debts into one consolidation loan, you only need to worry about paying up just one loan instead of having to keep track of the numerous loans you used to have. 

Debt consolidations have become very popular these days. It comes in different forms for you to choose from. The different types of debt consolidation are:

  •         Debt consolidation company
  •         Home equity loan
  •         Balance transfer option
  •         Peer-to-peer loans

Debt consolidation company

 

This option is the most common of them all. You will approach the consolidation company, either in person or online. You apply for the consolidation loan. After some simple checks, the debt consolidation company approves the loan and you start repaying the consolidation loan slowly.

However, you have to be careful with this option too. Look at the amount of money you normally pay for your various debts, then compare to what you would pay after taking up the consolidation loan. The latter amount should always be lesser so you can save money with the consolidation loan. Then look at the time frame the consolidation loan gives you, then calculate the amount of money you would pay in the end. You may realize that you are paying more than you actually should. It’s all about balancing the numbers to make things favorable for yourself. Some companies offer debt consolidation loans with bad credit.

Interest rates could also be predetermined by your credit score. People with a fair or bad credit score have to endure higher interest rates.

Home equity loan

 

Home equity loan

Home equity loan

Home equity loans are basically some of the best debt consolidation loans that allow you to repay your debts using your house as collateral. This plan lets you get about 70-80% of the value of your home. The best part is, the interest rates of home equity loans are quite low. This means that the loan is quite affordable and attractive. However, there is a twist. A home equity loan is a secured loan, meaning that if you are unable to repay back the loan, your house may be taken by the lender.

The loan is a good option only if you are sure you are able to pay up the loan eventually. If you are unsure, then this plan is just like playing Russian Roulette with your house. The attractive aspect of this loan is its low interest loans. However, you have to manage the risk of losing your house too.

Balance transfer

 

charge 0% interest up to a certain point

charge 0% interest up to a certain point

0% interest loans are all over the media nowadays. They charge 0% interest up to a certain point. Balance transfer is a kind of plan that gives you the ability to pay back the loan with 0% interest up to a certain period of time, between 6 months and a year. From then, you will have to start paying back the loan with interest. You first pay the initiation fee and about 2-5% of the total cash borrowed and then you get the loan.

During the period with no interest rates, you have to repay monthly on time and in full. Failure to do so will lead to the plan being cancelled and you have to pay normal interest rates. The key to this plan is the portion of the loan you have repaid before the interest rates kick in. The more you pay up before interest rates kick in, the more advantageous it is for you.

Peer-to-peer loans

 

The middleman company links you up with a lender who can give you the loan. The middleman company is paid for their service of getting you a lender. For the lender, he has the opportunity to make a profit out of lending you money. It also gives him the satisfaction of helping a person in need. The loan repayment period for this type of loans could range from a couple of months to about 5 years. It’s all what agreement you have with the lender. Get a debt consolidation loan calculator and get the best loan services you possibly can!

The basics of car title loans

Need fast cash?

Need fast cash?

The basics of car title loans

Every person would love the idea of receiving fast cash when  they need it. More often than not, they meet with some obstructions along the way. Having a bad credit score is a huge disadvantage when it comes to borrowing bank loans. Luckily, there  are some types of loans which do not take into account credit scores at all.

Car title loans are one type of such loans. A car title loan is a secured loan that allows borrowers to use their cars as collateral.

The lending company determines your car’s price based on the worth of the car in relation to the price that it would cost in the auction market. The lending company holds your car’s title until you pay off the whole loan within the stipulated time frame.

In the event that you default on your repayment, the lender is allowed to repossess your car and sell it to recover outstanding debts. However, if the borrower repays the loan on time, the lender will return the car’s title back to you. 

Car title loans are generally short-term loans and are associated with higher interest rates than other types of loans. The high-interest rates act as a guarantee for lenders as they cover the risk of lending to borrowers who are already in financial difficulties. In loans such as car title loans, the borrower’s credit history is not the lender’s concern. The value and condition of the car that is being used as collateral are of utmost importance. Hence, it is possible for borrowers with bad credit to secure a loan.

  • Eligibility of car title loans

Eligibility of car title loans

Eligibility of car title loans

1. Proof of your income


To secure a car title loan, you are expected to show your payslip and other necessary evidence of a regular income. As car title loans are associated with hefty interest rates, the lending company expects you to have a regular income so that you can fund the repayments.

2. Minimum age


You must be 18 years and older for you to secure a car title loan.

3. Personal identification


To secure a car title loan, you are required to have certain forms of valid identification These include a driver’s license, car registration number, and car insurance.

4. Proof of residency


You are also expected to give proof that you live in the said state. To prove this, you can provide some form of relevant mail.

  • Car title loans online

Car title loans online

Car title loans online

Many title loan companies offer online application for title loans. This application requires you to give basic information. Such information include:

1. Personal information


This includes your name, address, and contact telephone numbers.

2. Vehicle information


This includes the make, mileage, color and vehicle identification number.

3. Insurance information


You may need to reveal your insurance policy numbers or increase the coverage amount while taking up a car title loan.

  • Loan calculator

The amount of loan that you can secure is dependent on the worth of your vehicle. The lender generally offers a loan that is about 30% of the vehicle’s worth. This guarantees the lender of good profit in the event that they repossess the vehicle and sell it at an auction if you were to default on repayments.

  • Why car title loans are good borrowing options

No credit checks

No credit checks

Most borrowers take out car title loans due to their benefits.

1. Fast approval


With car title loans, you can get your money in just a few days or in a matter of hours. The money is either sent to your bank account or you can receive a check.

2. No credit checks


Many people who struggle with a poor credit score. With car title loan, lenders are not concerned with your credit score. Instead, the value and condition of the vehicle that is put up as collateral are very important to them.

3. You get to keep your car


With car title loans, you get the loan while still getting to keep your car. The only thing that the lender requires is that you give them a set of the car keys and its title until the loan is fully repaid.

4. Easy to qualify for


Title loans are very easy to secure. There are only a few requirements that should be met for you to be eligible. These are proof of income and residency, meet the minimum age and own a vehicle.

5. Less paperwork


Car title loans are available online. This minimizes tedious paperwork.

  • Disadvantages of car title loans

 Danger of losing your car

Danger of losing your car

1. Higher interest rates


Car title loans come with unreasonably huge interest rates. Interest rates may even exceed up to 300% at certain times.

2. Payment and fees


Lenders of title loans frequently charge outrageous fees and interest rates which end up leaving you even more in debt.

3. Danger of losing your car  

   
Car title loans are secured with your vehicle as collateral. In the event that you default in repayment, the lender has the right to repossess your vehicle and sell it.

  • Car title lenders

things you should consider

things you should consider

Most people are susceptible to fraud from rogue lenders and companies. Before committing to a car title loan, there are certain things you should consider.

1. You should apply for car title loans during emergency financial situations only.

2. Always borrow the smallest amount possible to avoid burdening yourself with unnecessary debt that would land you in more financial difficulty.

3. Many lenders are out to charge outrageous interest rates. Before committing to a car title loan, make sure you negotiate for the lowest possible interest rate.

4. Look for a lender that has won high approval ratings from customers over time.

  • Alternatives to car title loans

It is of utmost importance for any person who wants to take out a loan to evaluate what other alternatives are available. Compare the interest rates, penalties, fees and other options before making a decision.

1. Payday loans


Although payday loans also come with high interests, you do not stand the risk of losing your car in case of loan  default or late repayment.

2. Personal loans


Personal loans have a fixed number of months which you have to pay back your loans. With this, you can easily come up with a repayment plan. Personal loans come with interest rates that are lower than those of car title loans.

3. Sell your valuables (pawning)


If you are in dire need of fast cash, you can consider pawning some of your valuables such as jewelry. You can sell these items on online platforms such as eBay and Amazon.

4. Emergency loans 

       
These are short-term unsecured loans that come with low-interest rates. Emergency loans can be offered by companies with an emergency loan program for employees making the borrowing experience cheaper and easier.

How do car title loans work?

You know that time you have a mortgage loan that is due, maybe you have your kid’s school fees that need to be settled or basically any other kind of emergency that needs settling but you are broke. It gets to the point that you need to look at borrowing alternatives for a way out. There are many types of loans these days.

You could get a traditional loan, but it poses a challenge. As much as you want to get a bank loan, you realize that it’s really hard if you have a bad credit score. Thus, you have to look for other borrowing alternatives. One of them is a online car title loan which is also known as an auto title loan. This article will tell you how it works.

  • Car title loan application
Car title loans are easy to apply

Car title loans are easy to apply

Car title loans or auto title loans are small loan amounts that you can get if you use your car as the collateral. Typically, they are referred to as secure loans because if the borrower is unable to repay the loan, the car will be sold so that the lender can recover his money. They are short loans with loan tenures typically from 30 days to maybe a couple of years.

It is very easy to apply for a car title loan. The first thing you do is apply with the lending company of your choice, assuming that you have done your homework and know which company is able to help you.

There are two ways of application – physical application and online application. You may apply by dropping off the application form at the lending company’s office or online. You are a required to have a couple of documents for making the application process to be simple and easy. They include your name, age, home address, proof of work and other details.

For online application, you are required to visit the website of your lending company. Fill out your details according to the online form and then submit it.

Whether you do a physical application or an online one, the documents which you will need to include the car title and its photo identification. The company will also need to see the car that you are using as collateral to verify its condition and market value to determine the maximum amount of money you could get a loan. The company will also ask for a copy of the car keys and also ask you to buy a roadside plan.

The loan is then processed. If you qualify for the car title loan, the company will then write you a check or directly deposit the loan amount into your bank account.

  • Cost of a car title loan

The cost of the loan varies. Basically, the loan can be between 35%-45% of the market value of the car. Thus, it’s all about what kind of car you have used as collateral. The loan is for about 30 days. However, depending on your contract, you could have a longer period for repayment.

When applying, you are required to first pay up all the processing fees and then after 30 days, you start paying your interest and other fees that may be added on top of the car title loan.

  • Interest rates
Interest rates on car title loans

Interest rates on car title loans

The interest rates on car title loans are some of the highest compared to other kinds of loans. The loans are typically small, ranging from $150- $1500, but they could also go up to $5000. It all depends on your car.

Looking at the annual percentage rates (APR) of the loan, you will realize that it’s one of the highest among all loans. Typically, traditional loans have about 7% APR while APRs of credit card loans are around 20%. The APR for a car title loan is about 300%. This means that you will need to pay up to 300% of the amount of money you actually borrowed.

Mathematically, an APR of 300% translates to about 25% interest rates per month. It should also be noted that this is the basic number, which is averagely given as a statistic. In a real sense, the interest rates are customized according to the agreement between the borrower and lender. Thus, there is a sense of flexibility in car title loans.

  • Repayment

There are 3 main ways of repayment: physical, online payment and withdrawal from the borrower’s deposit account.

  • Physical repayment

This means that the borrower makes his way to the lending company and makes a repayment himself. This is a common and convenient method, especially if you live close to the company.

  • Online repayment

This mode of repayment is easy, convenient and flexible. This lets you make online repayments on your phone from anywhere.

  • Deposit accounts withdrawal
Deposit accounts withdrawal

Deposit accounts withdrawal

This method is usually used by people who have a large sum of money to be repaid each month. This involves the lending company withdraws a certain amount of money from your deposit account. This is done with your approval and your bank. According to most state legislations, the lending company is not allowed to make more than two withdrawals consecutively.

  • Rollover

Rollovers happen when you are unable to repay the loan back on time. A rollover lets you extend the repayment period by 30 days. This, however, comes at a price. You will have to pay a penalty fee and a couple of other fees for processing the loan rollover. The lender may also decide to review the loan’s interest rates at this point and may increase them.

Rollovers have a flip side. This means you will have to pay a lot more. This may be challenging since you resorted to borrowing due to a difficult financial situation in the first place. This leads a debt trap should you roll over again and again.

  • Repossession of car
Repossession of car

Repossession of car

Remember when applying for the loan, the lending company asks for an extra set of your car and a roadside plan? Typically the lender decides to repossess your car because you are unable to repay the loan. The repossession process, however, doesn’t start immediately. The lender will give you a couple of payment options and several ways out before eventually deciding to take a repossession action.

During repossession, the lender will sell your car to recover his money. At this point, you lose your automobile. The excess money left after debt settlement could be given back to you or the lender could decide to keep all of it. Essentially, this depends on where you are from and the state legislation.

If you are able to make prompt repayments on your car title loan, you will get to keep your car.

Benefits of car title loans

Benefits of car title loans

If you are employed, maybe you are on a day job, at a specific date that is far away from your payday, the financial struggles in your life are at their best at this time. By saying so, it means that if you meet with an emergency, it becomes a pain to try and solve it.

Emergencies could range from repayments of mortgage loans, school fees for your kids to unexpected situations like illness and accidents. All these require money to settle. It’s never that easy to cope, especially if the only source of income you have is what you get at the end of the month.

Car title loans have emerged as a great alternative to help you get out of tricky financial situations. It’s all about getting yourself a lifeline before you receive your salary by the month-end payday.

According to statistics, car title loans are becoming popular among people these days.

A car title loan requires you to use your car as collateral. Loan amounts can range from between $150- $1500 but it could be as high as $5000. The loan amount is determined by the value of the car that you are using as collateral. The loan amount is about 45% of the car’s market worth at the time of loan application.

Loan application

car title loans benefits

car title loans benefits

You can approach the lending company either by physically making your way to the office or apply online. After the application is submitted, you should submit your car title and its photo identification.

The company also asks for a copy of the car keys and then asks you to buy a roadside plan. After processing your loan, the company gives you the loan amount in the form of a check or deposit the money into your deposit account.

The company expects you to pay back the money as stipulated by the contract that you sign upon getting the loan. It includes the interest and other fees. If you cannot repay the loan, the company may end up repossessing your car and selling it to recover the outstanding loan.

A car title loan, however, has many advantages. That is why it is very popular among people.

1.  Ability to provide cash

A car title loan is designed to help you in times of financial difficulties. It offers cash conveniently and quickly just when you need it.

The loan helps you get out of financially difficult situations by providing cash to solve the problem at hand. We are talking about solving all the emergencies that may happen at a time when your next payday is still a few weeks away.

2.  Getting your money fast

Getting your money fast

Getting your money fast

The application and approval of a car title loan take a very short time. In fact, you could be getting your loan in a matter of a day or two. Compared to other types of loans, this is quite fast. It does not require you to keep making applications and waiting in line at the banks.

After you are approved for a car title loan, your car is then inspected and its value is determined. The lender and you will discuss before the former lays down the terms and conditions for the car title loan.

The speed of the car title loan processing and approval is a result of the simplicity of the loan and how it is designed.

3. Minimal requirements

For your loan to be processed, you will need to actually own a car. There are no bank account or credit checks. The car which you will be using as collateral for the car title loan is what matters.

Therefore, it is easy to process the loan and get the money that you need in less than two days. The credentials needed include basic personal information, the car title, the car itself during the application for assessing its value and its photo identification. Within a day or two, the loan is processed and you are on your way to solving your emergency.

Other loans require a lot of credentials and background checks before they approve the loan. This takes a lot of time. This is why most people are turning to car title loans for quick cash solutions.

4. Use the car as usual

Use the car as usual

Use the car as usual

A car title loan is very different from going to the pawnshop. This is because it allows you to continue using the car which you had used as collateral as you normally do.

The only thing the car title lending company needs is the car title. You are required to do is keep making prompt payments for the car title loan to avoid repossession of the vehicle.    

If you go to pawnshops, they will require the car or automobile to be left in their care until the loan has been repaid in full. It is only then that you will get your car back.

5. Credit scores

As stated earlier, the only documents and credentials needed are just your personal details, the car title and the car and its photo identifications. It is important to understand that a car title loan uses the car as collateral.

Essentially the car is the loan’s source of security. For this reason, the lenders barely look at the credit score of the borrower. The only thing they need is the car title.

Looking at traditional loans and other types of loans, the credit scores of the borrower are very important for the loan to be approved. Hence, car title loan are very suitable as most people as long as they own a car.

6.  Cheaper than cash advances

Car title loans are way cheaper

Car title loans are way cheaper

Car title loans are way cheaper than cash advances. The annual percentage rate (the real cost of borrowing) of cash advances are at about 400% or 450% compared to 300% annual percentage rate of car title loans.

While interest rates for both types of loans are quite high, interest rates for car title loans are definitely lower than those of cash advances.

As a borrower, you want a loan which with a low-interest rate.Hence, most people are attracted to car title loans.

7. Convenient repayment options

Car title loans offer a variety of loan repayment options. They include physical over-the-counter payment and online payment, among others. Compared to other types of loan servicing, this is flexible and efficient. You can make payment from anywhere at any time of your choice. This makes a car title loan very attractive.

8. No stress

A car title loans relieve you from financial stress. Emergencies are easily solved since the loan is approved. Moreover, you don’t need to stress about your credit score.