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Seek Calm Financial Waters with Loans

September 8, 2015 By Thomas Bawdy Leave a Comment

The following post is brought to you by: Realistic Loans

Over the last decade there has been a fair amount of financial turmoil. It should be everyone’s aim to reach a position of financial stability. There have been times in the last ten years when that was extremely difficult. It is easier now but there are signs that many still fail to get the message. Online lenders can often help; it is a matter of getting in touch.

As the misery of the recession increased more and more people lost their jobs. With little regular income they soon defaulted on their financial liabilities. In plenty of cases that meant the mortgage and foreclosure was an inevitable consequence. Often they were meeting their daily expenses, simple food in many cases by using a credit card even though they were building up a stubborn balance that incurred penal interest at the end of the month. That was only possible until they had reached their credit limit. In the days before the recession started credit card companies would generally increase that limit to encourage more spending. Those days were gone; once their credit cards became no good for cash they faced even more severe problems and the companies pestering them for repayment.

Improving

With the recession past and the economy improving things are much better though the complacency of both borrowers and lenders in the days before the Collateralized Debt Obligation (CDO) Crisis actually caused the Wall Street problems were gone. Everyone had to be more responsible with money. Or have they gone and is the typical American financially responsible?

The Figures

Federal Reserve Statistics reveal that the average American household owes approaching £7,400 on credit cards; the figure rises to $16,000 on indebted households.  Credit cards are just one part of household debt; mortgages are the main debt though they tend to be long term, low interest and even though recently the real estate market has had it problems, growth is returning slowly. Student loan can be relatively high as well but it is the credit card that is producing the worrying debt; people often buying things they cannot afford and facing potential problems in the future. The total national credit card debt is a staggering $900 billion, over 3% up on a year ago.

One positive aspect of an increase in credit card debt is that consumer spending is increasing and that does help the economy to grow. The problem is that credit card debt sometimes goes up because households are not able to pay their regular bills from monthly income.

Analysis

Figures always need close analysis. There are some figures suggesting the total credit card debt nationwide has fallen but within that fall there is a figure that represents money that has been written off by credit card companies as non-recoverable. A few months into the recession credit card debt peaked; it then fell because of defaults but later in the recession credit card companies did relax a little.  They had to because they were not making money by reducing the number of consumers holding their cards and it is clear from the figures three or four years on that consumers have been happy to sign up to cards and spend.

Self-Discipline

The problem lies with those people who lack the self-discipline to use credit cards properly; for convenience with the balance paid off in full at the end of each month. That avoids penal interest being added. Once a credit card balance is established it is extremely difficult to manage and expensive at that. Those households with that $16,000 debt should take out a credit loan which is likely to be at an interest rate of less than half that credit card companies will apply. If they take out a term loan which asks for monthly instalments it will remove the problem of the balance. However without the self-discipline to curb spending and never build up a balance again, the exercise will be useless.

This form of loan which is often referred to as a ‘consolidation loan’ can pay off existing debts at a competitive interest rate to rectify a household’s financial problems. Loans are readily available from a new breed of online member that provides a quick and easy application process for those that can demonstrate a regular income whether they have a good credit history or not.

Filed Under: loans Tagged With: loans

Lending Club Is Now Offering Business Loans

August 28, 2014 By MelissaB Leave a Comment

You likely know Lending Club is a peer-to-peer lending site that offers personal loans to individuals as well as the chance for personal investors to invest by lending money to individuals.

Now, however, Lending Club is expanding their services and offering business loans.  This is of particular interest if you own a business.

If You’re Looking to Lend Money to a Business

If you’re already investing in Lending Club, you may want to lend money to a business as well.  However, ordinary investors cannot yet do that.  “For now. . .the program is limited to institutional investors such as hedge funds, insurance companies, and family offices that manage wealth for the very rich, but eventually the company plans to let anyone invest” (Bloomberg Businessweek).

How to Qualify for a Lending Club Business Loan

Business funding can often be very difficult to get, so Lending Club’s business loans offer businesses a nice alternative to traditional funding options.  In order to qualify for a loan, a business must meet these minimums:

  • At least $75k in annual sales,
  • a personal guarantor by at least one 20% or greater owner of the company, and
  • the guarantor’s personal credit must be at least “Fair”

What Are The Loan Details?

Businesses that apply for a loan can borrow up to $100,000 for 1 to 5 year terms.

The interest rate is fixed for the life of the loan and can be as low as 5.9% to as high as 29.9%.  The rate your business gets depends on a variety of factors including:

  • how long your business has been established,
  • how financially strong your business is, and
  • the credit worthiness of the business, among other factors.

“Lending Club Chief Executive Officer Renaud Laplanche says the average interest rate will be 12.5 percent” (Bloomberg Businessweek).

Lending Club offers a “check your rate” button on their website.  Simply enter how much you need and what you plan to use it for and then you’ll be taken to a form to fill out that will check your potential rate.  (Filling out this form does not affect your credit score in any way.)

One of the best perks of the Lending Club Business Loan is that you can pay it off early with no pre-payment penalties.

The Fine Details

When borrowing, checking the fine print is always best.  There are a few other fees attached to the loan.

Borrower Origination Fee

The origination fee can range from 1 to 6%.  That money will be taken off the top of the loan.  If you borrow $10,000, for instance, and your origination fee is 3%, you will receive $9,700 because the $300 origination fee is taken off immediately.

The borrower must pay the origination fee to cover the cost of issuing the loans as well as the screening process.

Unsuccessful Payment Fee

If your automatic payment fails, you’ll be charged $15.

Late Payment Fee

A borrower is given a 15 day grace period.  If your payment is later than that, you will be charged either $15 or 5% of the unpaid monthly payment, whichever is greater.

Check Processing Fee

If you opt to pay via check, you’ll be charged a $15 fee.  If you use direct debit, you are not charged a fee.

Funding your business can be difficult, especially if you go through traditional channels.  Lending Club is expanding their business to offer business loans, which is one more way you can potentially find money for your business, whether you’re using it for debt consolidation, marketing, or another purpose.

If you have a business, would you look at Lending Club as a potential lender?  If you invest in Lending Club, would you like to invest in their new business loans?

Filed Under: Business Finance, loans, ShareMe Tagged With: business loans, lending club, loans, small business loans

5 Ways a Better Credit Score Leads to Better Finances

August 30, 2013 By Shane Ede 14 Comments

BookkeepingEverybody knows that you want to have the best credit score you can.  Why?  Because the better your credit score, the better the rates you can get on your loans, of course!  But, did you know that there are other reasons to try and improve your credit score?  In fact, here’s five ways that having a better credit score can lead to better finances.

  1. More money.  This is the obvious one.  A better credit score leads to better rates on loans (see above), and better rates lead to less interest paid over the life of the loan.  And less interest paid leads to…  (wait for it) a  better bank balance!
  2. Better rentals.  It’s a sad fact that many landlords are doing credit checks on prospective tenants these days.  They’ve got assets to protect, so it’s a smart move for them, but the fact that there are so many landlords out there getting burned that it’s become necessary is sad.  But, having a good credit score can help make sure you don’t get turned down for that great apartment down by the beach!
  3. Quicker payoff.  This one goes really closely with the first point.  With those lower rates, and lessened interest also comes the ability to pay the loan off quicker.  And, of course, a quicker payoff means a much better financial situation.  Especially if you avoid any new loans afterward.
  4. Any loan you like.  If you must loan money, at least do it smartly.  With the current state of affairs, you can’t just walk in and get a loan that has a pulse as it’s only requirement.  In fact, many banks and credit unions are cutting way back on their sub-prime lending for anything.  (P.S. the term “sub-prime” doesn’t just apply to mortgage loans) If you have poor credit, it’s much more likely, today, that you’ll get turned down for a loan altogether.  Better credit means that if you really need a loan, you probably can have one.
  5. Less fees.  We all hate fees.  Well, all of us except the financial institutions.  A growing number of them are making a growing amount of their revenues from fees.  And many have moved to an account structure that is based off of risk.  And risk is determined by credit score.  A lower credit score could mean an account with higher fees, or with monthly fees that some accounts might not have, while a higher credit score might qualify you for a different account without those fees.

So, you see, having a good credit score can really send your finances in the right direction.  And, having a bad credit score can really send them into the dumps in a hurry too!  Unless you’re very dedicated to the extreme frugaler lifestyle, and never plan on really using money, it still pays to have a good credit score.  It doesn’t take much to build it, and you might be glad you did someday.

photo credit: o5com

Filed Under: budget, Credit Score, Debt Reduction, economy, loans, Saving, ShareMe Tagged With: credit, Credit Score, finances, lending, loans

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