Monthly Archives: August 2016

Personal Loans for College Students: Are There Drawbacks?

Studying at colleges are getting incredibly expensive no matter what course you take. There are so many costs to cover including dorm rental, car maintenance, and pay utility bills. Students who have no option to cheaper financial aids such as school financial programs or scholarship will resort to personal loans. Consequently, they will have to carry a heavy burden to repay the debt upon graduation.

Many students are tricked into signing up for a personal loans when they saw the great rate advertised on the flyer. The truth is that the low rate only applies to the applicants that meet the criteria. Therefore, it is always important to study the fine print of the personal loans prior to signing up. Personal loans is usually expensive for college students because they lack credit history and their credit score is too low to help them get qualified for a good rate.

It offers a loan amount that range in between $1,000 – $50,000. Without a good credit score, the interest rate that you are asked to pay back will be significantly higher. The debt to income ratio is another factor that will be considered when they decide whether to approve the personal loan.
You need to provide a stable income proof so that the bank can put their trust on you that you will repay the loan. If you can’t show your income proof, most banks will still approve the personal loan if you can find a co-signor that possesses an adequate income proof. For some students, it can be quite a challenge to find a co-signor if they couldn’t get their parents to be a suitable co-signor.

If you want to take out a personal loan to buy something you want, make sure it fits your budget and you are able to make the repayment every month. You must never forget to check the rate of the loan and compare it with other loan companies. Besides the interest rate, you will also be charged with fees such as origination fees that can be about 1% -5% of the amount you want to borrow.0

You should look to better options like private student loans before considering to take out a personal loan. Private student loans offer lower interest rates and they are qualified for deferment. The private student loans is for paying your hostel, tuition and other living expenses while you are studying in the college even though it is not allowed to be used for funding your recreational expenses such as holiday. You only have to start paying back after graduation.

If you are planning to get a personal loan to cover you to compare the loan rates. This will give college costs, make sure you use the online personal loan comparison you an overview of the market rates for the personal loans and sign up on the best one with the criteria you can fulfill.

Payment Advance Loans from Pawn Shops, What are the Drawbacks?

There are some pawn shops that offer payment advance loans for people who are in need of money urgently. Pawn shops usually offer small loans that range from $75 – $100. It is much easier to get a lawn from a pawn shop compared to applying for a loan at a local bank but you might want to consider its disadvantages prior to making a decision. The following are some of the drawbacks of getting a loan from a pawn shop.

Most pawn shops’ loans have short repayment period, for example 30 – 60 days, so it is unwise to apply for the loan if you know that you won’t have access to enough funds to pay back the loan in such as short period of time.
You have the option of extending the loan period if you don’t have enough money to pay back the loan when the due date arrive. But, you must remember that you have to pay higher interest if you roll over the loan so that it becomes more expensive to afford the loan.

Secondly, you have to use anything of value as a collateral to secure the payment advance loans at the pawn shop. Example of items that you can pawn are jewelry, and electronic gadgets. Usually, the pawn shop will give a much lower appraisal for the valuable item compared to the appraisal value in the market. So, you have to prepare more valuable items to use as collateral in order to obtain the loan from the pawn shop. There are some pawn shops that are willing to negotiate the appraisal value of the valuable that you want to use as collateral.

Thirdly, pawn shops’ loans have incredibly high interest rates that makes it very expensive to repay them. The average interest rate that is charged on a pawn shop loans is about 120% – 300%. Every state has a different limit on the highest interest rate the pawn shop is able to charge. You should only apply for this type of loan if you are in a desperate situation and there is no other way for you to borrow the money you urgently need for covering your emergency expenses.

The pawn shop will also charge you other fees, for example storage cost and fees for the insurance coverage of the collateral. If you are unable to repay the loan, your collateral will belong to the pawn shop and they have the right to sell it to get back the money that you fail to pay on the loan. In some states, the pawn shop is supposed to return to you the excess money from the sale of your collateral. However, you should not expect to get any money back if you decide not to pay back the loan.