Monthly Archives: January 2016

Options To Consider If You Are Comparing Secured Personal Loans in 2016

We write here often about personal loans. They are handy and ultra convenient. You can use them for anything, no matter what the purpose is as long as it is legal. We love personal loans at our website. While there is a wide variety of personal loans out there, ones to fit anyone’s needs, we tend to cover mostly unsecured personal loans, but as I have mentioned before many times, unsecured personal loans are not your only option. Lets discuss for a moment secured personal loans, what they are, why they could be more preferable than a unsecured personal loan, and what are the pros and cons of secured personal loans.

Secured personal loans all have one thing in common, they use one asset or another of yours to guarantee the loan. People opt for secured personal loans for only one of two reasons, either their credit is terrible and a lender will not lend them otherwise, or the borrower wishes to obtain a good interest rate. When you opt for a secured personal loan, versus an unsecured personal loan, the lender can not only afford to give you a better interest rate, its expected, since you are putting up an asset of value against the loan. With an unsecured personal loan, the lender only has your word to pay them back, and many people sadly break their word for one reason or another. Since the lender has an asset of value against the value of your personal loan, there is less risk that you will default on the loan.

There are 4 types of secured personal loans, payday loans, car title loans, home equity lines of credit, and other. Lets go over these 4 types.

Payday loans
These loans are terrible, utter garbage and should be banned. In fact payday loans are indeed banned in all forms in many states, but far to many states allow these loans to flourish in their states. These loans use your paycheck and bank account as the “collateral”. These lenders also charge 400% interest or rather APR, or higher. It is not uncommon to find payday loans with an APR of over 400%. These loans exist mainly due to preying upon the working poor, but rather than helping the borrowers, they push them into further debt and worse financial straights. I struggled to find some pros to this type of loan, but in my opinion there is no pro to these loans.

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Home equity lines of credit
These loans use your homes equity as the collateral. The lender gives you a credit line worth some of the value of your equity. There is of course interest, but this interest is generally a fair rate. If you default on your payments the lender can go after the equity in your home. This can result in you being forced to sell your home in the worst case scenario, or at best a lien and a nasty dent to your credit. The plus side of this type of loan is the nice interest rate, the down side is the potential to loose the equity in your home.


Car Title Loans

These loans use your auto’s title as the collateral. These usually do not involve a credit check, so these are often a great option for those with terrible credit. These loans carry the risk of the lender repossessing your auto if you default on the loan, but if you are secure in your ability to repay the loan, you should be fine. For many cash strapped borrowers with a free and clear vehicle title, this is often a sensible option, despite the risks. Unlike most secured personal loans, the interest rates for car title loans tend to be high, despite being secured loans. These loans primarily service those with poor or bad credit.


Other

For those who do not have equity in a home nor have or are willing to opt for a car title loan, you still have options available. There are lenders out there who will accept nearly anything of value for a loan. Anything from precious metals to fine vintage wine can be used as collateral. Of course these lenders are harder to find, but they exist. Pawn shops are one such examplethese types of business, though these are found more easily. You will not get as good of a deal however if you opt to borrow from a pawn shop.

Reducing Debts In 2016 Make Great Financial Goals For Everyone

Reducing Your Debt

If you have the internet, I’m sure you’ve seen at least one article where some couple paid off all their debt in one year. Is it possible? Sure, but those people gave up a lot of little and big extras to pay down their debt that quickly. Certainly, if you have the willpower and a strong enough desire to do so, you can do it as well, but realize, it means that you are going to give up a lot for that year, and depending on the amount of debt you have and what your income is, even by giving up everything except the bare necessities, you might not be debt free at the end of the year.

The first key to reducing your debt is setting realistic goals that you can meet, so you don’t fail and then feel guilty for not accomplishing those goals. An unrealistic goal would be buying a house with a thirty year mortgage and thinking you can pay it off in a year, unless you paid less than fifty thousand for the house. But buying a house and saying that each quarter you are going to make the equivalent of a house payment and specify that it be applied directly to the principal, and you will reduce the debt on your house and pay it off more quickly. While we are on the subject of mortgages and reducing debt, if you get overtime or bonuses at work, instead of celebrating by buying something you always wanted with that money, use it to pay down your mortgage. Just remember when you include extra money in your mortgage payment, you need to specify that the extra money is to be applied directly to the principle. If you don’t, the mortgage company will simply use it as a partial regular payment.

Another important thing you need to do when you want to reduce your debt, is to not spend money on things you don’t really need.
If you have a lot of major credit cards and a credit card for each retail store you shop at, that’s a bad thing. Cut up all the retail store cards, because you can always use a major credit card at those stores if some great sale comes up. With your major credit cards, look at the interest rate on each card, and see which ones have the lowest interest rate. You might even call the companies and see if they will make some special offer to you to stay with them, like reducing your interest rate, or a special deal if you transfer the debt from your other cards over to them. This is known as consolidating your debt. With the right interest rate, you can save a lot of money by doing this. You don’t need more than two major credit cards; one you can have all your consolidated debt on and the other you use only for emergencies.

One of the most important things about reducing your debt is when you are already in debt, don’t increase it. Learn to live within your means and when you spend money, really think whether this is something you need or something you simply want, especially if you would need to buy it on credit. If it is a real need, shop around for the best price, or even consider buying used.

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