Types of Personal Loans

Personal loans are easy to obtain for most individuals. Even those individuals with poor credit or who haven’t established a credit rating can generally get a bad credit personal loan. You will need to verify income, employment, and residence when you apply. Personal loans are a fast and convenient way to get the money you need for a variety of needs. The funds can be used for essentials, travel, education, or to pay other loans. The choice is yours.

There are two types of personal loans, secured and unsecured. It can be hard to decide which one is best for you. Secured loans come with a lower interest rate than unsecured loans. However to get that lower interest rate you will have to offer some type of asset to the lender in the event you are not able to repay your loan. In many cases, the one you will choose will depend on what you are eligible for. Unsecured loans are generally available to those who have a good or outstanding credit rating and a steady income. Secured loans are usually the only option for those with poor credit, no credit history, and an unsteady work history.

Secured personal loans are a great way to establish your credit. They payments are often low, but your interest may be off the charts. To offset, this use it to your advantage. Only borrow what you need. Too often applicants hear the dollar amount they are eligible for and run with it.

Know before you apply what amount you are looking for as well as what you plan to use it for. Then stick to that. Don’t let a high pressure lender talk you into taking more than you really need. If this personal loan is your opportunity to establish your credit history, then don’t blow it. Use it wisely. Make all your monthly payments on time. If possible pay the loan off sooner to show you are responsible. Doing so will make the process much easier the next time you need to apply for a loan. Secured loans can also be a second chance for those with poor credit to redeem themselves.

It is important that you don’t miss any payments with a secured loan. If you find you can’t make a payment for some reason, contact the lender immediately to work out a solution. This is very important if you have lost your source of income. Most lenders will try to resolve the issue before reporting the personal loan as being in default. Since you have secured the loan with some type of property you own, you are at risk of losing that item if you can’t repay the loan. It is in your best interest to find a solution to stay on track with the payments of a secured personal loan.

Unsecured personal loans have a higher interest rate, but you will have the peace of mind that nothing you own is tied to that loan if you default on it. However, it is still very important for you to take responsibility for the debt and pay it as outlined in your loan terms. The same rules apply here as with a secured loan. Only borrow what you need and pay it back early if possible to keep your credit score high and reduce the amount of interest you will pay on the loan.

Is Emotional Spending Stealing Your Dreams?

Our emotions are one of the most powerful parts of our life. If we are experiencing an emotion that is uncomfortable, we are going to do what it takes to rid ourselves of that feeling. Not all of the things we do to calm our emotions are positive or healthy. We know we should not be handling our feelings that way, but if it makes use feel better, no matter how temporarily, we will do it. Spending money because it makes you feel good can steal your financial future.

Spending money is one thing that makes people feel good and temporarily forget about the problems at hand. Retail therapy–It seems harmless enough. It’s legal, it’s not physically bad for your health and it is not bad f or the environment, but what is it doing to your long term financial outlook or even your short term goals for that matter.

Shopping because you are bored or because it makes you feel better (self-esteem) will not take away the problem and in most cases it will leave you with debt that will take you much longer to repay than the purchases lasted. Society leads us to believe that he who has the most possessions wins. Not true. There is nothing wrong with possessions if you need them and you can afford them, but buying to keep up with the Joneses is not the answer either.

While most of us are not compulsive shoppers, how many of us give into that impulsive little voice that tells us we would feel much better if we just had that new purse or that cute little outfit we saw in the window the other day. The consequences of listening to that little voice can be far reaching when it concerns your finances.

Emotional spending will affect your finances over time. It may not be disastrous at first, but it will add up. The sad thing is that those feelings of instant gratification that we receive when we make that purchase are only temporary and the reason that we used to justify that purchase, still exists. The best thing you can do for yourself is to find a way to deal with your emotions that is not harmful to your health or cost you money.

There is no easy answer to emotional spending. Before you spend, try to delay it for awhile. This will give you some time to think about the decision you are about to make. Following this practice will sometimes prevent me from spending at all. If you can deal with the emotion instead of spending you will have gained a small victory. You will not gain control of your financial decisions over night, but if you handle them one decision at a time, you will make small steps towards achieving your goal. Debtors Anonymous can also be a good resource for helping people to understand why they spend money and to help them change those habits.

The Consequences of Making Late Credit Card Payments

In the past several years credit card companies have become very ruthless with the terms they have set for their customers. It is very important that you read your card member agreement so that you are aware of what you are getting into and so that you know the consequences of you actions, such as; making late payments.

Making a late payment can actually cause several things to happen. First of all, you have no grace period. If the credit card company does not receive your payment on the day it is due, it will be considered late. At that point, you will be charged a late fee. How much that fee is depends on your terms. The standard fee is $35. Some companies may charge you more or less depending on your balance. I have seen them as low as $15 and as high as $50.

If you have not had a late fee in 12 months, you can probably get the credit card company to refund the late fee if you call them and ask them to credit the fee. Most companies will do this as an annual courtesy. They will not normally report you to the credit bureau until you have gone 30 days delinquent.

However, the late fee is not what I consider the greatest consequence of paying your credit card bill late. If you make a late payment, your credit card company my raise your interest rate. Some companies will not raise you rate until you have been late twice in 12 months. At the time, you will be affected by something called Universal Default and your interest rate will likely increase to 29.99%. Much as we all hate to read that small print, this is all stated in your card member agreement, making the whole thing nice and legal.

If you have an introductory rate or a balance transfer rate, you will lose that after one late payment. Your chances of getting your credit card company to reduce your interest rate, because you made a mistake are very slim. They may reinstate your original interest rate after 6 months of on time payments, but that also depends on your credit issuer’s policy.

The best thing you can do to avoid being caught in this situation is not to carry a balance. The consequences of a late payment are not very great if you pay your balance in full monthly.

However, that is not an option for everyone. If you carry a balance, you should set up a recurring automatic debit through your bank or the credit card company. Make sure it is setup to pay 3-5 days before your due date, that way if your due date fluctuates (some do), you will not be late.Credit cards can be a big convenience, but they are also a big responsibility. Knowing what your credit card company expects and what they can and cannot do is half the battle.