interest

Loans in Tough Times: Banks can make it just that much harder

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Trying to apply for a loan in a tough economy can often be a challenge. People with bad credit reports and scores have difficult times in securing loans for small amounts. Banks simply do not trust certain people with poor credit history.

Less Formal Lending

Fortunately, there are some institutions and companies that are willing to provide loans without any major hassles and problems. Some companies can lend money by taking any form of collateral from burrowers. For example, a burrower that has an expensive home entertainment system can get a loan for placing such property security for a loan.

Similarly, a vehicle can be used as collateral for a loan that involves thousands of dollars. You can visit 800loanmart.com for more information on applying for a loan from alternative sources.

Easier to process

These days, loans can be given out online by filling out simple surveys. Loan companies ask potential borrowers a few quick questions. An automated system checks the official information of a client and then accepts or rejects a request for a loan.

Loans that are given out with personal property as collateral usually come with lower interest rates compared to some banks and credit unions. Anyone that has a car title can essentially apply for a quick loan that would be very difficult to obtain from local financial institutions.

Check the interest rate before you borrow, and don’t be seduced by the lowest tier rates. They are teaser rates, for good reason… you could end up paying much more.

Considerable Caveats

There are some considerable caveats that you should note when borrowing finance like this, however.

Firstly, your car (almost any car) is a depreciation asset. In other words, over time your car is becoming less valuable, not more valuable. Therefore, should you be forced to sell your car to repay the loan, it will be worth less than when you borrowed. Check your car resale value yourself so that you can determine how much it is worth, and how quickly the value is depreciation.

Secondly, if you are forced to sell the car to repay the loan, it is likely that the fire sale will reduce the sale value even more as you have to sell in a hurry. And if the company that owns the car title sells the car … well then, as long as they get their money back, they won’t worry too much about the excess value.

Thirdly, and as a consequence of the first point, your interest rate will be higher than a secured loan on a property that you own; because the value is on a depreciating asset, the total amount is lower in value, and therefore the profit margins for the lender will be lower too. You might not want to know this, but this will result in a higher interest rate, and bigger potential penalties for late payment, etc.

However, if you are stuck for short-term funding, and family & friends can’t, then this kind of loan might make a lot of sense, even though the cost & risk is much higher for you.

So cover your a$$ first

You need to make sure you can make the payments! Don’t repeat this kind of borrowing, the interest rates over long periods will skyrocket! And, NEVER EVER, roll the loan over or borrow another loan to repay this one.

Linking

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Increasingly, some people are concerned about the links that I have placed in posts, and may request that these links be removed. However, I freely place ALL of my links, and frown on removing links from my site. Why? Because the web is exactly that, that is its core function to link one site to another with relevance, authenticity and value to the reader.

Webspam

However, a lot of webmasters have gone out of their way to create hundreds or thousands of spammy links to their sites, such tactics worked until recently updates by Google penalized such backlinks. Spammy links are links that are obviously junk: regurgitated paragraphs, snipped content, garbage blogs, spammy comments, directory spam, … and so on. So, if you have lots of spammy links, by all means, remove them. This is not what InvestorBlogger is about. Blog links, like the links in this blog, are not spammy. InvestorBlogger has never, and never will be, a link farm; nor will we create any form of webspam.

If you’re determined to go ahead and remove links from this site, you MUST follow the guidelines outline on the following page. I will not reply to requests that are vague, rude, threatening, inappropriate, insufficiently documented… so don’t piss me off. Mind your language & tone when you contact me (and any webmaster) requesting removal.

InvestorBlogger no longer removes links except perhaps if the resource is no longer available or has become unsuitable. Reach me through the contact page.

No Follow

I am generally not in favor of using ‘no follow’ and regret the mess Google has caused with its link/search policies in the last few years, and have sought to diminish Google’s influence over this blog by removing the Adsense, Search, and Webmaster Tools from this site.

I would urge you not to let Google bully webmasters into submission, and to show your displeasure by cutting your own use of Google down. The web needs diversity, not monopoly. And Google is in danger of becoming the web, if we are not careful.

3 Tips to Help you Deal with New Credit Cards

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There are many reasons why your wallet may be feeling the pinch right now, and poor lending choices are one of the culprits. If your credit ratings have been affected by lost jobs, poor income levels or bad credit scores, you may need to spend quite a bit of time, money and personal energy restoring your credit record through credit repair efforts and renewed borrowing.

If you are considering high interest credit credit cards from sites such as BadCreditOffers (which provide links to different types of cards, different rates and conditions), I would caution you:

1. Know the Credit Card Interest Ratesbadcreditoffers-1[2]

Rates for most credit cards are typically between 10%~20%, but can go much higher depending on the card, the agreement, and the penalties.

Know this and understand this. Don’t be fooled by “Intro APRs”, “Low Rates”, Freebies, or Minimum Payments. Always know the full rate, work out how much you would have to pay at that rate, and calculate how much interest you would pay over 12 months on a typical amount for your own budget.

Oh, and beware those N/A statements. Know why they say “N/A”!

2. Read the Agreement before you sign!

Make sure you read the agreement, esp. if you are going to use the card a lot. Make sure that you understand what penalties may be applied, what rights you have under the agreement, and who you need to contact if you have problems.

If you don’t understand the agreement, don’t sign it until you are happy that you do. Find someone who can explain it to you.

3. Check those Statements carefully!

When you get your card, keep it safely along with a record of your usage of the card. Then make sure you check those statements carefully each month. Check off each item as it appears and query any that are incorrect. Then make the payment before the due date to avoid penalties.

I am thankful that I can read my statements (even though they are in a language I’m not competent at), I do have someone who can understand the agreement, and I religiously check each and every statement. It really helps to keep tabs on your credit cards and your usage patterns. But I’m assuming you already do that, don’t you?