Dead End Loans You’ve Got To Avoid: Part 1

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A tight financial bind usually pushes people into making desperate financial decisions. Those decisions usually show up in the form of loans. While not every loan is bad, some loans should be avoided at all costs. In part one of Dead End Loans You’ve Got To Avoid, you will see three kinds of loans that could leave you in a worst off position than where you started.  

  1. Pay Day Loan – This lending model may present itself as a logical, quick and fair solution that will hold you over until your next paycheck. But, what many borrowers soon realize is that it’s nearly impossible to satisfy the payments without falling behind on other important bills. Before you know it, you’re taking out another loan to satisfy the one you had before it.  
  2. Car Title Loan – Unless you don’t mind risking your ride, car title loans are bad news. The interest rates are extremely high and the loan is usually due in 30 days. Many people have forfeited their vehicles because they just couldn’t pay anymore.
  3. Tax Preparer Loan – Tax preparer loans usually promise to give you the money the IRS owes you weeks in advance in exchange for a huge cut of the pie. Though regulations have cracked down on this practice some companies are getting creative by offering personal lines of credit with double digit interest rates.

Check out part two where you’ll get to see three other dead end loan types you should avoid.

Ouch! You’ve Just Been Denied Credit – Here’s What To Do Next

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So, you’ve applied for a loan and found out you were DENIED.  You probably feel bummed, but you may also be wondering what to do next. Before you get up in arms about the situation, see this as a great opportunity. Now you have a chance to investigate any issues that are likely lurking on your credit report. Here are the next steps you should probably take:

  • First, find out why you were denied. The lender will send you a letter letting you know what the issue was.
  • Next, check your credit report. See if there are any late payments or accounts in collections that brought your score down.
  • If you see anything on there that looks fishy, make sure you aren’t a victim of identity theft.
  • After you’ve checked the problem and know why you were denied, you may want to consider a new lender.

Keep in mind that every time you apply for a loan, it pulls down your credit score a few points. It’s considered a hard inquiry. You’d do best not to keep applying for loans you know you won’t get approved for until you fix the issues on your credit report.

Trying To Avoid Getting A Title Loan? Here Are 4 Less Expensive Options

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Before you go knocking on a title loan lender’s door, consider other options for your short cash needs. Even if you think you’ve exhausted all conventional lending resources, there still may be other options you haven’t tapped into yet.  Try to think back many years ago before title loans became an option. What could you do? Besides family and friends, you could:

  • Go to religious institutions: Often times, these places can offer help and will do so if you ask. They don’t usually publicize this help. It’s something that you’ll have to go and ask for.
  • Try local community groups: Just like religious institutions, community groups sometimes have emergency funds for people in need. Try asking both the large ones and small ones.
  • Ask your employer for a paycheck advance: With the way payroll is set up nowadays, this may be a stretch, but still worth trying.
  • Go to a credit union: Credit unions may be able to offer a small amount for a much better rate than a title loan company would.

Here’s What You Should Know Before Taking Out A Title Loan

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When you’re in a bind, it can be really tempting to take out a payday loan. But, before you sign your name on the dotted line, take a moment to ask yourself if you’ve explored all your options yet. Studies show that nearly 80% of borrowers had other means of covering their shortage of cash. Some of the alternative options include:

  • Borrowing from family: This is probably a lot easier said than done, but asking family members or friends to help you out with the shortage of cash may be a better option.
  • Pawning items: Do you have anything of value that you can pawn? If so, pawn it.
  • Cutting back on expenses: Go through your expenses with a fine tooth comb to see what you could do without. Can you cut back on meals for a month? What about cutting back on how much electricity you use? You’ll find that cutting back on expenses is a good alternative to freeing up cash.

Although these are some great options, they may feel too “extreme” or “uncomfortable”. But because pay day loans are hard to get out of, many borrowers will end up turning to one of these options anyway.

3 Practical (But Uncomfortable) Alternatives To PayDay Loans

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When you’re in a bind, it can be really tempting to take out a payday loan. But, before you sign your name on the dotted line, take a moment to ask yourself if you’ve explored all your options yet. Studies show that nearly 80% of borrowers had other means of covering their shortage of cash. Some of the alternative options include:

  • Borrowing from family: This is probably a lot easier said than done, but asking family members or friends to help you out with the shortage of cash may be a better option.
  • Pawning items: Do you have anything of value that you can pawn? If so, pawn it.
  • Cutting back on expenses: Go through your expenses with a fine tooth comb to see what you could do without. Can you cut back on meals for a month? What about cutting back on how much electricity you use? You’ll find that cutting back on expenses is a good alternative to freeing up cash.

Although these are some great options, they may feel too “extreme” or “uncomfortable”.  But because pay day loans are hard to get out of, many borrowers will end up turning to one of these options  anyway.

How To Get A Car Loan Even With Bad Credit: Part 3

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Now that you’re aware that you can find a lender who will take a chance on you, don’t make the mistake of going with the first fish that bites. You have to be sure that you’re making a sound financial decision that benefits you in the long run. This means not getting distracted by the promises of lower monthly payments in exchange for a long term loan. If you have to take out a long term loan, you probably can’t afford the car.

Also, make sure that the loan doesn’t have a bunch of extras tacked on that you don’t need. This includes extended warranties, insurance or after – market services.

Finally, make certain that once you drive off the lot that that’s it. There shouldn’t be conditions afterwards. Some lenders have been known to contact buyers later telling them that their interest rates have increased or that they need to make a larger down payment.

If you make strategic steps ahead of time, you can totally get the car you need without having to pay an arm and a leg. Just remember to do the proper leg work and most importantly, don’t get caught up in desperation.

Read: Part 1 & Part 2

How To Get A Car Loan Even With Bad Credit: Part 2

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In part 1 of this series, we began exploring how to get a car loan even with bad credit. Bad credit is an issue many people have, but it doesn’t stop them from needing a ride. If you put in the leg work, you can definitely get the ride you need.  Here are a few more ways to get it:

Check out your bank or credit union first. It may seem like a long shot, but try applying at the bank where you have your checking account. You can also check out banks who are known for giving out auto loans. This may be national banks, regional banks and popular online lenders.

Also, get someone to go with you who can be your extra set of eyes and ears and who can be your partner. Their role is to not act too impressed and to help you stay neutral throughout the negotiation process.

Check out part 3 of “How To Get A Ride Even With Bad Credit”, for some final tips.

Need A Car? How To Get A Loan Even With Bad Credit: Part 1

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Don’t be intimidated into thinking you can’t get a car loan if you have bad credit. Chances are strong you can get one, it may just take a little more effort on your part. Will the interest rates be high? Most likely they will, but they may not be as high as you think. It’s definitely worth doing your part and checking out because no two creditors think the same. Here are a couple of tips for getting a car loan, even with bad credit.

Know your score: If you’re armed with your credit score and credit report, no one can catch you off guard. You may have the same score as someone else, but maybe your history is a  little longer. It’s important that lenders can see all the fine details.

Shop around: This can’t be stressed enough. One lender may be more lenient to your score compared to another. While one may think you’re too risky, another one may not think so.

Check out part 2 of ways to get a car loan even with bad credit.

The Sticky Truth About Loan Modifications – Part 1

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Have you ever considered getting a loan modification? If so, you’re not alone. Many people who fall behind on their loans are quick to turn to them, hoping they’ll provide some level of relief. But, many soon realize that a loan modification wasn’t quite what they expected.

The Amount Owed Won’t Disappear:
A common myth behind loan modifications is thinking that the amount past due has disappeared. Yes, the payment may be lower, but that’s because the lender has changed the terms of how you’re borrowing for the current loan. This is in an effort to help you get back on your feet, but the amount owed has likely been tacked on to the end of the loan. You’ll notice too that the loan will take longer to pay off.

Don’t let this discourage you from getting a loan modification if you really need it. It’s still a great option for those who want to get a better handle on their debts.

Steps To Take Before Your Payday Loan Defaults

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Have you gotten yourself into hot water because of a payday loan? These loans may seem like the perfect solution to your problems at first. Especially, when you need it for an unexpected expense. But if you aren’t careful, you may find yourself falling into default.

The first time you’re unable to pay back your loan on time, you’ll be charged an additional fee. If that happens too often, the amount you have to pay back will become larger, making it nearly impossible to find relief.

Of course, the best way to avoid this is to handle it before it defaults. Here are a few ways to catch your payday loan before it goes it’s too late.

If you haven’t done so already, check to see if you qualify for an extended payment plan (EPP). Be sure this is done before your due date.   

If at all possible, try and pay it off completely as soon as possible. These loans are so vicious that you don’t want them lingering any longer than they have to.

Is your credit score 600 or above? If so, you may be able to take out a loan with a traditional lender or maybe even a credit card that you can use to pay off the payday loan. One of these options will give you more breathing room when it comes to interest rates and payment schedule.  

Talk to a nonprofit credit counselor. They may be able to help you negotiate something with your lender.

If you feel that your lender is acting unreasonable, you may be able to report them to the Consumer Financial Protection Bureau. Their number is 8554112372.