Personal loans
Personal loans resolve life’s little crises and allow for life’s sweet indulgences
It seems like time and money are mutually exclusive: You never have both at the same time. Stay at home moms enjoy being able to take care of their families and homes, and being able to respond to emergencies. However, without a full-time salary, vacations, home repairs, new furniture and summer camps may have become out of reach. When the refrigerator dies, what may have once been an inconvenience, can become a crisis.
That’s where personal loans come in. No other loan affords borrowers the flexibility like that of personal loans. Unlike most loans, personal loans can be used for anything from urgent needs to desperately needed vacations.
In the past, many people felt comfortable pulling out a credit card to meet their financial needs. But in the new economy, many credit card issuers have raised interest rates and lowered credit limits. Today, consumers are working hard to pay off their credit card debts and are applying a new restraint on credit card spending. Personal loans, however, are less expensive than high-interest credit cards, and, with a good or excellent credit score, the interest rate can be as low as 6.99%.
The convenience of personal loans makes them an attractive option. Personal loans can be obtained online and deposited into the borrower’s bank account in as little as 24 hours. When the family car breaks down, the roof leaks or the washing machine dies, convenience and a rapid turnaround are a necessity.
The flexibility of personal loans allows for home improvements like landscaping projects, refurbished bathrooms or professional painting – the investments real estate agents encourage homeowner to make for maximum return.
When all the appliances are functional and the house is all spruced up, personal loans can be used for a much-deserved vacation. Using personal loans for travel allows time to plan the ideal trip and take advantage of the best bargains. Studies show that children who travel get better grades and have a better grasp of geography and foreign languages.
Alternatively, personal loans also provide the option of sending the kids off to summer camp while their parents enjoy a relaxing, romantic getaway of their own.
In short, personal loans save money, save grief and allow for the sort of things we all need and deserve.
Personal loans
Personal loans from family members are like land mines. Take a few simple steps to minimize risks.
The bank is usually the first place people think of when they need personal loan. However, if the bank is not an option, many would-be borrowers need personal loans from their families—a situation rife with opportunities for resentments, hurt feelings, jealousy and financial ruin.
No matter how badly needed, think twice—or thrice—before approaching family members for personal loans. Borrowers must anticipate potential problems and take all precautions to avoid them.
The first and most important consideration should be determining the most appropriate family member to approach. No matter which family members are approached, extending and accepting personal loans will probably have some uncomfortable consequences. When parents make loans to their adult children they feel entitled to know the details of borrowers’ finances, and to comment on them. Personal loans from siblings may also affect relationships with their spouses.
Before asking for personal loans, borrowers should consider the following:
- Can this candidate afford to make personal loans?
- Is this candidate likely to agree to make the loan?
- Can they afford the financial hit if the loans cannot be paid back?
- What effect will the debt have on the relationship?
- What will the effect on the relationship be if the loan cannot be paid back?
Borrowers might make suggestions that will increase the likelihood of a positive response and decrease the discomfort and risks inherent in personal loans from family members.
- Offer collateral. Doing so means lenders can place liens against the property if the borrower in case the borrower ever files bankruptcy. Lenders can then place liens against the assets and receive repayment along with other debtors.
- Give potential lenders the option of co-signing on personal loans from the bank. Doing so makes everything more official and involves a third party to neutralize the emotional aspects of the transaction.
- Whether it is done at the bank or over the kitchen table, insist that personal loans carry interest charges and very specific terms and put it all in writing. Have the agreement notarized. Ask for receipts on all payments. Following these steps increases the likelihood of repayment and avoids the potential of later confusion.
Finally, do not trust that personal loans from parents to their children will never be divulged to other family members. When other siblings later learn of the “secret” advance, they are likely to become suspicious, jealous and concerned about their stake in any future inheritance.
Do not put family members in a position that is uncomfortable at best and incendiary at worse. Instead, make any personal loans public knowledge and keep family members apprised of repayment progress. Ask that parents revise their wills or trusts to state that any remaining debt be deducted from the borrower’s inheritance and make sure other effected family members are aware of the new conditions.
American Unsecured
Personal lines of credit
When are personal lines of credit a better idea than loans or credit cards?
Personal lines of credit are perfect for those times when you’re uncertain what your total expenditure will be, for instance home renovation projects. Ask anyone who ever remodeled a kitchen if the projected expenses matched the final costs, and you’ll begin to understand one of the advantages of personal lines of credit over loans.
Personal lines of credit lines of credit allow you the convenience of writing a check or using a bankcard to draw on the account whenever you need it. Personal lines of credit are revolving credit accounts similar to credit cards; as you pay down the balance, you’re replenishing the pot of money you might need later
You make payments only on the portion of the credit limit you’ve used. If you have a $35,000 credit line for a kitchen remodel, but have only spent the first $5,000 of it to take out a wall, your payment is based on the $5,000 expenditure rather than the $35,000 loan.
In contrast, most loans are paid out in a lump sum. That means that if you take out a $35,000 loan, you have to begin paying on the full amount right away whether you’ve spent the money yet or not.
One of the biggest factors in choosing personal lines of credit over credit cards is expense. Personal lines of credit have lower interest rates than credit cards. Because of the lower interest rate, more of the payment goes toward the principal of the lines of credit, unlike credit card payments that can go on seemingly forever. Since the principal gets paid off faster, there is always a greater pot of money to draw from as the project proceeds.
Everyone loves the convenience and lower interest rates, of course, but most people opt for personal lines of credit because of the tax breaks they offer. When personal lines of credit are secured with borrowers’ home equity, the interest paid is tax deductible, just like the interest on mortgage payments. An added bonus: home equity lines of credit have even lower interest rates than unsecured personal lines of credit.
So, let’s see … borrowers take out personal lines of credit; secure the credit with home equity to get the lowest interest rates; write off the interest; use the money to increase the value and enjoyment of their homes; and pay off the debt faster.
Personal lines of credit for home renovations are a pretty sweet deal. Let American Unsecured help you sort through your personal lines of credit options and find the credit line that best suits your situation. American Unsecured is a loan-consulting firm and has helped millions of people find the money they need, and they can help you, too.
Wedding loans for DIY dream weddings
Wedding spending was down in 2009 … way down. In 2008, couples took out wedding loans to pay for $30,000 weddings, but this year they took out wedding loans so they’d stick to their wedding budgets and keep the expenses at an average of about $20,000.
Much of the expense of those over the top weddings was put on credit cards, and some of those newlyweds are paying off that debt at 29.99%; that’s not a mistake recession era couples are making. Instead, they save up all they can, and take out a loan to make up the difference; either way, wedding loans reinforce the notion that the available funds are finite.
That doesn’t mean sticking to a budget is easy, even with wedding loans. Lots of brides have been imagining their weddings since they played with Bridal Barbies. Wedding loans allow those brides-to be to shop for the best deals, and then move on them fast. Airfares have become unpredictable. With all the new fees and surcharges, it’s hard to find a bargain. But, when a rare low fare is announced for the frugal couples’ dream destination, wedding loans mean the money’s available.
The same goes for other areas where couples are cutting corners. With wedding loans, couples can tweak their DIY projects to achieve more professional results. For instance, taking out wedding loans a year before the wedding allows couples who decide on a backyard wedding to begin landscaping projects that will mature in time for their wedding.
Lower Personal Loan Rates vs. Higher Credit Card Rates
Historically, personal loan rates have been higher than those of credit cards, but no more. Now that 33% of credit card issuers have closed customer accounts, increased interest rates or fees and made it nearly impossible to get new credit, the reduced personal loan rates are only one of many reasons personal loans are a good bet.
Interest rates are down on nearly all types of loans, except credit cards; while median personal loan rates are hovering around 12%, median credit card interest rate rose 23% between December 2008 and 2009, according to a study by The Pew Charitable Trusts. And, last December median credit card interest rates were between 9.99% and 15.99%; by July of his year the rates increased to a range of 12.24 to 17.99.
Many also instituted new annual fees, ranging from $29 to $99 a year, including fees for under-utilized accounts.
In the past the best way to escape the squeeze of a high-interest credit card by strategically transferring the balance to a lower-interest card, but these days, balance transfer cards charge an average 14.54% interest on top of balance transfer fees ranging from 2% to 5%.
The best strategy for consumers intent on paying off high-interest credit cards is to take advantage of lower personal loan rates. Personal loan rates are determined by income and payment, but usually have fixed interest rates compared to the volatile, variable interest rates of credit cards.
Many personal loan lenders are currently offering personal loan rates as low as 8.99%–roughly half of widely advertised credit card rates. And, for credit card holders whose interest rates have been jacked up to 29.99%, taking advantage of lower personal loan rates can mean a savings of thousands of dollars. A $10,000 credit card with an interest rate of 29.99% will cost $19, 408.20 if paid off in five years; paying off that credit card with a personal loan will cost $12,452.40–a saving of $6,955.80.
Personal loans for credit card debts?
Credit card issuers have gotten pretty nasty lately. They’ve abruptly closed accounts, lowered limits, increased interest and shortened terms. Suddenly, what were affordable monthly payments have created a real budget squeeze, with payments that be entirely impossible to make in full or on time.
If you’re in this predicament, it’s time to consider personal loans. For many people and many reasons, they provide an attractive option to making—or worse, not making—those monthly credit card payments:
- Personal loans have lower interest rates than many credit cards.
- Personal loans can be paid off with lower monthly payments.
- Personal loans can actually improve credit scores damaged by credit card debts too near their limits.
- Even when personal loans aren’t enough to pay off all credit card debt, they reduce the ratio of available credit to credit balance.
- When personal loans are applied to pay off a significant percentage of a credit card balance, the credit card issuer may agree to a lower interest rate.
- Personal loans can be obtained quickly and easily online.
- Personal loans are typically unsecured loans, meaning they don’t put personal assets such as homes at risk.
- Personal loans are by far a better option than payday loans, which often carry annual interest rates between 300 and 700 percent.
Financial pressures affect quality of life in so many ways; marriages, families, professional opportunities, and physical and mental health all suffer as financial difficulties mount.
Though personal loans might not be a panacea for all of life’s challenges, they are a viable option for millions of people, and might improve your situation, too. Explore your options with American Unsecured.
Legal Expert has Some Good Advice on Divorce and Money
Anyone going through the pain of divorce knows it’s not just the emotional angst that can leave you sleepless at night — it’s the financial angst, as well.
Fortunately, things seem to be changing as more divorced couples are taking the “Do It Yourself” approach and leaving overly-litigious lawyers out of the equation — and saving a bundle in the process. That’s the notion forwarded by California divorce guru Ed Sherman, author of the groundbreaking books Divorce Solutions as well as How to Do Your Own Divorce in California, both of which are used as primers by about-to-split couples looking to reduce the pain of divorce. Read more