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Great Tips and Advice for Managing Your Money

Today, online loans are popular because of the convenience that it provides money borrowers. The smooth application process and quick access to cash greatly benefit people who want to borrow money.

Although some folks may not be willing to share their personal information with online lenders, there are many people now who consider online loans as their go-to loan option.

Here are some things you need to know about online loans and what you need to keep in mind before borrowing money from an online lender.

What are Online Loans? getting an online loan

Online loans are money borrowed from an online lending company. These loans are unsecured, which means you don’t need to offer an asset as collateral for the money you borrow.

If you want to borrow money from an online loan provider, you can just search the web and compare different loans offered by different loan companies. Make sure to inquire about the eligibility requirements, turnaround time, application fees, interest rates, and loan terms.

Unlike mainstream banks and credit unions, online lending companies are not so strict with eligibility requirements. Most online lenders may approve your application even if you have a bad credit score. You only need to make sure that you have a regular source of monthly income to increase your chances of getting approved.

The application process is also very straightforward, and you can take out the money within the day of your application or the next business day.

Risks of Online Loans

As mentioned earlier, there are advantages of taking out an online loan, namely: no-hassle application process and quick access to funds. However, there are also some downsides that you need to be aware of this loan option.

For instance, you may encounter lenders that are not following good lending practices. Predatory lenders that offer online loans are not uncommon. Many of these online lending companies impose high-interest rates on their loan products, which puts borrowers in a debt trap.

Tips Before You Obtain an Online Loan

Since there are risks to taking out an online, you need to be smart in your decision before you send your loan application. Here are some considerations you must follow before you get an online loan.

Don’t Use it for Leisure or Luxury Expenses

A lot of people are tempted to get an online loan to buy their “wants” instead of their “needs.” You must keep in mind that every time you take out a loan, there’s an interest that accumulates throughout the loan’s lifespan. One reason why many people are in a debt trap is that they’re taking out loans for leisure or luxury expenses.

So, it’s crucial to discipline yourself when it comes to spending, especially if the money you’re using is borrowed cash.

Avoid Taking Out Large Loans

Getting a large amount of loan can be too risky on your part. Most online lending companies will offer “deals” that lure you into signing a big loan amount, but the thing is that it’s still a large amount.

When taking out a loan, make sure that the amount, interest rate, and loan term suit your income. In this way, you won’t have a hard time paying back what you owe.

It’s Better to Use an Online Loan for Emergencies

It’s a smart way to take out an online loan only for emergency purposes. As mentioned earlier, you’re using borrowed money with accumulating interest, so you need to avoid getting it for unimportant expenses. But, if there’s an emergency, you can apply for an online loan, especially if you don’t have enough savings.

Takeaway

Online loans can be a good option for individuals who need to borrow money. It’s simple to apply for an online loan, and you can get your cash faster. However, there are also risks associated with online loans. So, you must keep in mind the considerations mentioned above before you apply for one.

Author Bio:

Bree Diaz is a business and finance blogger. She is well-versed in writing tips about running a business and how to manage your finances. Bree cites articles from GlobLoans.com in many of her works.

Apart from being a global public health risk that continues to threaten the lives of many, the pandemic is also putting a lot of people in a very difficult financial situation. These trying times can be even more difficult for those who have existing debt that continues to accrue interest, in spite of current circumstances. If you are one of those people, here are some tips that could help you in alleviating the impacts of accumulating debt and in managing existing ones.

Take out a debt consolidation loan managing debt during pandemic

It may seem counterproductive to get a new loan and use it to pay off existing ones, but this tip can be of great help in buying you more time. When you take out a debt consolidation loan, what you are actually doing is rolling all of your existing loans into one. This makes repayment easier (since you only have to concern yourself with one payment per month) and provides you with an opportunity to have a relatively lower interest rate on your debts. As highlighted in one of our previous posts ‘How To Consolidate Student Loans’, a debt consolidation loan may negatively impact your credit score initially since hard inquiries are bad for credit scores. However, in the long run, it may be able to help improve your credit score if you are able to make your payments on time every month.

Make the most out of technology

One of the ways you can make financial management easier these days is by relying on connected devices and making the most out of technology. In his article on how to adjust to remote working during the pandemic, digital nomad James Gonzales mentioned that the use of relevant apps can help you save more money in the long run. After all, such tools are often capable of encouraging increased productivity, streamlining work processes and assisting office appliances in order to achieve lower energy costs. A great example of an app that can help with money management is the Debt Payoff Planner. Finance writer Asia Martin mentioned how this manual input app can help you track your payments, notify you of due dates and allow you to see the result of making minimum payments vs. additional payments.

Refinance your debt

Since interest rates on mortgage and student loans are at their lowest these days, refinancing your debts can be a good strategy. Apart from getting better terms and lower interest rates, you can also get a lower monthly payment by initiating a new contract. To make sure that you are able to get the lowest refinance rate possible, Aly Vale of Fox Business highly suggests improving your credit score before applying. Some of the ways you can do this can include asking for a credit line increase, reporting errors in your credit report and getting added as an authorized user on someone else’s credit card.

Get guidance from a nonprofit credit counselor

If you are still at a loss for what to do with your debt, even after reading every article there is on the net, the next best plan of action would be to get guidance from a nonprofit credit counselor. Meeting with a professional can aid you in coming up with a plan to consolidate payments and lower your rates. If you plan on doing this, CNBC said that it is important for you to make sure that your credit counselor is accredited by the National Foundation for Credit Counseling. It would also be in your best interest to steer clear of settlement companies that can cripple your credit score with no guarantee of things working at the end of the day.

Times are understandably tough, but with due diligence and the right tips, you will be able to live through the pandemic without debilitating debt.

Written exclusively for Americasloancompany.com

by Allison Coolidge

Any financially smart adult thinks of having an emergency fund as a necessity. Life is full of uncertainties, and you need to have a separate bank account intended to cover unforeseen expenses caused by unfortunate circumstances, such as an illness or loss of employment.

It’s crucial to have a financial buffer for you to survive your day-to-day life without relying on high-interest credit cards or loans when things get rough. Avoid adding on your debts when you're facing financial challenges. So, you need to have ready cash set aside for emergencies.

Perhaps you’ll ask: how much emergency fund should I have? To answer that question and other related queries concerning emergency funds, read this blog post below.

Timing is the Key

According to most personal finance gurus, your emergency fund should cover three months of living expenses at the minimum. In this way, you won’t have a hard time financially if you lose your job or have to pay for medical bills. emergency funds

However, the main problem with this idea is that not everyone has the same lifestyle, income, and financial circumstances. For example, if you have monthly expenses of $5,000, your emergency fund should have at least $15,000 to meet the three-month standard. That's a huge sum of cash for most people!

Also, if you have loans or credit card balances that you need to pay, it will be difficult for you to set aside that sum of money for your emergency fund. That’s why timing is the key when building a fund for future emergency expenses.

Make sure to pay your current debts first before you put much money on your savings account. For sure, you don’t want the interests on your debts to accumulate faster than the gains on your savings. So, find the right timing!

Start Saving Even If It’s Small

Even if you’re paying for your current debt obligations, it doesn’t mean that you shouldn’t start building your emergency fund. You can start setting aside a small amount of money for that purpose. Starting with a small savings is much better than nothing at all.

It's hard to know when emergency expenses come. That’s why if you’re receiving income every month, make sure to save some of it for you to have a buffer against unforeseen expenses in the future.

While debts prevent you from focusing heavily on building your emergency fund, saving money even at a small scale is a smart choice because it’s dangerous to not have savings. For example, you can open an emergency savings account that has $500 or $1,000. This amount of cash can already cover minor expenses, such as car repairs or paying for medicines.

In the time that you get rid of your debts, you can already begin increasing your deposits into your emergency savings account.

Put Money On Your Savings Fund Monthly

Since your goal is to build a three months worth of emergency fund or more, it’s a must to set aside money in your account once a month until you reach your goal. You can split your direct deposit or start an automatic transfer into your emergency fund every month. It’s preferable to save 10% of your monthly salary or net income into this separate savings account.

If you find it hard to slice that kind of percentage off your salary, you can choose to make a few adjustments to your monthly expenses. Even if you can’t save 10% of your paycheck, surely you can save cash if you spend less than you’re used to in a month.

  • Avoid spending too much on streaming or cable subscriptions.
  • Cut your electricity expenses by turning off the lights in the morning or using a programmable thermostat.
  • Plan your grocery list carefully to prevent overspending.
  • Minimize your expensive habit of going out to lunch or dinner.
  • Lessen your gas expenses.
  • Look for a more affordable home or car insurance.
  • Negotiate with your credit card issuer/s to reduce the interest rates on your credit cards.
  • Go for a debt consolidation loan to avail of a lower interest rate and pay your debts quickly.

Save Money into Your Emergency Fund Instantly

Setting aside cash into your emergency fund every month is a good thing. But if you want to build your emergency fund faster, you can deposit a large amount into it. Of course, that’s a wise choice if you can afford it.

If you’re receiving monthly, quarterly, or annual work bonuses, you can opt to put that money or some of it into your separate savings account. In this way, you can build a fund for future emergency expenses in no time.

Takeaway

Building an emergency fund is crucial for you to keep afloat in times of a financial crisis. If you lose your job or get ill, for instance, you can use the money from your emergency fund to cover important expenses. Read the tips mentioned above on how to create an emergency fund.

Author Bio:

Bree Diaz is a blogger who specializes in writing about personal and business finance management. She has ample knowledge about debt management and wealth building. In this article Bree answers the question of “how much emergency fund should i have” and how to build it, in a way that is easy for readers to understand. Bree is also an avid traveler and a hobbyist.

There’s always a starting point for everything, and it’s especially true when you’re just beginning to establish your credit. People with no credit are those who have never used a credit card or secured a loan or who buy things using their debit card or cash.

When you don’t have credit, it doesn’t automatically mean that you’re not worthy of obtaining a loan. Your situation is different from having a low credit score. Yes, both situations may give you a hard time borrowing money from lenders, but it’s much harder to borrow cash when your credit score is below average.

For folks who are yet to build credit, there are ways for you to get a loan. If you want to know how you can do that, just read this blog article.

personal loans counting moneyChoose a Lender Who Specializes in No Credit Check Loans

Loan providers have different methods to assess your capability to pay back what you owe other than looking at your credit profile. For example, you can find lenders who do a different credit check from traditional lenders.

These non-traditional loan providers will assess your income status, bills payment history, and bank statements instead of checking your credit history.

If you want to try applying for a loan from a non-traditional lender, you can have many options on the internet. For instance, there are lending networks that have a pool of lenders you can choose from. Or, you can also go to a loan provider directly.

There are also instances that banks and credit unions allow people who have no credit to avail of their loans. Make sure to look for branches of such lending institutions in your locality if you need to get a no credit check loan. And, don’t forget to prepare the essential documents, such as your recent bank statements, tax returns, pay slips, and bills payment.

Look for a Co-Signer

Another option that you can take to borrow a sum of cash from a lender while you don’t have credit is having a co-signer. A family member, friend, or anyone you know can act as a co-signer for your loan application. You just have to ensure that the person who co-signs your loan has a good credit rating.

It’s also crucial that your co-signer understands the implications of taking this role. He/she should know that his/her credit score may get hurt if you fail to make payments on what you owe. Aside from damaging your co-signer’s credit score, it may also damage your relation to him/her if worse comes to worst.

As a borrower, you should take it as your responsibility to pay the loan on schedule to ensure that you don’t hurt your credit and your co-signer’s.

Apply for a Loan with Collateral

Having excellent credit is one of the primary qualifications when you apply for an unsecured loan. It’s easy for people with stellar credit scores to get such financing because having excellent credit means that they are good borrowers.

Borrowers with no credit scores, on the other hand, will really have a hard time getting approved for a loan without collateral. As such, it’s advised to go for a secured loan to borrow money. Lenders who provide this loan type allow borrowers to borrow cash when they put a valuable asset as security.

Here’s a list of assets that one can offer as collateral to get a secured loan:

  • Land or house
  • Vehicle
  • Insurance policies
  • Bond, stocks, or mutual funds
  • Gold, silver, and other valuable metals
  • Collector’s items

One of the benefits of a secured loan is that the interest rate is lower than an unsecured loan. But, you need to understand that defaulting on the loan may cause the lender to seize the asset you offered as collateral.

Consider Payday Alternative Loans

Payday alternatives loans are offered by credit unions to their members. This loan option allows you to borrow a small sum of cash with a short repayment period. This loan’s amount range goes from $150 to $1,000, with a loan term ranging from one to six months.

If you compare alternative payday loans to common payday loans, you’ll realize that the former has lower interest rates and fees than the latter. But, as mentioned earlier, you can only obtain this loan if you’re a member of a credit union. Credit unions require borrowers to be members for at least one month to avail of an alternative payday loan.

Apply for an Online Personal Loan

You can avail of an online personal loan even if you’re yet to establish your credit profile. Lenders of this loan type are not strict compared to major banking institutions. But, you still have to provide documents, such as a certificate of employment and proof of income before you can obtain this loan.

Takeaway

Don’t lose hope if you have no credit history because there’s still a chance that you can borrow money. For instance, you can go to a lender who specializes in non-traditional credit checks. If you want to learn more about the various ways to get a loan in this kind of financial situation, just review this article.

Author Bio:

Bree Diaz is a blogger who writes about personal and business financing. Her blog article topics revolve around business loans and e-transfer payday loans in Canada with FriendlyLender. Besides being a writer, Bree is also a businesswoman.

Student loan consolidation is the process of taking multiple outstanding loans and reorganizing them into a single loan, sometimes with a longer repayment period and therefore a lower monthly payment. If you’re in serious debt and ineligible for student loan forgiveness, consolidation could offer the solution you need.

student loan debtWhat is a student loan?

A student loan is financial assistance that’s specifically designed to help students pay for school-related fees. These loans cover the cost of such things as tuition, school supplies, books and living expenses.

Like other loans, this type of financial assistance is money that you borrow and pay back with interest. Unlike many other types of loans, however, student loans typically don’t require you to start repayment until after the education has been completed.

Student loans are offered by a variety of sources, including the federal government, banks and online lenders. Many of these sources also provide student loan consolidation.

What types of loans can be consolidated?

Both federal student loans and private loans can be consolidated, although consolidating through private lenders is typically known as refinancing.

Federal student loans are eligible for consolidation through the U.S. Department of Education, which offers a Direct Consolidation Loan that allows for the combining of multiple federal education loans into one loan at no cost. You can also consolidate your federal student loans with private lenders, although you’ll lose federal benefits in doing so.

Private student loans cannot be consolidated with federal student loans, but they can be refinanced and consolidated through private lenders.

These are some of the federal loans eligible for consolidation:

  • Subsidized Federal Stafford Loans.
  • Unsubsidized Federal Stafford Loans.
  • PLUS loans from the Federal Family Education Loan (FFEL) Program.
  • Supplemental Loans for Students.
  • Federal Perkins Loans.
  • Nursing Student Loans.
  • Nurse Faculty Loans.
  • Health Education Assistance Loans.
  • Health Professions Student Loans.
  • Loans for Disadvantaged Students.
  • Direct Subsidized Loans.
  • Direct Unsubsidized Loans.
  • Direct PLUS Loans.

Should I consolidate my loans?

If you need more cash in your pocket right now, consolidation can help by extending the life of your loan and thus trimming your monthly payments — although extending your repayment timeline will ultimately increase the amount you pay in interest.

You may also have access to a new repayment schedule (like an income-based repayment plan) that’s a little easier on your wallet.

Keep in mind that federal consolidation loans do not work like private loans — the interest rate you receive will be the weighted average of all of the loans you’re consolidating, meaning the main benefits are longer repayment periods and the convenience of having one monthly payment.

How to consolidate your student loans

There are two options for consolidating your student debt. The federal student loan consolidation option offered by the U.S. Department of Education is the Direct Consolidation Loan.

“With this option, any federal loans that you choose to consolidate are paid off and you are issued a Direct Consolidation Loan for the total combined balance,” says Jessica Ferastoaru, student loans specialist for Take Charge America.

You can complete the Direct Consolidation Loan application online. Once submitted, it may take 60 days for your application to process, says Ferastoaru.

“You should continue to make your regular payments on your loans, if payments are currently due, until your consolidation has been approved,” explains Ferastoaru. “Once approved, you will have one monthly payment due to the new servicer managing your Direct Consolidation Loan.”

Yet another option is a private loan refinance, meaning you combine your federal student loans or your private student loans, or some combination of both, with a private lender.

Private loan refinancing has some significant drawbacks to be aware of, however, including different eligibility criteria.

“You will need to meet certain income and credit score requirements to qualify,” says Ferastoaru. This means a co-signer may be required to qualify.

More importantly, it’s critical to understand that if you consolidate federal loans with a private lender, you’re no longer eligible for any federal programs, such as those that allow you to postpone payments when you’re unemployed. In addition, you will no longer be eligible for federal income-driven repayment options, loan forgiveness or any sort of loan discharge.

How can I get the best interest rate?

If you’re consolidating your student loans through the federal government, your overall interest rate will remain the same. This is because a Direct Consolidation Loan charges the weighted average of all loans you’re consolidating.

However, it’s a different story if you’re refinancing with a private lender. Interest rates are determined by the federal government and change each year on July 1, so it’s a good idea to shop around with lenders to see how they respond to rate fluctuation.

Improving your credit score will also help you get the best loan rates possible, says Katie Ross, education and development manager for American Consumer Credit Counseling.

“Having a good credit score is the key to getting the best interest rate with any loan,” says Ross. “A credit score of 750-plus is generally considered good, with 800 or higher considered exceptional. The higher your credit score, the better your interest rate when you apply for a loan.”

Additional things to consider

When is the right time to consolidate loans?

“The right time to consolidate will be different for every borrower,” says Ferastoaru. “If payments are affordable when you graduate college, there may not be any reason to consolidate your loans at that time. But if you need lower payments right after graduating from college, federal student loan consolidation may be a good option to consider.”

For those who may be considering a private loan refinance in order to obtain a lower interest rate, it may be best to wait to explore this option until you have a steady income and strong credit history in order to increase your chances of qualifying.

“If you’re not yet employed right after graduation, it will be difficult to qualify for a refinance without a co-signer,” says Ferastoaru.

What kind of terms do lenders offer?

With federal consolidation loans, you can choose from a variety of repayment plans, sometimes up to 30 years. No application or origination fees are allowed, and there are no prepayment penalties.

Private consolidation lenders, on the other hand, are not subject to those terms and may include variable rates and any number of fees. What’s more, some benefits of a federal consolidation loan, such as interest subsidies on deferred loans, are not available on private loans.

Bear in mind that not all consolidators are created equal. Some offer favorable terms like interest-rate reduction for making on-time payments or choosing automatic withdrawal. Others may offer repayment plans that better suit your financial situation.

FAQs on student loan consolidation

How is loan consolidation different from loan forgiveness?

Unlike student loan forgiveness, consolidation involves working with a lender that will pay off your existing balances. The lender will replace those loans with a new, consolidated loan and a new monthly payment.

Consolidation involves changing the way you repay student loans rather than relieving you of the obligation to repay all the money you’ve borrowed. Student loan forgiveness is a process that erases financial obligation. Students who have entered careers in the military or other forms of public service, for instance, may be eligible to have their loans partially forgiven.

How is loan consolidation different from refinancing?

The difference between student loan consolidation and refinancing is subtle, and the terms are often used interchangeably. Both methods involve taking out a new loan to better manage multiple outstanding balances.

“In general, the term consolidation is used to describe the process of combining one or more federal student loans within the Direct Loan Program,” says Ferastoaru. “Combining one or more of your loans with a private lender is considered refinancing your loans, as you may qualify for a lower interest rate on your new private loan. With federal consolidation, you may qualify for more repayment options, but it is not a way to reduce your interest rate.”

Can I consolidate more than once?

Current law dictates that you can consolidate student loans only once. There are two exceptions:

  1. If you’ve since gone back to school and acquired new student loans.
  2. If an outstanding loan was excluded from your original consolidation.

Will consolidating my student loans hurt my credit?

If you’re consolidating student loans through what’s known as a debt consolidation loan, rather than through the Department of Education, then your credit score may drop initially, says Ross.

This is because any time you apply for new loans, it results in a hard inquiry on your credit. Too many hard inquiries will hurt your credit score,” Ross explains.

Over the long term, though, consolidating your loans may help your score if you make the payments on time every month. This is because payment history is one of the most significant factors in determining your credit score.

Completing a federal student loan consolidation, on the other hand, typically does not have a significant impact on your credit, says Ferastoaru. “Your previous loans are being paid off and you’re issued a new loan for the same amount, so your total amount of debt has not changed.”

The bottom line

There are many options when considering loan consolidation, so make sure to do your homework and investigate all the possibilities before applying.

But bear in mind that if you have federal student loans, consolidating through the U.S. Department of Education program may ultimately provide the best option over the long term, allowing you to remain eligible for income-driven repayment programs, loan forgiveness or loan discharge.

Blog Writer: Barry Bridges For Bankrate.

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