Payday loan

A payday loan (also called a paycheck advance or payday advance) is a small, short-term loan that is intended to cover a borrower's expenses until his or her next payday. The loans are also sometimes referred to as cash advances, though that term can also refer to cash provided against a prearranged line of credit such as a credit card (see cash advance). Legislation regarding payday loans varies widely between different countries and, within the USA, between different states.
Some jurisdictions impose strict usury limits, limiting the nominal annual percentage rate (APR) that any lender, including payday lenders, can charge; some outlaw payday lending entirely; and some have very few restrictions on payday lenders. Due to the extremely short-term nature of payday loans, the difference between APR and effective annual rate (EAR) can be substantial, because EAR takes compounding into account. For a $15 charge on a $100 2-week payday loan, the APR is 26 × 15% = 390% but the EAR is (1.1526 − 1) × 100% = 3,685%. Careful reporting of whether EAR or APR is quoted is necessary to make meaningful comparisons.
Retail lending
Borrowers visit a payday lending store and secure a small cash loan, with payment due in full at the borrower's next paycheck (usually a two week term). In the United States, finance charges on payday loans are typically in the range of 15 to 30 percent of the amount for the two-week period, which translates to rates ranging from 390 percent to 780 percent when expressed as an annual percentage rate (APR) The borrower writes a postdated check to the lender in the full amount of the loan plus fees. On the maturity date, the borrower is expected to return to the store to repay the loan in person. If the borrower doesn't repay the loan in person, the lender may process the check traditionally or through electronic withdrawal from the borrower's checking account.
If the account is short on funds to cover the check, the borrower may now face a bounced check fee from their bank in addition to the costs of the loan, and the loan may incur additional fees and/or an increased interest rate as a result of the failure to pay. For customers who cannot pay back the loan when due, members of the national trade association are required to offer an extended payment plan at no additional cost. In states like Washington, extended payment plans are required by state law.
Payday lenders require the borrower to bring one or more recent pay stubs to prove that they have a steady source of income. The borrower is also required to provide recent bank statements.[citation needed] Individual companies and franchises have their own underwriting criteria.
Internet lending
Online payday loans are marketed through e-mail, online search, paid ads, and referrals. Typically, a consumer fills out an online application form or faxes a completed application that requests personal information, bank account numbers, Social Security number and employer information. Borrowers fax copies of a check, a recent bank statement, and signed paperwork. The loan is direct-deposited into the consumer's checking account and loan payment or the finance charge is electronically withdrawn on the borrower's next payday.
Examples
For example, a borrower seeking a payday loan may write a post-dated personal check for $460 to borrow $400 for up to 14 days. The payday lender agrees to hold the check until the borrower's next payday. At that time, the borrower has the option to redeem the check by paying $460 in cash, or renew the loan (a.k.a. "flip the loan") by paying off the $460 and then immediately taking an additional loan of $400, in effect extending the loan for another two weeks. In many states, "flipping" or "rolling over" the loan is not allowed. In states where there is an extended payment plan, the borrower could choose to opt into a payment plan. If the borrower does not pay off or refinance the loan, the lender deposits the check.In this example, the cost of the initial loan is a $60 finance charge, or 390% APR.
When the Consumer Federation of America conducted a survey of 100 internet payday loan sites, it found loans from $200 to $2,500 were available, with $500 the most frequently offered. Finance charges ranged from $10 per $100 up to $30 per $100 borrowed. The most frequent rate was $25 per $100, or 650% annual interest rate (APR) if the loan is repaid in two weeks.

Payday Loans

There are many types of loans. Some loans require your greater understanding to know its category. But others like payday loans, which are generally small loans, suggest the meaning of its type by its mere name; they are designed to tide employees over until their next payday. Fees coupled with payday loan depend upon its size of borrowing and your credit history. The fund for this short-term loan is available within 24 hours and deposited into your bank account directly or provided in cash. But if your agreed repayment period is over, the entire sum of this small loan is taken from your bank account along with the lenders service fees.
Eligibility Criteria For Payday Loans

Payday loans have such low eligibility criteria that even a customer with county count judgments (CCJs) or bankruptcy will not have problems. You can expect a charge of around $25 per $100 borrowed as fees by some firms. But mind you, if you fail to repay the loan on time, additional interest might be charged.

Despite these benefits, a payday loan might be a very expensive form of borrowing, compared to credit cards, where on $350 borrowed for a month, you pay an interest of only around $8 and nothing the next month if you clear your card in full. But a payday loan might charge you a fee of $87.50, a staggering difference.

Payday Loans Without Interest For anyone opting for a loan for the first time, getting a little anxious is normal. The most common doubt a first time loan applier come across is whether they will get the cash before they earn it.

It is their responsibility to check or else they might land up in trouble. So it's best to start with a small loan amount. So, a first time borrower should find a lender offering an interest free loan. In this case, you pay back exactly the same amount you borrowed and nothing more. You become debt free as soon as you get your next paycheck.

Alternatives To Payday Loans


You should consider a few things before opting for a payday loan, like when do you want the loan, the APR (annual percentage rate), is it suitable etc. In fact, you can opt for a small loan from your credit union or small loan company, or you can ask for an advance payment from your boss, family or friends.

Comparing the APR and the finance charges including loan fees, interest and credit costs is essential to choose the loan with the lowest cost. Also clear doubts regarding late charges, finance charges or interest rates.

To pay off the payday loan in time, avoid being extravagant. Keep a check on your daily and monthly expenditure; don't spend money on unnecessary things.

Try to save even small amounts and stop borrowing, not even a single penny.

Conclusion

Payday loans aren't as big as personal or home loans.

But these small loans are easily returnable and a simple way of getting cash in advance. You get the required amount even without going through a credit check or waiting for approval on your small cash loan.

Low-Interest Personal Loans

Qualifying for a low-interest personal loan can be quite difficult. Also known as signature loans, they are granted without the lender having benefit of any collateral. Because of this, the lenders’ guidelines for making such loans are much more stringent.
Unlike a home or car loan, there is no security that the lender can seize should the borrower default. Therefore, the lender’s only legal alternative would be to file a lawsuit. While it’s possible that the lender could be awarded some element of personal property or a wage garnishment from the borrower, this is rarely the case. In areas that allow wage garnishment, it is usually reserved for child support payments. Because of this limited recourse, lenders strictly require that borrowers have good credit, a good income, and financial stability before granting this type of loan. Those with excellent credit and a strong repayment history can obtain low-interest, no-fee personal loans from Credit.com. This company makes loans only to strong-credit borrowers, thereby substantially lowering risk-associated costs and passing the savings on to their customers.
Each lending institution sets its own underwriting guidelines for making personal loans. If a business relationship already exists between the lender and a prospective borrower, that institution may be a bit more lenient with regard to their qualification criteria. This relationship could be in the form of a checking or savings account, a Certificate of Deposit, a mortgage loan, or business banking accounts. Of course, they're under no obligation to bend their guidelines for existing customers. Generally, the qualities that they're most adamant about seeing in a prospective borrower are an excellent credit rating, job longevity, a low debt-to-income ratio, and solid financial assets. They also are very likely to want to know what the borrowed money will be used for.
Many banks and credit unions limit the size of the personal loans that they make, perhaps as low as $2,500 to $5,000. Some may loan more, but it must be remembered that all of these loans are very tough to get. Some institutions refuse to make unsecured personal loans of any size. The ones that do grant them require the borrower, as previously stated, to have a very solid financial position. If a borrower has less-than-perfect credit, the chances of obtaining a low-interest personal loan can be somewhat low.
Are there alternatives for people with average- to below-average credit? Yes, there are. Finance companies have been around for years. They specialize in financing smaller purchases, no more than a few thousand dollars, for example. They also make personal loans, but of course, they are not generally low-interest. The price of these loans can range from five- to ten percent above market interest rates, and can generally be amortized over a one- to two year period. As is always the case, comparing several lenders is the wisest avenue to finding the program that best fits your needs.
Another option exists in the use of cash advance loans. Also called fast-cash or payday loans, they require no credit check so the borrower’s credit history is not an issue. These loans are designed to be high-risk, high-interest, short-term loans that solve immediate cash-flow problems. They are not meant as solutions for long-term monetary concerns. It must be noted, however, that some lenders are more flexible than others, and willing to work with borrowers of all credit ratings. Some even grant personal loans up to $15,000 or more. Of course, the criteria varies greatly among such lenders, and also among loan programs of the same lender. Again, thorough shopping is your best friend. One of the better and more reputable lenders for loans such as these can be found at Credit.com.
Unsecured personal loans are obtainable for virtually any situation. Although the low-interest loans are very difficult to come by, other alternatives do exist for less financially strong borrowers. Compare the programs; become aware of what’s available to you. With the proper knowledge, you’ll be able to find the package that’s right for youloans/low-interest-personal-loans.

How to Reduce Your Insurance Costs

With the cost of insuring homes on the rise in recent years, now is a good time to examine your policy and look for ways to save money.
The Insurance Information Institute, a non-profit organization supported by the property and casualty insurance business, attributes the increases to the mounting number of catastrophes, the high cost of home repairs, and the emergence of mold claims.
So what can you do to help keep your rates reasonable? The III makes the following suggestions:
· Shop for the best deal. Get at least three quotes. See if your state department of insurance has any price comparisons available. But don't just look at prices. Evaluate which companies provide the best customer service and are readily available to answer your questions.
· Raise your deductible. The higher your deductible, the less premium you'll have to pay. The III says if you raise a $500 deductible to $1000, you may save as much as 25 percent.
· Buy your home and automobile policies from the same insurer. Some companies will reduce your premium up to 15 percent if you have at least two policies from them.
· Reduce the odds of being affected by a disaster. Make your home more resistant to disasters - you might be able to save by adding storm shutters and shatter-proof glass or reinforcing your roof. If you live in an older home, you should consider modernizing your heating, plumbing and electrical systems to reduce the risks of water and fire damage.
· Understand the costs. The cost to rebuild your home is going to be different than what you paid for it. Don't include the cost of the land in deciding how much coverage to purchase.
· Secure your home. Some companies offer a modest discount, usually at least 5 percent, for installing smoke detectors, burglar alarms and dead-bolt locks. Some insurers will also offer a discount if you install a sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations. First you'll want to research the costs involved, and whether you'd be saving on your premiums.
· Inquire about discounts. Ask your company about all potential discounts. For example, some offer discounts to those 55 and older.
· Investigate group coverage. You may be able to get a group coverage plan through your employer or a professional or business group. See if it's a better deal than what you have.
· Stay put. Many companies offer discounts for longer-term customers - sometimes up to 10 percent if you've had your policy through the company for more than six years. Be sure to compare prices against other companies once in awhile.
· Review your policy and the value of your possessions. If you sold that pair of diamond earrings or other valuable for which you have a floater policy - additional coverage for items not covered by a standard homeowners policy - be sure you're not paying for the extra insurance.
Finally, when you're ready to buy a new home, be sure you factor in the cost of homeowners insurance. The cost of your premium will depend on how much it would cost to rebuild, and whether the house is likely to succumb to a disaster or fire.
Also, flood and earthquake damage are not covered by a standard policy. If you need flood insurance, which costs about $400 per year, you'll want to contact the Federal Emergency Management Agency. Most insurance companies offer a separate earthquake policy.

Personal financial planning

A key component of personal finance is financial planning, a dynamic process that requires regular monitoring and reevaluation. In general, it has five steps:

1. Assessment: One's personal financial situation can be assessed by compiling simplified versions of financial balance sheets and income statements. A personal balance sheet lists the values of personal assets (e.g., car, house, clothes, stocks, bank account), along with personal liabilities (e.g., credit card debt, bank loan, mortgage). A personal income statement lists personal income and expenses.
2. Setting goals: Two examples are "retire at age 65 with a personal net worth of $1,000,000" and "buy a house in 3 years paying a monthly mortgage servicing cost that is no more than 25% of my gross income". It is not uncommon to have several goals, some short term and some long term. Setting financial goals helps direct financial planning.
3. Creating a plan: The financial plan details how to accomplish your goals. It could include, for example, reducing unnecessary expenses, increasing one's employment income, or investing in the stock market.
4. Execution: Execution of one's personal financial plan often requires discipline and perseverance. Many people obtain assistance from professionals such as accountants, financial planners, investment advisers, and lawyers.
5. Monitoring and reassessment: As time passes, one's personal financial plan must be monitored for possible adjustments or reassessments.

Typical goals most adults have are paying off credit card and or student loan debt, retirement, college costs for children, medical expenses, and estate planning.[citation needed]

The six key areas of personal financial planning, as suggested by the Financial Planning Standards Board, are:

1 - Financial Position: this area is concerned with understanding the personal resources available by examining net worth and household cash flow. Net worth is a person's balance sheet, calculated by adding up all assets under that person's control, minus all liabilities of the household, at one point in time. Household cash flow totals up all the expected sources of income within a year, minus all expected expenses within the same year. From this analysis, the financial planner can determine to what degree and in what time the personal goals can be accomplished.

2 - Adequate Protection: the analysis of how to protect a household from unforeseen risks. These risks can be divided into liability, property, death, disability, health and long term care. Some of these risks may be self-insurable, while most will require the purchase of an insurance contract. Determining how much insurance to get, at the most cost effective terms requires knowledge of the market for personal insurance. Business owners, professionals, athletes and entertainers require specialized insurance professionals to adequately protect themselves. Since insurance also enjoys some tax benefits, utilizing insurance investment products may be a critical piece of the overall investment planning.

3 - Tax Planning: typically the income tax is the single largest expense in a household. Managing taxes is not a question of if you will pay taxes, but when and how much. Government gives many incentives in the form of tax deductions and credits, which can be used to reduce the lifetime tax burden. Most modern governments use a progressive tax. Typically, as your income grows, you pay a higher marginal rate of tax. Understanding how to take advantage of the myriad tax breaks when planning your personal finances can make a significant impact upon your success.

4 - Investment and Accumulation Goals: planning how to accumulate enough money to acquire items with a high price is what most people consider to be financial planning. The major reasons to accumulate assets is for the following: a - purchasing a house b - purchasing a car c - starting a business d - paying for education expenses e - accumulating money for retirement, to generate a stream of income to cover lifestyle expenses.

Achieving these goals requires projecting what they will cost, and when you need to withdraw funds. A major risk to the household in achieving their accumulation goal is the rate of price increases over time, or inflation. Using net present value calculators, the financial planner will suggest a combination of asset earmarking and regular savings to be invested in a variety of investments. In order to overcome the rate of inflation, the investment portfolio has to get a higher rate of return, which typically will subject the portfolio to a number of risks. Managing these portfolio risks is most often accomplished using asset allocation, which seeks to diversify investment risk and opportunity. This asset allocation will prescribe a percentage allocation to be invested in stocks, bonds, cash and alternative investments. The allocation should also take into consideration the personal risk profile of every investor, since risk attitudes vary from person to person.

5 - Retirement Planning: retirement planning is the process of understanding how much it costs to live at retirement, and coming up with a plan to distribute assets to meet any income shortfall.

6 - Estate Planning: involves planning for the disposition of your asset when you die. Typically, there is a tax due to the state or federal government at your death. Avoiding these taxes means that more of your assets will be distributed to your heirs. You can leave your assets to family, friends or charitable groups.