Bad Credit Loans Blog

Great Tips and Advice for Managing Your Money

Getting saddled with student loans has become the new norm, and what you pay depends on the number of loans you take out and the amount borrowed under each. For instance, most students apply for federal loans through the Free Application for Federal Student Aid program, and some look at private loans. However, the Financial Aid Guide published by Maryville University states that tuition for public and private universities can range from $20,000 to $30,000 a year, and to get through this, most students would need a combination of both federal and private loans. More loans equal more interest, which means higher amounts to pay after graduation. This makes student loans a College Loanheavy burden to bear, and achieving financial success even harder. In fact, a survey published on Business Insider found that the new standard for financial success for young adults isn't about being wealthy at all — most people aspire to simply be debt-free.

This is understandable, as this financial burden can be a hindrance to your life choices for years after college. You might avoid making risky decisions at work, or you’ll hold off doing something you love in order to pay your debt. So if all this sounds familiar to you, we've outlined some key tips to help you tackle your student loans:

Have a Payment Plan

The first and most vital step is to create a payment plan for yourself. Make a list of your debts, and rank them according to interest.

In this regard, personal finance writer Luke Landes lists two ways you can pay your debt: snowball payments or avalanche payments. Snowball payments involve prioritizing the smallest debt first, giving the rest of your debts minimum payments. Once the lowest debt is finished, add your payments from that to the minimum payment of your next debt. In this way, the snowball method gives you a feeling of accomplishment from seeing results faster. On the other hand, avalanche payments comprise of large payments to the debt with the highest interest rate first, and minimum payments for the rest. Though this method is a little more challenging, it helps you save on interest in the long run, and will eventually help you pay off your debts sooner.

Regardless of the method, a payment plan can also help you achieve one step highlighted by our article on how to ‘Raise Your Credit Score’, which is making payments on time. Taking care of your credit score can benefit you in the long run, as it can make future financial transactions much easier.

Create your budget — and stick to it

Once you’ve landed a job, budgeting your income is vital to help you ensure that you pay your debt on time. This will also help you see where you can cut down on spending, and instead, place that extra money towards your debt payment and even some savings.

Make bi-weekly payments

Switching to bi-weekly payments is one way to trick yourself into paying more — and it won’t even seem like it, until you do the math. For instance, paying $150 bi-weekly for one year (26 weeks) equals $3,900, while paying $300 monthly for one year is $3,600. This method enables you to give 13 months’ worth of payment instead of 12, shaving off time out of your payment schedule and reducing your interest at the same time.

Find a program that suits you

There are plenty of programs that can help you out with your student loans. Most of them, however, only apply for federal loans, such as loan forgiveness, income-based repayment, and loan repayment assistance programs. For those with private loans, Credit Sesame's Adrian Nazari recommends finding companies with a loan repayment program as an employee benefit, as this can go a long way in clearing your debt.

For many, paying off student loan debts is an important achievement towards long-term financial wellness. Stay motivated, and you’ll rid yourself of your debt faster than you anticipated. After all, the best way out is always through.

Prepared for americasloancompany.com

By Heidi Smith

How to Avoid Shady Online Loan Providers

With the internet becoming a household necessity, running errands and getting things done have become easier and more convenient. From online shopping, paying bills, ordering food, everything's possible with just one click. Even borrowing money is possible. However, when applying for a loan online, the stakes are higher. lady on labptop sept 2019 blog

Online lending platforms have grown considerably in the past few years to answer the growing demand for accessible loans. But the red flag of borrowing money online is that you need to give personal details to a party or to someone you barely know. It's quite risky given the fact that loan scams and shady loan offers are rampant nowadays.

What Every Borrower Needs to Know

The safest way to borrow online is to keep an eye out for red flags and make sure you're dealing with a credible lender.

If you're resolved to borrowing money online, there are two significant risks you need to be aware of.

  • It's a real risk to lose money. Fraudsters can easily set up shop, charge fees, and promise the world for approving your loan. In the end, you will not get what you paid for.
  • You'll pay too much. You might end up paying big in interest and fees to a deceptive lender, costing you thousands of dollars, which is more than what's necessary. Legit and reputable lenders will offer the same loan for a more affordable rate.

Identity Theft

It happens when you give your personal details to a website that doesn't entirely protect your identity, or when you give your personal information to identity thieves.

The information commonly found on loan applications are vulnerable to the prying eyes of thieves. Your date of birth, Social Security Number, home address, and phone number are just some of the information they might steal.

You already lose when you wasted your time dealing with all of the applications and follow-ups and trying to borrow from a fake lender. Thus, be extra prudent.

Watch Out for Red Flags

Sometimes, con artists make the mistake of giving themselves away. As such, when you start communicating with lenders, observe how they operate and present themselves before you give your money and personal information.

Look for a different lender if you see any of the red flags below.

Up-front Fees

Take heed that legitimate lenders don't ask for upfront fees. Thieves and scammers commonly use "advance-fee scam" and will explain that you have to pay a certain fee so they can process your loan application.

While there are legitimate loans that require money for the application, they are usually for big loans like home loans. Such loans will require the borrower to pay for an appraisal, a credit check, and so on. Also, these fees will be thoroughly explained on official disclosure documents. If you're applying for an auto loan or personal loan, such fees should be non-existent.

If you paid for some fees already, expect them to keep asking for "one last" fee to you until you catch on.

Guaranteed Approval

Lenders don't do business just to lose money. With that, they don't give guarantees that they'll lend money to just about anyone. Although there are lenders who are willing to bite more risk than others, they still need to be sensible and check about your finances.

If you have no income, no assets to use as collateral, or you have a bad or no credit history, a lender will hardly lend you funds. Otherwise, how can they get their money back? If it's just too good to be true, then it probably is.

Lenders who approve anyone's loan applications often sound smarter than they do. They have ways to gain high profits as a return for taking big risks, which could mean they steal data or money, or you're going to pay a lot.

Request for Funds Through Payment Services or Wire

You're trying to get money when you're applying for a loan, so why do you have to send money? Again, there are loans that require legitimate fees, but you can pay them with a credit card or check.

If a lender will ask for payment through a wire or instant payment services such as MoneyGram or Western Union, it's definitely a scam. Your money will be gone for good once you send funds, and it's going to be impossible to track the receiver.

Further, a lender who accepts checks for payment will need a clean bank account for deposits, that of which can be easily found by law enforcement. Be informed that credit card processors will quickly shut down vendors with too many complaints.

Unprofessional Service and Sales

Banks may not be known for their fuzzy and warm interaction, but with them, you will not get a sense that you deal with a fly-by-night operation.

A lender's site that’s full of misspelled copies, security errors, and other inconsistencies is an indication that you deal with scammers. Moreover, pay attention to how the sales staff speaks with you, high-pressure and abusive behavior are clear warning signals of what's to come.

The Name Game

For businesses that deal with money, first impressions are as important. But for scammers with nothing authentic to offer, they will use confusing names or choose official-sounding names.

For instance, the lender might use the word "Federal," but it doesn't mean the U.S. government supports or endorses the lender. Imitating the name of a large bank is another obvious tactic.

Beware of Dangerous Loans

Apart from being vigilant with the lenders, it's also important to be wary with the loan offers online. There are loans that aren't worth the risks no matter who the lenders are, and it's easy to spot them online.

Expensive Loans

caution high feesSuch loans can send you to a debt spiral and may put you in a worse position than where you currently stand.

For instance, auto title loans and payday loans are known for their expensive fees, which could amount to triple-digit interest rates.

Unlicensed Lenders

These are lenders who are not supposed to operate in your state. But since they're lawbreakers, they can collect fees and offer loans from just about anywhere on the planet.

To avoid falling into the hands of these shams, check the regulator of your state to verify if a certain lender has the authorization to do business in your place. Legitimate lenders don't let their licenses lapse or forget to register. You'll have little or no legal recourse in case you have a dispute with a lender overseas.

Illegal lenders take advantage of those who don't have many options or of individuals who are desperate to borrow money. Their common practices may include:

  • Rolling over or repaying high-fee loans more often than what's allowed in your state. The borrower will pay another fee whenever it happens, which increases the debt load over time.
  • Bypassing debt-collection laws that curb how lenders can collect defaulted or unpaid loans.
  • Including products like disability or life insurance into your loan without your consent.
  • Imposing higher interest rates than what's allowable in your state.
  • Information Gatherers and Sellers

Beware also while searching for online lenders, you might find businesses whose slogans shout "we don't lend money" to site visitors. Such web has lead generation sites which could sell your personal details to lenders.

Lead Generators are Experts in Marketing

Lead generators will help you look for people or parties who are willing to lend you funds. Some big websites do this maneuver and present a valuable service while earning little per loan. But with shadier operations, it may create problems.

Be cautious when giving out personal information to websites that guarantee you to shop the competition as they might sell your contact information to predatory lenders, or identity thieves who will continuously try to scam you.

Be a Wise Borrower

As a borrower, make it a practice to borrow only what you can afford to pay. The lenders may be willing to lend you the largest amount possible, but it doesn't mean you have to borrow the maximum.

Besides, it's not really a good idea to do so. You never know what surprises may come in the future even if you can afford the payments.

Takeaway

All online lenders are expected to be completely legitimate and above the board. Unfortunately, scam or fake online lenders now resides on the internet, and you need to avoid them at all costs.

Besides the obvious scammers, be vigilant with legitimate lenders too as some will try to squeeze you by offering bad loan conditions and terms like hidden fees, inflexible repayment options, and excessive APRs. Fortunately, you can more easily identify sketchy online lenders by being aware of the following red flags given above.

The above blog was received from a recent contributor.  We wanted to share with everyone since it has some good points to keep in mind when trying to find trustworthy online lenders like America's Loan Company.  It is quite sad that there are so many ruthless people trying to steal and that they are able to do it so easily.  America's Loan Company does not recommend or discourage the use of any other lenders named in this blog.  The point is to share the basic suggestions on how to avoid online scams.  Our thanks to the contributor, Tiffany Wagner.

Author Bio:

Tiffany Wagner is a full-time writer and contributor for various websites on topics about Credit Score Trends, Banking, finance, and real estate are her favorite go-to subjects to tackle. She’s also a big stock market hobbyist and likes to spend her free time crunching data and numbers. Whenever she has free time, Tiffany cozies up on her favorite cafe and play Sudoku.

 

What would you say is the most nerve wrecking part of applying for a loan?  Submitting the application?  May be, if you try to answer questions on the application in a way that you think will increase your chances of being approved.  But reading the mind of the people who will approve or decline your application is not realistic.  How about providing documentation such as bank statements and pays stubs?  No likely stressful, but, more like just plain work.  How about this one, waiting for a decision to be made based on your credit report?  I think most people find this the most mentally painful as the ways by stressing over a loanwhich credit reporting bureaus determine our credit scores are not always clear to understand.  For example, in our company, America’s Loan Company, we have found people with credit scores at 700 who have one car loan and nothing else.  Yet we find others with more lengthy unsecured loan and credit card credit histories who have slightly lower credit scores.  Although there are several factors that we would look at, all things being equal, we may find the applicant with the good unsecured debt credit history better qualified for a loan.  As far as keeping you credit score good keep this points in mind:

  • It will always help to make you debt payments on time. This shows that can are responsible.
  • Keep older accounts current. In this way lenders can see that you can handle debt long term. 
  • Use less of your available credit. Maxing out you credit limit is not viewed positively.   

But is credit score and credit history the only thing that lenders look at when determining eligibility for a loan?  No.  Looking at income is also a factor.  A borrower who can proof that they have a steady proof of income will have a preferable decision.  If you can prove that you receive a steady monthly, biweekly, or weekly income it makes the lenders less worried about the payments being paid on time.  If you don’t have a steady income, a cosigner may be required.  However, beware those of you who may decide to be a cosigner for someone else.  If the main applicant fails to pay that loan, then the cosigner has joint liability to pay that loan in full.  Our recommendation is that you don’t agree to be a cosigner for a loan unless you are ready to pay for that loan yourself.  Another factor related to income is time of employment.  Obviously, someone who has been with an employer only 3 months may have a more difficult time getting a loan as compare to someone who has been two years with the current employer.

Looking at your bank statements may also determine eligibility for a loan.  For instance, if a bank statement is flooded with nonsufficient funds fee, it will put in doubt that your finances are kept in order.  It makes you look like more of a high risk to loan money to.  But, even if the bank account is kept clean of nonsufficient fund fees, if the bank statements show mostly very low daily balances, like under $20, that may indicate to a lender that there is not much disposable income available to pay another debt.

credit historySo, credit history, credit score, a steady income, length of time with current employer, how you keep your bank account, all can be factors used by lenders to decide whether to trust you with a loan.  If you decide to apply for a loan, please, realize that lenders are not trying to be mean to you.  They are just trying to be responsible and make sure you can handle dealing with a debt.

Have you noticed the increase of car loan offers with terms longer than 5 years.  Don’t know about others, but I find the idea of being indebted for a car loan for over 5 years scary.  Just think of the interest you will be pay.  Red flags pop up all over my mind.  Did some digging and I found the Experian Blog below dated June 29, 2019.  Talks about pros and cons of getting a car loan with terms longer than the traditional 5 years.  Some excellent points to keep in mind.  So, I figure we share it.  If you rather read the blog yourself follow this link: https://www.experian.com/blogs/ask-experian/are-84-month-auto-loans-a-good-idea/.

As new car prices rise, lenders are offering longer and longer terms for auto loans. While five-year (60-month) loans were once considered lengthy, in the first quarter of 2019, nearly two-thirds of new car loans had longer terms, according to Experian data.

Now, 84-month auto loans are becoming more common. Getting a seven-year auto loan can reduce your monthly payment, but is it a wise move financially? That depends on several factors. Here's what you need to think about before you head to the dealership.

When an 84-Month Car Loan Might Make Sense  cash for car loan

Stretching out your repayment schedule over seven years can lower your monthly car payments significantly compared with, say, a three-year or even five-year loan. This can allow you to buy a car that might not otherwise fit your budget (more on that below).

There are a couple scenarios where an 84-month auto loan might make sense:

  • If you invest the money you'll save: If taking out a seven-year auto loan saves you $396 a month on your payments compared with a three-year loan (as in the example below), you could put that $396 into an investment whose rate of return outweighs the amount of interest you're paying on the loan. But will you really do that—for seven years? And if you have an extra $396 a month to invest, is keeping your car payment low really a concern?
  • If you plan to pay down other high interest debt: If you have $10,000 worth of high interest credit card debt, taking out a seven-year car loan would give you more money to put toward your credit card bill each month. However, you'll have even more money to pay down your credit card debt if you don't buy the car at all or buy a much less costly one (that you could ideally pay for in cash). If you're already having trouble with credit, taking out a new loan probably isn't a wise move.

Reasons an 84-Month Auto Loan Might Not Be the Best Idea

The main reason to avoid an 84-month car loan: You'll pay more interest. Because these loans tend to be targeted at people with less-than-stellar credit, they often carry higher interest rates than three- or five-year loans to begin with. But even if you get a low interest rate, the longer your car loan, the more interest you'll pay over its life.

Suppose you buy a $25,000 car with no down payment at 5.09% interest. Here's how three different loan scenarios pan out:

  • 36-month (three-year) loan: Payments are $750/month; you pay $27,010 total ($2,010 in interest) over the life of the loan.
  • 60-month (five-year) loan: Payments are $473/month; you pay $28,369 total ($3,369 in interest) over the life of the loan.
  • 84-month (seven-year) loan: Payments are $354/month; you pay $29,770 total ($4,770 in interest) over the life of the loan.

If the thought of paying thousands of dollars in additional interest doesn't persuade you to steer clear of 84-month car loans, consider these other reasons to avoid them: TOO MUCH DEBT

  • Car depreciation: A new car loses as much as 20% of its value in the first year. Over the seven years of the loan, your car's value will continue depreciating, possibly to the point where you owe more money than the car is worth. That's called being "upside down" or having negative equity in your car.

Negative equity becomes a real problem if you want to sell your car or trade it in for a newer model. The buyer or dealer will only pay you what the car is worth—so you actually lose money on the deal. If you get into an accident and your car is totaled, the insurer will only reimburse you for the car's value, but you'll still be on the hook for the remainder of the loan.

  • Outlasting the warranty: Most new car warranties are good for three to five years. If you have a seven-year auto loan, however, you'll be making car payments for several years after the warranty has run out. Sure, you can pay for an extended warranty—but wasn't the whole point of an 84-month auto loan to keep your costs down? The older your car gets, the more likely it is to need costly maintenance or repairs. Paying for a new transmission while you're still paying for the car itself can be a real kick in the bank account.
  • Overextending yourself: An 84-month car loan lets you buy more car than you can really afford—and let's face it: That's not a good thing. If you're eyeing a luxury car, know that they often cost more to operate, maintain and repair, which can cancel out any savings from the lower monthly payment. And if you lose your job, have to take a pay cut or face a major financial setback, you're still stuck with that (seemingly endless) car loan.

How to Get Low Monthly Car Payments

It is possible to buy a car without spending your whole paycheck each month. Here are some ways to lower your monthly car payments that make more financial sense than an 84-month auto loan.

  • Improve your credit score. If your credit score isn't high enough to qualify for a lower interest rate on your loan, why not wait to buy a car and work to increase your credit scorein the meantime? Devote yourself to paying down debt and making all of your payments on time. In as little as three to six months, you could have a higher credit score and qualify for a better loan.
  • Save for a larger down payment. A bigger down payment can help you qualify for better terms on an auto loan. The down payment will also reduce the total amount of money you need to finance, helping to ensure that you don't end up owing more than the car is worth.
  • Lease the car. Dealers often advertise appealing lease offers that can help you get the car you want with lower monthly payments than buying. But keep in mind that since you won't own the car at the end of the lease, you'll have nothing to show for the money you spent. You could also face additional costs if you go over the mileage limit. If your credit is poor, leasing a car could be difficult
  • Buy a less expensive model or a used car. If the only way you can afford your dream car is with an 84-month loan, it could turn into a financial nightmare. Set your sights on a less expensive vehicle or look for a late-model used car instead.

When to Refinance Your Car Loan

Have you already taken out an 84-month auto loan? If interest rates have dropped or if your credit score has risen since you got the loan, you may be able to refinance and get better interest rates. Get your free FICO® Score* from Experian to see where you stand. Then contact banks, credit unions and online lenders to see what interest rates they're offering for auto refinance loans.

Even if you had bad credit when you bought your car, paying your bills on time, monitoring your credit and paying down debt can all help boost your score relatively quickly. Get the details on how to improve your credit score and how to refinance a car loan. (Don't wait too long to refinance; in general, lenders prefer to refinance loans for cars under 5 years old.) 

The Bottom Line

If you're looking longingly at pricey new cars, an 84-month car loan may seem like the answer to your prayers. However, the tradeoff of lower monthly payments is rarely worth the risk of owing more than your car is worth, being tied to endless car payments or spending more than you can really afford. Instead of getting locked into a seven-year car loan, look for a smarter way to keep your monthly payments down. 

Do you have bad credit?  Have you ever opened a credit card or taken out a single loan with the intent of improving your credit score?  That seems to be an advise that is heard constantly.  Yet by itself, it may not do as much “magic” as you hopped.  It is possible to have a good credit history and yet a not so good credit score.  Many of our customer have bad credit and take out Personal Loans with us to help improve it.  For that reason, I found an article from a May 16, 2019, Experian’s Blog that addresses this seemly contradiction and gives some pointers that my help.  Below is the article.  You may also read it at https://www.experian.com/blogs/ask-experian/can-i-have-a-good-credit-report-but-a-bad-credit-score/.

"My credit report is great, but my scores aren't. What's going on?"

While this sounds like a riddle, it's a reality for many people. The reason for the disconnect: Your credit report might not be as attractive as you think it is. Since credit scores are created from the information that appears in your file, those numbers will be low if the data isn't quite right. Here's how and why your credit report may seem good to you, but could translate into a bad (or even nonexistent) credit score.

What Makes Up a Good Credit Report?

A good credit report is one that contains evidence that you've borrowed and repaid money responsibly with several lenders. Specifically, that you: credit repair with calculator

  • Use a variety of credit cards and loans, and have done so for a few years 
  • Always pay your bills on time
  • Have repaid loans in full
  • Consistently carry over little, if any, credit card debt

Just as important, there a few line items that are absent from a good credit report. These include:

  • Defaults
  • Charge-offs
  • Collection accounts
  • Liens
  • Judgments
  • Bankruptcies

And while you do have to apply for credit products to get them, you don't want your credit reports to indicate a flurry of applications in a short span of time, since it could be interpreted as a sign that you're desperate for money.

When your credit report only lists plenty of appealing activity, you appear to be a low-risk credit customer—and your credit scores will reflect that. That's because past and present behavior is a predictor of future behavior.

What Is a Good Credit Score?

Credit reports are valuable because they show a detailed overview of what you've been doing with loans, credit cards and other debts. But for a quick mathematical snapshot, credit scores come into play. Credit scoring companies take the financial information from your credit report, enter it into their scoring model, and spit out a three-digit number that indicates to lenders what kind of risk you pose as a borrower.

There are a number of different models, but the most common are the FICO® and VantageScore® models. Both range from 300 to 850, with higher numbers being preferable. For example, in the FICO® scoring range, scores between 740 and 850 are tops. Learn more about credit scoring ranges.

Although the scoring models assess credit report information differently, the same general rules apply: As long as you have an established pattern of on-time payments with a mix of credit products, a low credit utilization ratio (the amount you owe compared with the amount you can borrow) and no visible credit problems, your scores should be on the high side.

How Do I Know if My Credit Report Is Hurting My Scores?

There are a few types of credit reports that might look good to you on first glance, but actually often translate into poor scores.

  • The good . . . and the bad. The first type of report lists some perfectly managed accounts—but also some negative activity, like late payments, collection accounts and credit card balances that are close to the credit limit. These negative line items can overshadow the positive ones, sinking your scores.
  • Inaccurate reports. Undiscovered mistakes or fraudulent activity may also be in your credit file, hurting your scores. Pull your credit reportson a regular basis to check that all the information is correct. This way you won't be blindsided by scores that are at the bottom of the scale when they should be at the top.

If you find fraudulent activity in your report, dispute it with the credit bureaus and consider putting a security freeze on your file if the activity is recent or prevalent. Once the negative information is removed from your report, your scores should see a bump.

  • Not enough credit activity. The other type of surprising bad credit report is the one without enough information in it, also known as a "thin" credit file. While you may think your credit is stellar because you only have one credit card and manage it responsibly, having just one account in your credit file is actually a negative to lenders considering you for credit.

The reason why is data is food for credit scores. And if you only have one account in your file, you likely don't have a credit score at all, since the scoring models typically require at least five accounts to calculate a score. A lender won't know how terrific of a credit risk you might be because your reports and scores aren't proving it.

Your credit scores will also be low if the only credit accounts you have are very new. Building an impressive credit history takes time and a wealth of information.

Credit Scores Change Over Time

Another misperception about reports and scores is that they're static. If you've used an array of credit products and managed them all without a hitch, your scores may be high. That doesn't mean they'll stay that way—and they definitely won't if you stop borrowing and repaying.

Eventually a credit card issuer will close an inactive account, which will impact your credit utilization ratio. Remember, credit scores need sustenance, so you need to feed them with responsible credit activity. You may also not realize that a couple late payments will hurt your score, but they will. In fact, making credit payments on time is the biggest factor in calculating your credit scores.

If you have as many credit cards as you want and don't need any loans, you can still positively impact your credit. Add your cell phone and utility bills to your credit report with Experian BoostTM†. Then your credit report will show the type of data that is important to lenders: timely payments. They will be factored into your Experian credit scores, which could cause them to rise.

Clearly, you can have a bad credit score with what you presume is a good credit report, so ensure they match up. Just use a mixture of credit products often and responsibly, dispute errors, and deal with high or delinquent debts. In time your scores will be where they ought to be—and you can be certain about how lenders see your creditworthiness.

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