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Money Management

Who makes payday loans?

In the early days of cash and loans, most payday loan lenders operated out of small check cashing shops, back when the advance pay day loans industry was simply a side service of these shops. As the cash and loans business evolved over the years, payday loans lenders saw the huge potential of this market, and since then it has evolved into a national phenomenon. There was a huge flood of consumers wanting to take advantage of this product, and payday loans lenders realized they needed to change their businesses to focus mainly on these types of loans. People constantly find themselves in negative financial situations so the demand for small cash loans just keeps on growing. 

Today the largest, fastest and easiest group payday loan lenders can be found online, although this isn’t the only option. The majority of these companies also offer other services such as bill pay, money order cashing and check cashing services, but the main focus of these payday loans lenders is primarily on offering 24 hour cash loans

The online variant of quick cash loans with no fees has exploded as customers found that they could get their hands on the cash much quicker and more easily by filling out an application, than by walking into the bank. The banking process is a long and extensive one that can take days or even weeks before the money is there. With instant payday loans, the money can be deposited into the borrower’s bank account by the payday loans lenders in as little as one hour. The online process is simple and easy and as a result, the payday loans business has seen a huge explosion in its market. 

Banks have since realized that the competition of these instant payday loans businesses has grown to be very stiff, and they’re just now starting to act. As the bank loaning process was too long and extensive to compete with the small loan business that payday cash and loans and payday loans lenders are taking over, many banks have entered the market in a roundabout way, by offering loans to the payday loan lenders themselves, sometimes even joining into partnerships with them so that they can take over this growing niche. 

There are many other businesses that now offer payday cash and loans including title loan lenders, pawn shops and even department stores. There is also a growing number of standalone payday cash loans to meet the growing demand by people in need of these services. The online payday loans business has been taking off extremely well over the last several years and payday loans lenders have realized that the internet can be an extremely effective way to get people the money they are so desperately in need of. 

The business has evolved from a small side service of check cashing shops to a full-blown industry of its own, competing with banks and other lending institutions.

Money Management

Car Loans FAQ’s

Car loans are frequently becoming more and more available to us, mainly due to the economic climate. Maybe you are buying your first car, or you have never used any car financing before. Either way there will be a whole host of questions you need answers to before you sign on the dotted line. Finances can be confusing at the best of times, with a variety of interest rates, loan periods and a whole host of companies all vying for your attention; it is not the easiest mine field to navigate. Before you start shopping for your brand new vehicle, here are some of the most commonly asked questions that should help you battle your way through to the right loan for you.

Can I get a car loan even though I have bad credit?

If you know that your credit history is far from perfect, then you might be worried about whether or not you can even get a car loan. The first and most important thing to do is to get a copy of your credit report. This will tell you exactly where you are up to with your personal credit score. Once you have this information then you are able to start shopping around.

There are plenty of financial institutions that offer car loans for bad credit, but you will need to be extra picky as to which one you choose as mistakes could lead to your credit being damaged even further. Don’t just rely in the dealer to grant you your financing as you may find that this comes with a higher rate of interest than other lenders, at the end of the day they make extra money through financing payments. Car loans for people with bad credit do come with a higher interest rate than other loans, so before you decide to sign for the loan, make sure you know the amount you can afford to pay back each month; the most important thing is to not get into any further debt or to damage your credit at all, in fact paying the amount you can afford will help you to rebuild your credit.

How do I know whether a second hand car or a brand new one is best for me?

Car loans are obviously determined by the total amount you need to borrow to pay for the vehicle. So, if you can’t afford to pay back a large loan, then a second hand car may be the perfect option for you. In essence the decision to buy pre-owned or new comes down how much finance is available to you and what form of car you want/need. Here are the ins and outs of both to help you to make the right decision for you.

New cars will come to you with a manufacturer’s warranty, usually giving you up to 3 years coverage. This is the beauty of buying a brand new vehicle. Even though it is less likely to breakdown or need repairs than a pre-owned car, it is still covered by the manufacturer. When you get your new car, there is likely to be no nasty surprises with it; it should be in perfect condition with all the latest safety and technology features as described.

Brand new cars are considerably more expensive to finance than their used counterparts and can lose up to 40% of their value as soon as you get the keys – yes that is an awful lot of money to lose straight away. Due to this and the higher fees you will have to pay each month, your comprehensive insurance will also be greater.

Pre-owned cars, on the other hand will require smaller loans as they are in general far cheaper to buy. Remember though, that they are cheaper for a reason; they will have a certain mileage to them that can flag up certain issues with the vehicle, that you wouldn’t get from a new car. This could be anything from repairs that need to be made through to a lower level of safety features.

The benefits of a used car are the lower repayments, lower insurance costs and the vehicle will retain its value for longer. This is a perfect form of vehicle for brand new drivers, or someone that simply needs to get to or from work every day. It is worth noting through, that although you are paying less each month in loan repayments, you may need to cover costs for repairs etc.

The main thing to remember is that choosing your car loan will be very personal to your circumstances, so do your research. You will need to know how much credit you can get, how much interest you will be required to pay and what sort of car will suit you. Once you have all these answers, picking the car will be easy.

Money Management

How to Get Your Credit in Shape for a Home Loan

When buying a home, the majority of your financing options depend on your credit score. So before you apply for a home loan, make sure your credit score rating reflects positively on you as a borrower. You want to put your best foot forward, because even with interest rates at historic lows, you still need to qualify for a loanto take advantage of them. Take the necessary steps to improve your credit score before you apply for a loan, and you’ll have better chances of qualifying for the best possible financing rate.[1] Rebuilding or improving your credit score isn’t difficult, but it does take time, dedication, and careful budgeting.

Repay Your Debts

Start repairing your credit through debt repayment. Take a look at your budget and figure out if there are any areas where you can cut back. Do you really need to pay $100 a month for cable? Can you cut back on electricity and water use? Can you carpool to work to lower your gas expenses? Allocate any savings you can find to debt repayment. Repay your debts with the highest interest rates first, so your more expensive loans don’t continue to grow.[2] Very often, that means repaying your credit card balances first, since they have such high interest rates. Once you’re out of the hole with your credit card company, move on to lower-interest debts like student loans or auto loans.

Check Your Credit Score

After your debts are repaid, get a free credit report from AnnualCreditReport.com, where you can request reports the three major credit bureaus, Experian, Equifax and TransUnion.[3] Make sure there are no fraudulent charges or other issues. Credit reports can alert you of late payments that may have escaped your notice or if there are credit account you may have opened and then forgotten about.[3] If you find an error on your credit report, contact your credit card issuer so it can be resolved right away. There’re required by law to investigate your disputes. Be sure to repay your credit cards and resolve any delinquencies before applying for a home mortgage. A realistic look at your current credit score gives you a solid idea as to how much you need to improve; it gives you a solid number to improve upon.

Please note that if you have credit cards that you forgot about, it may not actually be in your best interest to cancel them right away. By closing an unused card, you’ll lower the total amount of credit that’s available to you. That will raise the percentage of your total credit used, which will lower your credit score.[3]

Pay Bills On Time

You can also help improve your credit score by paying your billson time. If you’re forgetful, try setting up automated payments online.That way your biller can just deduct your bill directly from your bank account. You won’t have to worry about missing payments or late fees.[2] You could also consider setting up reminders on your phone or computer that update you regularly about the status of your bill. Showing that you have a credit history of making successful, regularly scheduled payments will show lenders how reliable you are.

Get Pre-Approved

When you’re considering buying a home, getting pre-approved can give you a realistic look at how much financing you’ll receive and how much you need to save for a down payment. Pre-approval can also help you estimate the toll your mortgage payments will take on your monthly budget.[2]If your pre-approval shows you that your finance aren’t ready to handle a home loan yet, wait to move forward. Continue to build your credit score by keeping your credit card balances low, paying your bills on time, and avoiding any new debt.

Buying a home can be an exciting experience, but it requires you to jump through quite a few hoops. Make sure your credit is in peak condition before you apply to ensure that you have a positive experience when applying for a loan and financing a house. All your saving will pay off when you qualify for a low interest rate; it will lower your mortgage payments and shorten your repayment period. The less you have to pay, the faster your home will be completely yours.

Byline: Rachel is a grad student who is all too familiar with loans and strict money management. She also writes articles for Check ‘n Go on responsible borrowing, investment, and budgeting.

References 

[1] “How to Buy a House.” WikiHow. n.d. n. page. Web. 23 Apr. 2012. .

  [2] Purcell, Patti. “Getting your credit score in shape for home ownership.” Citizens First. n.d. n. page. Web. 23 Apr. 2012. <http://www.citizensfirst.com/financial-life-archive/item/1-getting-your-credit-score-in-shape-for-home-ownership.html>.

 [3] Orsini, Patricia. “Get Credit Score in Shape Before You Shop For Home.” AOL Real Estate. 15 07 2010: n. page. Web. 23 Apr. 2012. <http://realestate.aol.com/blog/2010/07/15/get-credit-score-in-shape-before-you-shop-for-home-sponsorship/>.

Money Management

Should You Have An Automatic Bill Pay Setup

The easier you can make something, the more likely for you to do it. When it comes to savings the best thing to do is automatically have money transferred to savings. Well, it’s the same thing with bills.

I had a student of my free Jumpstart Your Financial Freedom eCourse ask me my thoughts on automating your monthly bills. I think it’s a great thing to do so that you don’t forget about your bills and get a late fee or possibly a utility cut off. Yea that’s an extreme but a late payment can happen. I’m not a fan of flushing money down the drain like a late fee, so I have a setup that I’ve been using successfully for the last year.

My Setup

I don’t have many bills that I pay directly due to having roommates. However, If I didn’t have roommates I’d just add those bills into the system. What I do is have a credit card, a secured card, as my exclusive bill card. I set up all of my reoccurring monthly bills to directly get paid with that card. This way I have one source to go through and can check all of the bills to see if any of them are out of the ordinary. If they are I check out the bill itself to see where I can cut down or to see if there’s a mistake I can get corrected.

Warning

I did mention that you should check your bills for a reason. This isn’t a set it and forget it type of system. This is a set it but keep an eye on it system. You don’t have to worry about paying them on time, but you do have to worry about if your bills are going up or not.

This set up helps me to keep organized as well as help build up my credit since the card stays active. Once I got all of my bills set up I be sure to stash the card away somewhere so I don’t carry it around with me. That makes sure I don’t use the card for other purposes.

What do you think about automatically paying your monthly bills?

Money Management

Does Saving Excite You?

It’s not a question that you often hear asked but there is no denying its positive value especially for those who are concerned about their future; so we ask, does saving excite you? Are you one of those people looking to prepare for the rainy days? If your answer to these questions is “yes”, then perhaps it is time for you to choose a cash ISA account. 

For those who are wondering, a cash ISA is much like most savings accounts offered by banks. It offers a great way to stash away a fraction of your earnings and convert it into savings. It is not uncommon for many people today to head to the bank to open a savings account and in fact, the truly savvy maintain multiple savings accounts in many banks and for various purposes. 

If indeed, you are excited with the concept of saving, then you would be pleased to know that a cash ISA takes the idea of savings to a whole new level. This is because compared to a traditional savings account, a cash ISA carries a lot of advantages. Consider the following short list of positive benefits that you can expect from cash ISA: 

  • Tax advantages. A normal savings account is taxed just like most profits. In many cases, it is levied a capital gains tax which eats into the profit itself. This is not the case with cash individual savings accounts; by law, cash ISAs are not taxed during the holding period or during withdrawal. This maximizes the profit that you can expect to draw out of each investment.
  • Cash ISAs are convertible to stock ISAs should one choose to do so. This increases the flexibility of the investment and simplifies the process of investing without having to withdraw and personally purchase financial instruments like stocks and shares. With a cash ISA, you can follow through the prescribed conversion process and your host bank takes care of all the processing for you. 

You do not need to be a deeply enamored with the idea of saving to appreciate the value of cash ISAs, although it bears mentioning that being excited with the idea of savings can give you more than ample motivation to take advantage of the benefits of financial instruments like the cash ISA. See how you can incorporate it into your investment goals so you can invest safely, and enjoy the tax benefits that come with cash ISAs.