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Monthly Archives: April 2017

How Do Auto Title Loans Works?

# Auto title loans are short-term loans that are secured using your auto title, that is, by using your car or any other vehicle you own as collateral. Getting an auto title loan does not require a credit check. The lender will give you the money and at the end of the auto title loan period, you pay it back with interest. During the loan period, you can continue to use your vehicle; however, the lender will keep a spare set of the keys as well. If you default on your loan payment, the lender repossesses your vehicle.

# Since your vehicle has a clear title, a loan can be got without the processing delays that plague other types of loans.

# Auto tile loans are short-term loans with the repayment period varying from 14 days to a month of the loan being issued.

# Rollover plans are available in case one is not able to pay off the auto title loans when due. Rollovers are, however, accompanied by large interest payments. You could end up paying an amount many more times the auto title loan amount secured under such schemes. It so happens sometimes that the annual percentage rates (APRs) on many auto title loans are in triple digits because of repeated rollovers.

Is an auto title loan right for you?

Auto title loans can be a very high financial risk for auto owners, especially those who borrow an extravagant amount as loan. A single miss in the repayment of an auto title loan could result in your auto being reclaimed immediately. To add to your woes, you cannot prevent the lender from generating additional funds by selling your auto above retail value.

For this very reason, auto title loans are a very low financial risk for lenders. Borrowers often secure loans for far less than the value of their autos but get embroiled in a vicious cycle of rollovers and repayments, which costs more than they can imagine.

The Issue On Personal Loans and Secured Loan

The Issue On Personal Loans

When it comes to personal loans and especially unsecured personal loans, there are no particular requirements as to what the use of the money should be. Thus, the money you obtain from a personal loan, even if you have requested it for a particular purpose, can almost always be used for any other purpose you can think of. Most personal loan contracts have no stipulations whatsoever regarding the use of the money.

Nevertheless, certain personal loans that are issued only to consolidate consumer debt (mainly to pay off credit card balances), can include among the loan contract clauses a stipulation requiring that the money has to be used only for that purpose or else, the whole loan becomes immediately overdue and has to be canceled. Thus, when it comes to these loans, you need to pay special attention to the fine print of the loan contract.

The Issue On Secured Loans

When it comes to secured loans, the scenario is significantly different. The requirements for approval on secured loans may be lesser in terms of credit and income but considerably harsher in terms of security, documentation, and other formal requirements. Thus, the use that the money will receive is almost always part of the loan contract and it even varies the terms of the loans.

For instance, even though there are home equity loans that provide amounts that can be used for any purpose, home equity loans that are designed for home improvements require that the money is actually used for that purpose because the advantageous terms that these loans feature are justified by the fact that the property’s value will increase due to the improvements. The value of the property increases and thus, the asset securing the loan has a higher equity further protecting the lender.

Home mortgage loans for home purchases also require a specific use for the money (the purchase of the property) and generally speaking all secured loans that feature special rates require for approval a commitment from the borrower to use the money for that specific purpose and nothing else. The suggestion is then to read the loan contract carefully and if you are not sure you will need the whole amount, opt for a regular loan and a lender that does not include in the contract, clauses that restrict the use of the money.

 

Have a Bad Credit but Need A Student Loan, How?

Bad credit is always an obstacle when you need finance. Lenders will not grant money to someone they think will not be able to repay it and that is what bad credit tells them. Thus, further assurance of repayment needs to be offered in order to convince them. The key is to use the benefits of certain types of loans to your advantage and find a way out whenever a loan turns out too onerous.

Government Loans For Students Do Not Consider Credit Score Or History

Those loans for students that are granted by the government do not consider credit score or history as a variable for approval. This is due mainly to the fact that those who apply for these loans have no credit history at all but also because these loans are meant for helping those going through underprivileged situations to pay their way through college and graduate.

Stafford loans (granted by the US department of education) and Perkins loans which are also granted by the federal government but are assigned according to the needs of the applicants and not on a first arrived first served basis are examples of the above. As long as there are no records of non-attendance of federal loans, your credit score and history will not be an obstacle to obtaining a federal student loan.

PLUS Loans When The Money Granted Is Not Enough

PLUS loans are meant to fill a gap that turns federal loans into an imperfect financial source. Federal loans presuppose that the applicant will have aid from family members and thus, the amount of money granted usually does not cover for all the costs of college studies. PLUS loans are granted to parents to let them help with their children college payments.

PLUS stands for Parent Loan For Undergraduate Students and are low interest loans for parents that let them borrow up to the full cost of their children education as long as there are no other financial aid in which case, the amount of additional aid must be deducted from the overall PLUS loan available amount. These loans require credit checks, but the credit report that will be verified is the parents’ and not the student’s.

Private Bad Credit Student Loans And Consolidation

Sometimes federal loans are simply not enough and you need to resort to private funding. PLUS loans are an option but are not always available if parents do not meet the income or credit requirements. Bad Credit Private Student Loans are available as well as No Credit loans, only critical delinquencies like default or bankruptcies can prevent you from getting finance if you can afford it.

However, you need to bear in mind that the cost of financing will be higher with bad credit and that whenever possible you should consolidate your student debt if you can obtain a lower interest rate due to an improvement on your credit score and history.