Paying Off High Interest Rates

Is it a good idea to take out a loan to pay off other loans? If you have the intentions of paying off a higher interest rate loan with one that you can obtain with a lower interest rate than the answer is yes. You must make sure that there will not be any penalties for paying the first loan off early to make it cost effective.

When you took out the first loan there are conditions that you are going to want to review before you pay off the balance. Many companies will charge penalties for paying off the loan before the terms of the loan end. This insures that they will be making the money on the interest of the loan that they expected to make. If you have this clause tied to your original loan than you must make sure that you will actually be saving money by paying it off with another loan at a lower interest rate.

If you do not have the clause tied to the original loan then it is definitely a good choice to obtain the loan with the lower interest rate. You just have to make sure that you use that money for that purpose and don’t end up carrying to loans when you only intended on having one. This will also help your credit rating as the first loan has been paid off, but you still are developing credit by having the second loan still outstanding.

This is also common practice when it comes to credit cards. There are always offers to transfer balances from one credit card with a higher interest rate to another with a lower one or even no interest for a small amount of time. Be sure there are no transfer fees tied to this action or you may be paying more in the long run. Also make sure that you can pay off the balance on the card before your initial lower interest rate expires, usually a year. Otherwise you may not be saving any money.

Transferring balances and paying off loans can be a smart way to save money and build some credit history. When you transfer credit card balances, make sure you do not cancel the first credit card as long as it does not have an annual fee. Keeping the account open will build your credit; just make sure you don’t use the card unless you absolutely have to. Lower interest rates are the way to go, just make sure you are saving money in the long run.




Taking a Personal Loan While Unemployed

So, bad financial times have fallen upon your life. Your company decided to make cuts and you were in the mix of the people being let go. You are finding yourself out of a job and the bills still keep coming in. Is it wise to take a personal loan to help you through this rough spell?

If you have to ability to secure a personal loan while you have a lowered or non-existent household income then you may want to jump on the chance to obtain that money while you have the opportunity. It is very hard to acquire a personal loan if you have diminished your income. If you qualify now, consider taking the loan to have some extra money as a cushion while looking for a new job, if you wait, you may not be able to get that loan down the road.

Whether or not to take on more debt while unemployed is a tricky question to answer. If you do not have any significant savings in the bank, you will probably need some extra cash. Counting on unemployment is not going to fully pull you through these hard times. Unemployment will help, but it will only be a fraction of your previous income.

The most important thing to do during this time is changing your spending habits. You must cut way back on everything during this crisis. Many people make a huge mistake and think they are going to be re-employed right away, if that’s the case then great, in reality it will take longer for most people. Cutting all of the luxuries out of your lifestyle is imperative when you are experiencing a financial crunch. No more satellite TV, going out to dinner, even going to the movies; you must cut back on all of your extras and focus on paying the bills.

If you have some savings in the bank that can pull you through then this is good thing. Why would you need to take a loan? One of the most common answers is that “I don’t want to touch my savings”. Well if you think about it, you are actually hurting your overall financial profile by taking on more debt with the personal loan. If your situation lasts longer than you planned, you will be tapping into your savings at some point, but now you will have to use some of it to pay off that loan.

If you know your time off work is going to be temporary, by all means, secure a personal loan to help you through. If you are uncertain about your next job then it is time for major lifestyle changes and time to go into a major spending freeze. Pinching every penny can be a big difference in the long run. Adding on another monthly payment of a personal loan may not be the wisest decision.

Why people choose to apply for Personal Loans

There are so many different types of loans available, most of which are design for a specific purpose. The personal loan is one of the most attractive loans available to date. A personal loan can be used in a number of ways and with the easy repayment terms of these loans they are more effective than most loans. You can find a vast number of online vendors as well as banks that offer personal loans but it is still important to shop around for the best interest rate.

Personal loans are often use for home improvements or remodeling. They have a lower interest rate on them when compare to construction financing options and credit cards. When homeowners decide to use their credit cards or apply for lines of credit from home improvement stores, they run the risk of running out of money to complete their projects. With a personal loan, you know exactly how much money you have to work with and the size of a personal loan will likely be three to four times greater than the limit on a line of credit or credit card.

Personal loans are also commonly used for debt consolidation. They have better interest rates than most debt consolidation loans and have an easier payment plan established. You typically will not find any penalties when it comes to paying off your personal loan, whereas you may encounter this type of a problem with a debt consolidation loan. The personal loan has quickly become the most sought after style of loan.

When using a personal loan to consolidate your credit card debt, keep in mind why you took out the loan to begin with. A lot of people who use personal loans to consolidate their credit cards, they quickly begin using the credit cards again and find themselves back in the same situation. Sitting down and figuring out a method to help control your financial spending or meeting with a financial advisor may be something to consider as well.

Should you accept a pre-approved personal loan?

So you receive information that you are pre-approved for a personal loan. There are many questions to answer before you decide to accept the loan. Normally you will have a decent credit score for a financial institution to offer you a loan, or your credit score has just recently been upgraded. Everybody needs extra cash in their lives, but should you take the loan? Let’s ask a few questions to see if taking the loan is right for you.

Why are they offering you a pre-approved loan?

Generally speaking, you have probably recently paid off the balance of one or more credit cards and financial institutions are assuming that you have freed up your monthly budget and you can afford to take on more debt. This situation is probably true; however you may not want to immediately put yourself back in that situation. The financial institutions want you to use the money that they are offering you and are hoping that you find it beneficial to accept their loan. They have looked at your credit history and feel secure in offering you a loan.

Do you need extra cash for some expenses?

If you are in need of some extra money for a new car or some household repairs, then it may be wise to accept the loan. Just be wary not to jump on the loan for some luxuries that you would like to purchase. Many times the interest rates are higher than if you were to go to your bank and apply for a loan. In these troubled economic times it may be best not to add more debt to your financial portfolio. If you really need the cash then you probably should accept the loan, but make sure that you understand all of the terms offered and know that you can afford to add the extra monthly debt to your expenses.

How much money are they offering you?

Normally pre-approved personal loans that are not tied to a house purchase will not be an extremely substantial amount of money. Make sure you check the interest rate that is tied to the loan and if you actually require extra money, see if you can only accept a portion of the loan offered. You may be better off using your credit cards to help out with the necessities of life.

Just remember to ask yourself if you truly need the loan offered. It can be very tempting to accept a pre-approved loan, but it can be a burden.

Why a Personal Loan is Better than Using Credit Cards

There are several benefits to taking out a personal loan instead of using your credit cards to make a purchase or use for some form of financial obligation. Many people find themselves in a situation where they need a large sum of money for a particular situation and end up using their credit cards as a quick and convenient way of obtaining the funds.

The problem that arises is that you are usually paying a higher interest rate on the credit card than if you were to go to a bank or other lending institution for a personal loan. There are also many fees that people do not consider when it comes to the credit card. You can end up getting in over your head if you put a lot of debt on your credit cards due to the fact that the interest rate fluctuates and late fees add up if you miss a payment.

In most cases when you take out a personal loan you are obligated to pay back the amount borrowed plus interest and hidden late fees or convince fees do not find themselves being tag on to the amount of money borrowed. You have one monthly payment to one institution and you do not find yourself trying to pay on four or five different credit cards.

Another benefit from taking a personal loan is improving your credit history. You already have established credit with the credit card companies, by taking a personal loan from a bank or other lending institution; this broadens your use of your credit. Your credit score with increase with every successful personal loan that you pay off.

The choice of using a personal loan for financial obligation is usually a much wiser one than adding on debt to your credit cards. Make sure you have the means to pay back the loan taken and try to trim your spending habits if you have an outstanding personal loan. Your main focus is paying back that loan within the time allotted and you should not rely on your credit cards to make unnecessary purchases if you have an outstanding personal loan.

A lot of people use personal loans to pay off their credit card debt due to the fact that it is easier to maintain one monthly bill at a lower interest rate than having to pay on several different cards with fluctuating fees and interest rates.