Jan 03, 2007 @ 05:51 pm by Bruce Liu
“Cash Advance” loan, often called “payday loan” comes with extremely high price.
Here is how it works: let’s say you wrote a $330 personal check to borrow $300 up to 14 days. The lender would agree to hold check until next payday.
In this example, the cost of initial loan is $30 and interest rate for 14 days is 10% (=30/300), So APR is 260.7% (=10% * 365/14)!
Now multiply 260.7% by the $300 loan, 2.607 * 330 = $860.31. That is total interest charges you pay for in one year. If you add this charge to the original loan amount $330:
$330 + 860.31 = 1190.31. That is way TOO MUCH!
If you find yourself need extra cash from the lender, consider these possibilities as alternatives to the payday loan:
1. When you need credit, shop carefully.
2. Compare the APR and finance charge (which includes loan fee, interest and
other types of credit cost) of credit offer to get the lowest cost.
3. Ask your creditor for more time to pay your bills.
4. Make a realistic budget, and figure your monthly and daily expenditures.
5. Find out if you have, or can get, overdraft protection on your checking account.
6. Contact with your local credit counseling service, if you need help working out
a debt repayment plan with creditor.
If you cannot avoid taking out a payday loan, borrow only as much as you can afford
to pay back. Payday loan roll-overs can lead to a vicious cycle unending debt.
It could turn your temporary setback into major financial crisis.
Jan 07, 2007 @ 11:22 am by Bruce Liu
The lenders often look for 4 basic things when you apply for the credit:
1. Good payment record
If you pay your bills on time, you’ll score major points with lenders.
If you have a lot of late payments, this can hurt your chances of getting a card, and, if the lender decides to issue you a card, it’s probably going to have a higher interest rate.
2. Signs of stability, responsibility
Lenders perceive things such longevity in your home and job (at least two years) as signs of stability. Having a respected profession doesn’t hurt either.
3. Control of debt load
Lenders generally want to see that you are a good credit risk and that you aren’t living beyond your means.
Experts say non-mortgage credit payments each month should not exceed more than 20 or 25 percent of your take-home pay.
4. Reduce credit inquiries
Whenever you apply for a credit card, the lender will pull your credit report from one or more of the major bureaus as part of the approval process.
Each time a report is pulled, it’s marked as an inquiry and stays on your credit bureau report for two years.
Lenders perceive several inquiries on your report as indications that you’re scrambling for loans and may consider you a poor credit risk.
Bt following above 4 points, your chance to get approved for the credit is much improved.
Jan 17, 2007 @ 06:23 pm by Bruce Liu
If you’re turned down for a credit card, the very first thing you need to do is to ask why. It may be that you haven’t been at your current address or job long enough. Or that your income doesn’t meet the issuer’s criteria or any other reason that you may not know.
Different credit card companies have different standards. But if you are turned down by several companies, it may indicate that you are not ready for a credit card and need to do something about it.
If you’ve been denied credit because of information supplied by a credit bureau, federal law requires the creditor to give you the name, address and telephone number of the bureau that supplied the information.
If you contact that credit bureau within 60 days of receiving the denial, you are entitled to a free copy of your report. If your file contains accurate negative information, only time and good credit habits will restore your credit-worthiness.
If you find an error in your report, you are entitled to have it investigated by the credit bureau and corrected at no charge. You should dispute any inaccuracy in your report with the credit bureau and also with the company that furnished the information
to the credit bureau.
Jan 23, 2007 @ 12:43 pm by Bruce Liu
Consider carefully before taking out a home equity loan. Although This type of loan might let you take tax deductions you could not take with other types of loans, they can
reduce the equity that you built up in your house. And if you are unable to make payment promptly, you could lose your house!
Home equity loans can either be a revolving line of credit or a one-time, closed-end loan. Revolving credit let you choose when and how often to borrow against the equity in your home. In closed-end loan, you receive a lump sum for a particular purpose, such as remodeling or education tuition.
Apply for a home equity loan through a bank first. Bank loans are likely to cost less than the loans offered by finance companies.
When comparing loan offers, read all materials and ask following 7 specific
questions before you sign up:
1. What is the minimum monthly payment?
2. What is the annual percentage rage (APR)?
3. If the interest rate is adjustable, how much can it increase at one time?
4 What is the maximum interest rate?
5. What are the annual and transaction fees?
6. If the loan is for revolving credit, how large a credit line is available?
7. What are the initiation fees for a closed end loan?
