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Shopping Around For a Loan

Before you take out a loan near you, it’s a good idea to shop around with a few lenders to make sure you’re get the best loan deals.

Check Your Credit
First, consider your credit history. It’s always a good idea to check your credit report and credit score before you shop for a loan. That way, you can gauge your likelihood of getting approved without actually applying for the loan. Each loan application puts a credit-score damaging inquiry on your credit report and can hurt your chances of getting a subsequent application approved. Check your credit report for any errors and dispute them before putting in your loan application. Make sure you’re current on all your accounts, even debt collections, to improve your chances at getting improved.

Shopping Around For a LoanFind Out the Cost
Get the cost information – interest rates and fees. As you discuss the loan with a loan officer, make sure you completely understand the cost of the loan. The Truth in Lending Act requires lenders to give you a disclosure that outlines the interest rate and fees of the loan. It will include details about the annual percentage rate (APR), finance charge, amount financed, and total payments by the end of the loan. Each of those factors is important. Look for a low interest rate loan with a low total payment amount.

Know the Life and Payment Amounts of the Loan
Get the length of the loan and monthly payments. It’s important to know how long you’ll be paying on the loan and how much you’ll be paying each month. You want to afford your monthly payments, but keep in mind the lower your payments, the longer you’ll pay on the loan, and the more you’ll pay in interest charges.

Get Loan Quotes
Compare quotes from different banks. Don’t stop at a quote from a single bank. Chances are, there’s a better deal out there, but you don’t know until you look. Get quotes from at least three different banks and compare the terms of each. Unless you’re shopping for a mortgage, you should do your loan shopping as quickly as possible. Mortgage loan applications made within 30-45 days won’t affect your credit score, but other loan applications will hurt your score as soon as the inquiries appear on your credit report. You can always explain away inquiries by letting lenders know you’re shopping around. If you have a solid credit score, additional inquiries might not hurt too much.

Negotiate the Best Loan Terms
Negotiate a better deal. If you like a bank, but don’t like part of the deal you’ve been offered, try to negotiate a better one. It’s easier to negotiate if you have good credit and a steady income on your side. Let the loan officer know you’re looking for the best deal. Don’t be afraid to turn down a loan offer that is outside your price range.

Loan Discrimination is Illegal
Lenders must give your loan application fair consideration. The Equal Credit Opportunity Act, a federal law, prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, participation on a public assistance program, or exercising rights under the Consumer Credit Protection Act. If your loan application is denied, the lender should send you a letter letting you know why. You may be able to fix the reasons and reapply.…

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How to Read a Credit Report

Your credit report is a document that contains details about your financial habits – what accounts you have, how you pay those accounts. Each month your creditors and lenders update your account information with the credit bureaus who then update your credit report. You can order your credit report from any of the major credit bureaus – Equifax, Experian, or TransUnion. Once you have your credit report in hand, here’s how to read a credit report.

Your credit report has four major sections – personal information, account history, public records, and inquiries. Some credit reports also include a credit summary section.
Personal Information

This section lists your identifying information. Things like your name, current and previous addresses, current and previous telephone number, and place of employment will appear here. If you’ve had your name changed, your former name will show up on your report.

It’s not unusual for name misspellings to be included on your report because one of your creditors reported it that way. Credit bureaus usually leave these misspellings to keep the link to your account information.
Credit Summary

Some credit reports include a credit summary between your personal information and credit accounts sections. This summary includes the number of accounts you have, the total balance, total payments, the number of current and derogatory accounts. This credit summary lets you quickly see your credit standing.
Account History

The bulk of your credit report information will appear in the account history section. Here, you’ll find each of your accounts, along with the following account information:

• Name of the creditor
• Account number, partial
• Account status, whether it’s open, closed, inactive, paid, settled, etc.
• Date the account was opened
• Monthly payment
• Date the account was updated with the credit bureau
• Balance as of the date the account was updated
• Credit limit
• High balance, the highest balance you’ve ever held on the account
• Remarks, any comments made by the creditor will appear in this section
• Payment status, current, 30 days late, etc.
• Payment history, which details the status of your payments for the life of the account
Public Records

The public records section lists bankruptcies, judgments, and tax liens. Criminal arrests won’t appear on your credit report, only financial related data is included. In some states, overdue child support payments are included in your public records. Collection accounts could appear in this section, in their own section, or in the credit accounts section.

Accounts that appear in the public records section of your credit report have the biggest impact on your credit score. You want to keep this section free of any account listings.

This section lists everyone who’s checked your credit report within the past two years. Your credit report includes two types of inquiries – hard and soft. Hard inquiries are from business to whom you make an application for credit. Soft inquiries appear when you pull your own credit report or when businesses pull your report for promotional purposes. When a business pulls your credit report after you’ve made an application, only hard inquiries show up. You’ll see hard and soft inquiries on your report.

Your credit reports at all three bureaus won’t necessarily be the same. Some of your creditors might only report to one credit bureau and bureaus only share information with each other in certain circumstances. So it’s a good idea to check all three credit reports from time to time.…

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How to Improve Your Credit Score

Your credit score is only three-digits, but it’s one of the most important numbers of your life. Your credit score is a grade for your credit. It’s a numerical value that helps creditors, lenders, and other businesses make decisions about you. High credit scores are better because they show that you have a history of handling your financial responsibilities. If you have bad credit, here are some things you can do to improve your credit score. Dispute credit report errors. The information on your credit report directly influences your credit score. Any errors could hurt your credit score, especially negative ones like an inaccurately reported payment status. Order a copy of your credit report and review it to make sure everything in it is correct. If you find errors, dispute them.

Pay off past-due accounts. Accounts that are more than thirty days past due hurt your credit score the most. That’s because payment history makes up 35% of your credit score. If you have delinquencies, including charge-offs and collections, bringing them up to date will give your credit score a boost. Pay off the most recent delinquencies first because they have the biggest effect on your credit score. Pay your bills on time. The longer you pay your bills on time, the more your credit score will improve. Be aware of your due dates and send your payments in enough time to reach your creditors. Setting up automatic payments will eliminate the need to remember your due dates and ensure your payments arrive on time.

Bring your balances below the credit limit. Your level of debt is another significant part of your credit score – 30% to be exact. The higher your credit card balances are relative to your credit limit, the lower your credit limit will be. Your credit utilization – balances divided by credit limit – should be lower than 30% for the best credit score. If you have high credit card balances, pay them down and keep them down. Keep certain credit cards open. Many people close credit cards without knowing the effect it will have on their credit scores. The age of your credit history counts for 15% of your credit score. If you close an old credit card, your credit score could drop because your credit score looks shorter. Closing credit cards that still have balances increases your credit utilization and decreases your credit score. Before you close a credit card, be sure it’s not going to hurt your credit score.

Only open the accounts you need. Every time you make a new application for credit, your credit score takes a hit. These credit report inquiries account for 10% of your credit score. Though the inquiries remain on your credit report for two years, only those made within the past year affect your credit score. Limiting your credit applications will help your credit score in terms of credit inquiries, but also with your level of debt. The more credit you have available, the more tempted you’ll be to use it. Remember, high balances hurt your credit score, so removing the temptation to charge more can keep your credit score in a good range.…

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Lessor of Two Evils: Credit Card Cash Advance vs Payday Loan

If you’re in a cash crunch, two of the options that have probably occurred to you have been the payday loan or taking a cash advance on your credit card. While neither option is, obviously, ideal, both can be viable ways to address an immediate need for cash.

Before considering one of these two options, you might consider other possibilities. Whether it’s borrowing money from family or friends, taking out a personal loan or line of credit or dipping into a savings account, these options will usually save you some serious fees over the cash advance or payday loan. Still, these aren’t always a possibility.

Both of these options have their pros and their cons. Let’s take a look at both options, one at a time.

Payday Loans

Most of the time, the fee for a payday loan is somewhere between $17 and $25 for each $100 you get in a payday loan. In some states, however, that can go as high as $30 per $100. For example, you might take out a payday loan for $2000, and in two weeks need to pay back $2350.

The advantage that a Payday loan has is that it’s short term. Once it’s paid back, it is over and done with. It doesn’t drag on, the way that a credit card cash advance payment can drag on.

Still, the payday loan isn’t always that clear. According to the CFA website, most consumers who get a payday loan will have between eight and 13 payday loans per year at their payday loan lender. What often happens is that customers wind up taking out an additional payday loan in order to pay off the first, incurring fees each time.

Credit Card Cash Advances

Taking a credit card cash advance may be another option. While the interest rate on a credit card cash advance is likely to be less than the interest rate on a payday loan, the rate is still usually pretty high. You can wind up with an APR of between 15 and 25 percent.

In addition, most credit card companies will use your monthly payments to pay off the items with the lowest interest rate first. This means that your purchases will be paid off long before that higher-rate cash advance is paid off. Depending on what kind of a balance you carry on your credit card, which can mean that it will take months if not years to pay off the cash advance portion of your credit card bill.

Which is Better?

Again, each of the options has their own benefits. If you can take a payday loan and pay it back immediately, without needing another one, you’re better off than a credit card cash advance. However, if you know it will take some time to be able to pay off the debt, a credit card may be a better option.

On the other hand, if you have a high credit card balance for purchases, it can still be months or years before the cash advance is paid off.…

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10 Shocking Facts About Payday Loans!!

Payday loans were first legalized in the 1990′s. The idea is simple: Allow almost anyone to take out a small loan and charge them a flat fee with a short deadline. The average loan is $350 and average loan fee is over $50.

ten facts about payday loansBorrowers write a personal check that is post dated and the payday location holds it until the original loan is paid off. The borrower must pay back the loan or they are forced to deal with a bounced check and other financial consequences.

The majority of borrowers entrap themselves by never paying off the original loan and instead paying the loan fee to take out another loan to pay off the first. While this premise sounds bad enough, there are many other aspects of the payday industry that are just as shocking.

1. 76% of total loan volume comes from repeat loans

The payday industry operates in 35 states across nearly 23,000 locations. In the course of a year the industry generates $27.2 billion of loans. However $20.6 billion of the loan volume, 76%, derives from “churned” loans. A “churned” loan is defined as a loan made within the same two-week period in which a previous loan is paid off. Two weeks is the normal deadline for payday loans.

The vast majority of business stems from the borrowers inability to repay the original loan, causing them to immediately take another out and pay an additional fee. These are not one time loans, people become entangled in multiple loans and the fees begin to pile up.

2. The enormous amount of churned loans amounts to $3.5 billion in profit from fees

This is where the payday industry makes their money. Where your credit card only charges you interest if you fail to pay off the entire amount of a purchase, you pay upfront a flat fee to simply take out a loan. Since 76% of loans are repeat loans, the industry makes profit by getting the borrower to keep paying for loans because of their inability to pay off the initial loan. The average fee is $17.50 per $100 borrowed and for many this seems miniscule, but it adds up over the course of a year if not remedied.

3. There are two payday locations for every Starbucks

There are 11,000 Starbucks locations in America. There are 23,000 payday locations. So every time you complain or hear a complaint about the ridiculous number of Starbucks on every corner, take a second and understand there are twice as many payday locations in America.

4. In the 29 of 35 states where payday lending is legal there are more payday locations than McDonalds

Out of the 35 states that allow payday stores, there are 12,400 McDonalds compared to over 23,000 payday loan locations. Again, pretty shocking statistic considering we believe McDonalds to be one of the most ubiquitous businesses in our country.

5. The lowest APR cap is 156% in Texas and seven other states have no interest caps. The standard credit card APR is 16-18%

APR is annual percentage of rate. This is the interest rate for a whole year as applied to a loan. Basically, the APR calculates how much interest you pay if you borrowed the loan for a full year. For example, a payday loan fee of $17.50 per $100 for a two week loan equates to 455% (17.5% x 26 weeks).

Payday APR is astronomical compared to credit cards and other methods of borrowing. Payday locations trick potential borrowers by not revealing this statistic, instead focusing on the loan fee. Almost all borrowers do not realize the interest is in fact horrendous compared to other alternatives such as a regular cash advance or even loan from a friend for free.

6. $91.01 is the difference you pay by taking a payday loan versus a cash advance via credit card on a $300 loan paid in 30 days

Payday loan: $17.50 per $100 loaned, 15 day term with 1 rollover = $105 total fees

Cash advance via credit card – 20.23% APR with a 3% lending fee = $13.99 total fees

7. It’s frighteningly easy to obtain one of these loans

All a customer needs is a bank account, proof of income and identification. No location performs a full credit check or analysis to see if the loan is healthy in regards to the customer’s financial status. It’s harder to apply to many credit cards than it is to yank out a 455% APR loan.

8. Everything is due at once. You cannot make payments

This may not seem bad at first thought. Compare it to alternative loan methods and you see the disparity. Payday loans are short term loans that require you to pay back the entire amount or be forced to take out another loan.

Alternatively, many credit cards offer a grace period of repayment upwards of 30 days before any interest is charged. Even then, you can make small payments on purchases and combined with the relatively low APR on credit cards, this isn’t a big problem for most people. With payday loans, you are bound to pay the entire sum up front, so most people are forced to take another loan out immediately, thus paying the drastically high APR yet again. Either way, you are paying way more for a loan than you should be.

9. The industry constantly tries to undermine the law

Lots of lenders use sham transactions where they attempt to cloak the loans. An example is creating internet payday sites with rebate schemes that can avoid small loan laws in certain states. Texas lenders often operate as unregulated credit services organizations to blur their definition under state law. Locations in Illinois and New Mexico offer high cost installment loans instead of single payment loans to evade state law restrictions.

10. The industry targets minority neighborhoods

Statistics reveal in California payday lenders are eight times more concentrated in neighborhoods with the largest percentage of African Americans and Latinos. While the payday industry has been officially banned in North Carolina, many lenders still operate because of their affiliation with out of state banks. Of these that remain, they are three times more concentrated in the minority neighborhoods than Caucasian.

Information taken from and

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Pros And Cons Of Bad Credit Personal Loans

In these tough economic times, banks are getting much more strict about lending money. A missed mortgage payment or defaulting on credit card debts is enough to tarnish your credit report and making it difficult for you to get loans from the banks.

Fortunately the good thing is you may still be eligible for credit but under different conditions. While it may be harder to get normal loans with bad credit, it is possible to get bad credit personal loans. One of the biggest disadvantage of a bad credit personal loan history is that your interest rates will be higher that normal rates. Your loan may also be subjected to extra fees such as processing fees.

However, in spite of all these shortcomings you can take advantage of bad credit personal loans and get cash when you need it. Bad credit personal loans allow you to make amends, by repaying the loan in good time you slowly over a given period of time strengthen your borrower profile. This means that the more consistent you are with repayments of bad credit personal loans the higher the chances of being eligible for the such loans with lower interest rates in future.

Another advantage of bad credit personal loans is that you are almost assured to get them hence they can be a good bail out plan for people in need of cash. This is because past credit records may not influence your chances of getting a loan. They can also be used to pay up other expenses such as utility bills, emergency expenses or other personal needs.

There are a few requirements for bad credit personal loans such as not having a steady income, a resident of the U.S. and at least 18 years old. There is also a limit as to how much one can borrow. The highest amount you can get is $1,500 which means if your need more than that you may have to find alternative means to foot your expenses.

If you have a bad credit history and cant access other loan options, bad credit personal loans is always a fast and convenient option. Just make sure you don’t use it as a long term financial solution.…

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Ohio Caps Payday Loan Rates

OhioPayday loans are a relatively recent phenomena, appearing in just the last decade or so. These short-term loans often have a high interest rate, especially when compared with more conventional loans such as mortgages, auto loans and even personal loans. Still, the payday loan market is booming, indicating that this is an area where consumers have created a genuine demand for a service.

Consumer advocates in many places around the country have raised concerns about the high interest rates on payday loans. They argue that these rates take advantage of customers when they’re in a desperate situation. Consumers don’t always agree, however, and are often willing to pay those fees for the sake of expediency or of convenience.

What complicates the matter, at least in part, is the fact that these loans are so short term. While the Annual Percentage Rate for a given payday loan may be in the triple digits, the actual fee associated with the loan may be a small amount – often $50 or less on a loan of several hundred dollars.

In Ohio, the issue of payday loans has made it once again to the legislature. The state of Ohio passed legislation recently that caps the interest rate on payday loans at 28 percent. This may fundamentally change the way that payday lenders operate in the state of Ohio, and may have a real impact on that particular market.

One report, released by the group Policy Maters Ohio, suggests that Ohio residents are still paying the high interest rates. In addition, Ohio’s recent legislation allows borrowers at least a minimum of 30 days to pay back loans, but many of these lenders were still requiring that the loans be paid back within two weeks or less. These lenders have found ways to circumvent the new law, or are operating outside the boundaries of the law.

Advocates in other states such as Illinois have also been pressing officials to cap rates on payday loans in those states, as well. Illinois passed legislation several years ago that set out to deal with the issue of payday loans. The 2005 Payday Loan Reform Act applied to shorter term loans. In response, payday loan lenders have created longer-term loans with the same triple digit high interest rates.

Illinois in considering new legislation to address this issue. The current legislation would lower the cost of borrowing, help to ensure that consumers don’t over borrow, and prevent them from using one payday loan to pay off another.

Advocates in Illinois and Ohio, as well as other states looking at the question of payday loans, are suggesting that state laws be changed to require a minimum of 90 days to pay back a loan, and that loan rates can then be uniformly regulated.…

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Are Payday Loan APR Caps Irresponsible? E&Y Study

dunce picWhen it comes to payday loans, there are people with some very vocal opinions. Some consumer advocates claim that payday loan lenders are unfair, that they take advantage of consumers who are in a tough financial spot, and that they aren’t offering a responsible product to the market.

Recently, E&Y set out on a national study to determine whether the pricing of payday loans was fair and reasonable. The findings of the study may be surprising to some, and suggest that the issue of payday loans isn’t as cut and dried as opponents would like for you to think it is.

The study found, among other things, that attempts by state legislatures or other governmental entities to create and impose an artificial cap on the rate for payday loans would have a detrimental effect. It would, in effect, eliminate a product that millions of Americans use to address short-term credit needs.

In addition, the study found that, on average, payday advance lenders charge just over $15 for each $100 lent to consumers. The average cost to the payday loan store was just under $14 for every hundred dollars loaned, meaning that their profit margin isn’t outside normal standards for retail or financial businesses. The average profit margin was 9.1 percent before taxes.

Lenders in the payday loan industry face far greater risk than those lenders who offer more traditional loans that require a form of collateral. Around 27 percent of the cost of each loan went toward bad debt.

Reducing the fees that payday loan lenders charge, then, would greatly impact the ability of these businesses to function. The vast majority of the more than 10,000 payday lenders around the nation operate within the percentages for profit margins outlined above, and would not be able to keep their doors open if rate caps were put in place.

A typical payday loan last for two weeks at a cost of $15.26 per $100 borrowed. This works out to an annual percentage rate of 397 percent. That rate sounds astronomical, and would certainly be if the loan were for a term of one year. The very idea of an “annual” percentage rate for a short-term product like this is, at best, misleading.

Incidentally, some of the proposals in state and federal legislatures would cap the APR at 36%. According to the E&Y study, this kind of a cap would make payday loans unprofitable. This would force the lender to stop offering the product.…

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Why Bad Credit Personal Loans Are So Common?

Bad credit personal loans are available for people who have a poor credit standing and are in need of money. People use this borrowed amount for various purposes such as sudden family expenses, the purchase of a new car or home, unexpected medical bills, weddings, and even for restoring their credit records.

Over the past few years, bad credit personal loans have become very common. People from all walks of life seem to have been affected by the instability of the economy. This has resulted in mountain-high debt and subsequent poor credit standing experienced by consumers. Recent trends show that bad credit personal loans are becoming increasingly more popular than regular loans. The majority of consumers do not qualify for regular loans so they turn to this alternative personal loan.

Bad credit personal loans are unsecured loans which are especially intended for people with poor credit ratings. In fact, anyone can apply for this loan. Unlike other types of loans or financing schemes, it does not entail a lengthy application process or extensive credit checks. Also, since these loans are unsecured, there’s no need to present your properties as collateral.

You can use the loaned amount for any purpose. Although there’s no limit on your choice of spending, do remember that bad credit personal loans are meant for short term expenses and must be cleared as soon as possible. They provide an immediate solution to your urgent financial needs.

To find a bad credit personal loan, you can browse online for lending companies offering such loans. There are virtually millions of creditors willing to approve loans to people with a poor credit standing. However, it’s not easy looking for a loan term that matches both your needs and your financial capacity. Browsing through different banks and searching for the best terms is a challenging task.

This is where online credit matching services such as Credit Season come in. Credit Season are professionals in this field and work with a nationwide network of lenders, so you are assured of getting matched instantly. Once you complete the online application form, your details will be matched with dozens of lenders and credit companies. As soon as a match is found, you will be redirected to the lender’s website where you can review loan amount, terms of loan and rates. After verifying and signing the loan agreement, the money requested will be sent directly to your bank account. It is a hassle-free and easy way of borrowing money.…

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