Personal FInance

Pros and cons of payday loans

March 17, 2023 by Jennifer Leach Leave a Comment

Payday loans are a type of short-term, high-interest loan that can provide quick access to cash for borrowers. While they can be a convenient option for those in need of immediate funds, payday loans come with several risks and drawbacks that borrowers should be aware of before deciding to take out a loan.

Payday loans are different from bank statement loans. They’re not necessarily recommended but, if you’re in a financial bind, they could be a solution for you.

In this article, we will discuss the pros and cons of payday loans, as well as some alternatives that may be worth considering.

How do payday loans work?

Payday loans are a type of short-term, high-interest loan that is designed to be repaid on the borrower’s next payday. While payday loans can be a quick source of cash, they come with both pros and cons.

Pros and cons of payday loans

Pros:

Quick access to cash: Payday loans are often processed quickly and can provide cash in hand within a day or two.
No credit check required: Payday lenders typically do not require a credit check, which can make them more accessible to borrowers with poor credit.
Easy to obtain: The application process for a payday loan is often quick and simple, requiring only proof of income and identification.

Cons:

High-interest rates: Payday loans often come with high interest rates, sometimes as much as 400% or more. This can lead to a cycle of debt as borrowers struggle to repay the loan and the interest.
Short repayment period: Payday loans are typically due on the borrower’s next payday, which can make it difficult for borrowers to repay the loan on time and in full.
Predatory lending practices: Some payday lenders engage in predatory lending practices, such as charging hidden fees or rolling over loans into new loans with additional fees.
Potential for debt spiral: If borrowers are unable to repay the loan on time and in full, they may be forced to take out additional loans to cover the original loan and the interest, leading to a cycle of debt.

Overall, payday loans can provide quick access to cash but come with high-interest rates and the potential for debt spiral. It is important to carefully consider the risks and alternatives before taking out a payday loan.

5 Clever Ways to Boost Your Credit Score

March 17, 2023 by Jennifer Leach Leave a Comment

Looking for ways to boost your credit score? If you have a low credit score, things might feel hopeless but, the truth is, there are many ways to boost your credit score. There are simple things you can do to change your score for the better. Some of these things are easier than others but, it can be done.

Read on to learn more about credit, credit scores and ways to boost your credit score.

Let’s go!

What is a credit score?

A credit score is a numerical rating that represents an individual’s creditworthiness, or their ability to repay debt. It is calculated based on the individual’s credit history, including factors such as payment history, credit utilization, length of credit history, types of credit accounts, and recent credit inquiries.

Credit scores are typically calculated by credit bureaus using a mathematical algorithm that analyzes the individual’s credit data.

The most commonly used credit scores are FICO scores and VantageScores, which range from 300 to 850. The higher the credit score, the more likely the individual is to be approved for credit, such as a loan or credit card, and to receive favorable interest rates and terms.

Credit scores are important because they are used by lenders, landlords, and other financial institutions to determine the individual’s creditworthiness and risk level. A higher credit score can lead to better opportunities and financial benefits, such as lower interest rates, higher credit limits, and better loan or rental terms.

Why is credit important?

Credit is important for several reasons:

Access to loans: Credit is often necessary to obtain loans for major purchases, such as a car or a home. Having a good credit score makes it easier to get approved for loans and can result in better interest rates and terms.
Renting and utilities: Many landlords and utility companies require a credit check before renting or providing services. A good credit score can increase the likelihood of approval and may result in better rental or utility terms.
Employment: Some employers conduct credit checks as part of the hiring process. A good credit score can demonstrate responsibility and financial stability, which can improve job prospects.
Insurance rates: Insurance companies often use credit scores to determine insurance rates. A good credit score can lead to lower insurance rates and premiums.
Financial flexibility: Credit can provide financial flexibility and the ability to make purchases or handle unexpected expenses. It can also help establish a credit history, which is necessary to build a good credit score.

Overall, credit is important for financial stability and the ability to make major purchases, obtain loans, and access other financial services. A good credit score can result in better opportunities and financial benefits, making it an important aspect of personal finance.

5 Clever ways to boost your credit score

Improving your credit score usually takes time and effort, but here are some tips to help you quickly boost your credit score:

Pay down high credit card balances

High credit card balances can hurt your credit score. Paying down these balances can quickly improve your credit utilization ratio and boost your credit score.

Become an authorized user on someone else’s credit card

If you have a family member or friend with a credit card in good standing, becoming an authorized user on their account can help you quickly establish a credit history or improve your credit score.

Dispute errors on your credit report

Errors on your credit report can lower your credit score. Disputing these errors and having them removed can quickly boost your credit score.

Ask for a credit limit increase

Increasing your credit limit can improve your credit utilization ratio, which is a key factor in your credit score. However, be careful not to use the extra credit to accumulate more debt.

Use Experian Boost

Experian Boost is a free tool that allows you to add positive payment history from utility bills and other sources to your credit report, which can quickly boost your credit score.

Remember, these tips can help you quickly boost your credit score, but improving your credit score in the long term requires consistent, responsible credit behavior.

How do secured credit cards work?

March 17, 2023 by Jennifer Leach Leave a Comment

Wondering how secured credit cards work? Lets dive in.

What are secured credit cards?

Secured credit cards are a type of credit card that require a security deposit in order to be used.

The security deposit serves as collateral for the credit limit on the card. In other words, the credit limit on the secured credit card is typically equal to the amount of the security deposit.

Secured credit cards are designed for individuals who have poor or limited credit history, or who have had credit issues in the past. Because the security deposit reduces the risk for the credit card issuer, secured credit cards are typically easier to obtain than unsecured credit cards.

Just like with an unsecured credit card, the cardholder can use a secured credit card to make purchases, pay bills, and build credit. The cardholder is required to make monthly payments on the balance owed, and the credit card issuer reports the cardholder’s activity to the credit bureaus. Over time, responsible use of a secured credit card can help build credit and improve credit scores.

It’s important to note that secured credit cards often come with higher fees and interest rates than unsecured credit cards. However, they can be a useful tool for individuals who are looking to establish or rebuild their credit.

How do secured credit cards work?

Here’s how they work:

Security deposit: To open a secured credit card account, the cardholder must make a security deposit with the credit card issuer. This deposit acts as collateral for the credit limit, and the amount of the deposit is typically equal to the credit limit on the card.
Credit card usage: The cardholder can then use the secured credit card just like any other credit card, making purchases and payments as needed. The credit card issuer reports the cardholder’s activity to the credit bureaus, which can help the cardholder establish or improve their credit history.
Payments: The cardholder is required to make monthly payments on the balance owed, just like with a traditional credit card. However, if the cardholder is unable to make a payment, the credit card issuer can use the security deposit to cover the amount owed.
Refunds: When the secured credit card is closed or upgraded to an unsecured credit card, the security deposit is refunded to the cardholder. This is typically done as a statement credit, but can also be refunded via check or direct deposit.

Secured credit cards are often used by people who are new to credit or who have poor credit, as they can be easier to obtain than traditional credit cards.

However, they typically come with higher interest rates and fees, so it’s important for cardholders to use them responsibly and pay off the balance in full each month if possible. Over time, responsible use of a secured credit card can help build credit and improve credit scores, making it easier to obtain other types of credit in the future. This can go along with pursuing rent-to-own home programs for people that want to become homeowners in the future but have credit restrictions now.

Is a secured credit card something you’d try?

What are rent-to-own home programs?

March 17, 2023 by Jennifer Leach Leave a Comment

Rent-to-own home programs are a type of housing arrangement where a tenant rents a property for a set period of time, with the option to purchase the property at the end of the lease term. Read on to learn how these programs work, who they are for and if they are a good fit for home renters.

How do rent-to-own home programs work?

Here’s how it typically works:

Agreement: The tenant and landlord enter into an agreement that outlines the terms of the rental period and purchase option. This agreement will include the rental price, lease term, purchase price, and any other relevant terms.
Rent payments: The tenant pays rent to the landlord each month, just like in a traditional rental arrangement. However, a portion of the rent may be set aside in a separate account to be used as a down payment towards the purchase of the property.
Purchase option: At the end of the lease term, the tenant has the option to purchase the property at a predetermined price. This price is typically agreed upon at the beginning of the lease term and may be higher than the current market value of the property.
Purchase agreement: If the tenant decides to exercise their option to purchase, they will enter into a purchase agreement with the landlord. The down payment that was set aside from their rent payments will be applied towards the purchase price, and the tenant will need to secure financing for the remaining balance.

Rent-to-own home programs can be a good option for those who want to own a home but may not have the necessary down payment or credit history to qualify for a traditional mortgage. However, tenants should carefully review the terms of the agreement and consider the risks involved, such as potential changes in the housing market or financial situation.

Are rent-to-own home programs a good option?

Whether or not rent-to-own home programs are a good option depends on individual circumstances and goals. Here are some potential advantages and disadvantages to consider:

Advantages

Option to build up a down payment: Rent-to-own home programs offer tenants the opportunity to set aside a portion of their monthly rent payments towards a future down payment. This can be helpful for those who may not have enough savings for a traditional down payment upfront.
Potential to improve credit: Consistently making on-time rent payments can help improve a tenant’s credit score, which may help them qualify for a mortgage when the time comes to purchase the property.
Lock in a purchase price: Rent-to-own home programs typically include a predetermined purchase price that is agreed upon at the start of the lease term. This can be beneficial for tenants if the housing market appreciates, as they will still be able to purchase the property at the agreed-upon price.

Disadvantages

Higher overall cost: Rent-to-own home programs may come with higher rental rates and purchase prices compared to traditional housing arrangements. This is because the tenant is essentially paying for the option to purchase the property in the future.
Risk of losing money: If the tenant is unable or decides not to purchase the property at the end of the lease term, they may lose the down payment they made towards the purchase price and any other funds they set aside for the purchase.
Limited options: Rent-to-own home programs may not be as widely available as traditional housing options, and the properties that are available may have more restrictions or limitations.

Overall, rent-to-own home programs can be a good option for those who are committed to owning a home but may not have the necessary resources or credit history to do so immediately.

However, it’s important to carefully review the terms of the agreement and weigh the potential risks and benefits before deciding to enter into a rent-to-own home program.

What are bank statement loans?

March 17, 2023 by Jennifer Leach Leave a Comment

Bank statement loans are a type of loan that is based on a borrower’s bank statements rather than their tax returns or traditional income verification. These loans are typically offered to self-employed individuals, small business owners, or those who have non-traditional sources of income.

To qualify for a bank statement loan, borrowers must provide their bank statements from the previous 12 to 24 months. Lenders use these statements to calculate the borrower’s average monthly income and expenses, and then use this information to determine their ability to repay the loan.

Bank statement loans are typically easier to qualify for than traditional loans because they don’t require traditional income verification, which can be difficult for self-employed individuals or small business owners who have irregular or seasonal income. However, they also tend to come with higher interest rates and fees because they are considered riskier loans.

Who are bank statement loans for?

Bank statement loans are primarily designed for self-employed individuals, small business owners, and other people who have non-traditional sources of income. Traditional lenders often require a stable, regular income that can be easily verified with pay stubs or tax returns.

However, for those who have irregular or unpredictable income, such as freelance workers, independent contractors, or people who own their own business, it can be difficult to meet these requirements.

Bank statement loans can be a good option for these individuals because they are based on bank statements rather than traditional income verification. By looking at a borrower’s bank statements over a period of 12 to 24 months, lenders can get a better understanding of their average monthly income and expenses, which can help them determine their ability to repay the loan.

In addition to self-employed individuals and small business owners, bank statement loans may also be suitable for people who have recently started a new job, those who have experienced a recent drop in income, or those who have a high debt-to-income ratio.

However, borrowers should carefully consider the terms and fees of the loan before deciding to apply.

Overall, bank statement loans can be a good option for those who have non-traditional sources of income, but borrowers should carefully consider the terms and fees of the loan before deciding to apply.

How does cryptocurrency trading work?

March 17, 2023 by Jennifer Leach Leave a Comment

Cryptocurrency trading involves buying and selling digital currencies on a cryptocurrency exchange. Here are the basic steps of how cryptocurrency trading works:

Choose a cryptocurrency exchange

There are many cryptocurrency exchanges available, and each one has its own fees, trading pairs, and user interface. Choose an exchange that suits your needs and is available in your country.

Examples of crypto exchanges

There are many cryptocurrency exchanges available, each with its own fees, trading pairs, and user interface. Here are some examples of popular cryptocurrency exchanges:

Binance: Binance is one of the largest cryptocurrency exchanges in the world, with a wide variety of trading pairs and low fees.
Coinbase: Coinbase is a popular exchange that is known for its ease of use and user-friendly interface. It offers a limited selection of cryptocurrencies, but is a good choice for beginners.
Kraken: Kraken is a well-established exchange that offers a wide range of trading pairs and advanced features for experienced traders.
Bitfinex: Bitfinex is a popular exchange that is known for its advanced trading features and margin trading.
Gemini: Gemini is a regulated cryptocurrency exchange that offers a limited selection of cryptocurrencies, but is known for its high levels of security and user protection.
Huobi: Huobi is a global cryptocurrency exchange that offers a wide variety of trading pairs and low fees.
KuCoin: KuCoin is a popular exchange that offers a wide range of cryptocurrencies and low trading fees.

These are just a few examples of the many cryptocurrency exchanges available. When choosing an exchange, it’s important to consider factors such as trading fees, available trading pairs, and security features to find the one that best suits your needs.

Set up an account

To start trading, you’ll need to set up an account on the exchange. This may involve providing personal information and verifying your identity.

Fund your account

Once your account is set up, you’ll need to deposit funds into it. This can be done through a bank transfer, credit card, or other payment methods.

How much should you fund your account with?

The amount you should fund your crypto account with depends on several factors, including your investment goals, risk tolerance, and available funds. Here are some considerations to keep in mind:

Investment goals
Risk tolerance
Available funds
Trading fees
Diversification

First, determine your investment goals and how much you are willing to risk. If you’re just getting started with crypto trading, it’s generally recommended to start with a small amount and gradually increase your investment as you become more experienced.

Next, consider your risk tolerance when deciding how much to invest. Cryptocurrencies can be volatile, so it’s important to be comfortable with the potential risks involved.

Only invest what you can afford to lose. Don’t invest more than you can afford to lose, and make sure you have enough funds available for other expenses and emergencies.

Consider the trading fees charged by the exchange when deciding how much to fund your account with. It’s generally a good idea to have some funds available to cover trading fees and other expenses.

It’s generally recommended to diversify your crypto portfolio by investing in multiple cryptocurrencies and spreading your investment across different exchanges.

In general, it’s a good idea to start with a small amount when getting started with crypto trading, and gradually increase your investment as you become more experienced and comfortable with the risks involved.

Choose a trading pair

Cryptocurrency exchanges offer a variety of trading pairs, which are combinations of two different cryptocurrencies. For example, Bitcoin and Ethereum can be traded as a BTC/ETH pair. Choose a trading pair that you want to buy or sell.

Place an order

To place an order, you’ll need to specify the amount of cryptocurrency you want to buy or sell and at what price. There are several types of orders, including market orders and limit orders.

What to consider when placing an order?

When placing a cryptocurrency order, there are several factors to consider in order to maximize the chances of a successful trade. Here are some key considerations:

Market conditions: Before placing an order, it’s important to assess the market conditions for the cryptocurrency you want to trade. Look at the price history, market sentiment, and news that could affect the price.
Order type: There are several types of orders you can place, including market orders, limit orders, stop loss orders, and more. Choose the order type that best suits your trading strategy.
Order size: Consider the amount of cryptocurrency you want to buy or sell. This should be based on your trading strategy, risk tolerance, and available funds.
Price: Specify the price at which you want to buy or sell the cryptocurrency. This is particularly important for limit orders, where you set a specific price that you want to buy or sell at.
Fees: Consider the trading fees charged by the exchange. These fees can vary depending on the exchange and the trading pair, and can have a significant impact on your profits.
Timing: The timing of your order is also important. Cryptocurrency prices can be volatile, so it’s important to monitor the market and be prepared to adjust your order if necessary.
Risk management: It’s important to have a risk management strategy in place to minimize the potential losses from a trade. This can include setting stop-loss orders, diversifying your portfolio, and having a clear exit strategy.

By considering these factors when placing a cryptocurrency order, you can increase your chances of a successful trade and minimize the risks involved in cryptocurrency trading.

Monitor the market

Cryptocurrency prices can be volatile, so it’s important to monitor the market and be prepared to adjust your orders if necessary.

Withdraw your funds

When you’re ready to cash out your cryptocurrency, you can withdraw it from the exchange and transfer it to your wallet or bank account.

It’s important to note that cryptocurrency trading can be risky and is not suitable for everyone. It’s important to do your research and understand the risks involved before investing in cryptocurrencies. Do your due diligence and consult with an expert for advice. This is not financial advice. Additionally, it’s important to keep your cryptocurrency secure by using a reputable wallet and following best practices for security.

What are payday loans and are they a smart way to get cash fast?

March 17, 2023 by Jennifer Leach Leave a Comment

You may have heard of the term payday loans. Not sure what they are or how they work? We’ll talk about that in this article.

When I was in college, I first heard of payday loans from a coworker of mine.

Her boyfriend had taken one 0ut when he was in a bind and two years later he was still paying for it. He got caught in an ugly loop and the interest was too high for him to pay it off in bulk at that time. Sadly, this can happen. Read on to learn more about these kinds of loans including if they are a smart way to get cash if you find yourself in a bind.

What are payday loans?

Payday loans are short-term loans that are typically used by individuals who need quick access to cash. They are often advertised as a way to cover unexpected expenses, such as a medical bill or car repair, until the borrower’s next payday.

Here’s how payday loans typically work:

The borrower visits a payday loan store or applies online and provides proof of income, such as a pay stub, and a bank account.
The lender calculates the maximum amount the borrower can borrow based on their income and sets the loan amount and interest rate.
The borrower agrees to the terms and signs a loan agreement.
The lender deposits the loan amount into the borrower’s bank account.
The borrower agrees to repay the loan on their next payday or within a short period of time, typically two weeks to a month.
If the borrower cannot repay the loan on the due date, they may be given the option to extend the loan by paying an additional fee.

Payday loans are known for their high-interest rates and fees, which can make them a very expensive way to borrow money. Some states have regulations in place to limit the interest rates and fees that payday lenders can charge, but in many cases, the rates can still be very high.

Borrowers should be aware of the risks of payday loans and consider alternatives, such as asking friends or family for a loan, negotiating a payment plan with their creditors, or using a credit card with a lower interest rate.

Are payday loans a solution to getting cash fast?

Yes, they are but, that doesn’t mean they are the smartest path to take if you’re in a financial crunch.

Pros and Cons of Payday Loans

Payday loans are a controversial form of short-term borrowing. Here are some pros and cons to consider:

Pros:

Quick access to cash: Payday loans can be approved quickly, often within minutes, and can provide cash in hand or deposited directly into a bank account.
No credit check required: Most payday lenders don’t require a credit check, so borrowers with poor credit may be able to access funds that they wouldn’t be able to get from traditional lenders.
Convenient and accessible: Payday loan stores are often located in low-income neighborhoods and open outside of regular business hours, making them more accessible for borrowers who may not have access to other forms of credit.

Cons:

High interest rates and fees: Payday loans can come with extremely high interest rates and fees, which can add up quickly and make the cost of borrowing very expensive.
Risk of debt cycle: Many borrowers are unable to repay their payday loans on time, which can result in additional fees and charges, leading to a cycle of debt that can be difficult to break.
Targeting vulnerable populations: Payday lenders often target low-income individuals who are already struggling financially, making it more likely that borrowers will become trapped in a cycle of debt.
No positive impact on credit: Payday loans are not reported to credit bureaus, so they do not help borrowers improve their credit scores.

Overall, payday loans should be considered as a last resort option, due to their high cost and potential risks. Borrowers should explore other options for borrowing money, such as personal loans or credit cards, before considering a payday loan

Are payday loans smart to take out?

While payday loans can provide fast access to cash, they are generally not considered a good way to borrow money due to their high-interest rates and fees.

Payday loans are typically designed for short-term needs, such as unexpected expenses or bills that need to be paid before the borrower’s next paycheck. However, the high cost of borrowing can make it difficult for borrowers to repay the loan on time, which can lead to a cycle of debt.

In addition, payday lenders often target individuals who are already struggling financially, making it more likely that the borrower will have difficulty repaying the loan. This can lead to additional fees and charges, as well as damage to the borrower’s credit score.

If you need to borrow money quickly, there are alternatives to payday loans that may be more affordable and less risky. For example, you may be able to borrow from friends or family, negotiate a payment plan with your creditors, or use a credit card with a lower interest rate.

How does an auto refinance work?

March 1, 2023 by Jennifer Leach Leave a Comment

We are talking auto refinance loans in this article. If you’ve been contemplating whether or not to pursue an auto refi, you’ll want to read this. Learn how auto refinance loan works, examples of auto refinance companies, if it makes good sense to pursue and more.

Let’s go!

How does an auto refinance work?

Auto refinancing is the process of replacing your current car loan with a new loan from a different lender. The new loan is used to pay off the remaining balance on your old loan, and the terms of the new loan can be more favorable than your previous loan, which can result in lower monthly payments and overall interest costs.

Here’s how auto refinancing typically works:

Check your credit score: Before you start the process, it’s important to know your credit score, as it will affect the interest rate and terms of the new loan.
Shop for rates: Research and compare rates from different lenders to find the best deal. Look for lenders who specialize in auto refinancing and check their rates against your current loan.
Apply for the loan: Once you’ve found a lender with a favorable rate, you’ll need to complete an application. This typically involves providing personal and financial information, as well as information about your current loan and the vehicle.
Get approved: If you’re approved for the loan, the new lender will pay off your old loan and become the new lienholder on your vehicle. You’ll then start making payments on the new loan.

It’s important to note that auto refinancing may not be a good option for everyone, and it’s important to carefully consider the terms of the new loan before committing to it. Factors like the interest rate, length of the loan, and any fees associated with the new loan can all affect whether refinancing is a good option for you.

What are auto refinance companies?

Auto refinance companies are financial institutions that specialize in helping consumers refinance their car loans. These companies offer refinancing options for those who want to lower their monthly payments, reduce their interest rates, or extend the length of their loan term.

Some popular auto refinance companies include:

Capital One Auto Finance
RoadLoans
Bank of America Auto Refinance
AutoPay
LightStream
PenFed Credit Union Auto Refinance
MyAutoLoan.com
CarFinance.com

Each of these companies has different requirements and offers different rates and terms, so it’s important to do your research and compare your options before choosing an auto refinance company. It’s also important to make sure that any fees associated with the new loan don’t outweigh the savings from the lower interest rate or monthly payments.

Does auto refinancing make sense?

Refinancing your car loan can make sense in certain situations. Here are some reasons why you might consider refinancing your car:

Lower interest rates: If interest rates have dropped since you first took out your car loan, refinancing could allow you to lower your interest rate, which could save you money on interest over the life of the loan.
Lower monthly payments: If you’re struggling to make your monthly car payments, refinancing could allow you to extend the length of your loan term, which could lower your monthly payments.
Change in credit score: If your credit score has improved since you first took out your car loan, you may be eligible for a lower interest rate and could save money by refinancing.
Change in financial circumstances: If your financial circumstances have changed since you first took out your car loan, such as a decrease in income, refinancing could help you manage your payments and avoid defaulting on the loan.

However, there are also some situations where refinancing may not make sense, such as if you’re close to paying off your current car loan or if your current loan has a prepayment penalty. It’s important to carefully consider the costs and benefits of refinancing before making a decision.