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Choosing The Right Options For You When Getting A Secured Personal Loan

admin — Tue, 28 Jul 2009 16:21:55 +0000

If you are looking to get a personal loan, you have two basic options. A secured personal loan, or an unsecured personal loan. Since many people generally want a secured personal loan, they are the most popular. Secured personal loans are loans that are secured against a piece of your property. It does not matter what you decide to use your secured personal loan for, but you do need to be honest with your banker about why you want the loan.

The options you choose for your secured personal loan will weigh heavily on the outcome of your loan repayment plans. If you want a small personal secured loan, then it will obviously need to be paid off in a shorter amount of time. If you want a large secured personal loan, then it may have a longer repayment period.

Your personal secured loan can be secured in a number of ways. You can use your home, a recreational vehicle, your primary vehicle, certain valuable pieces of jewelry, your savings account through a bank, and much more. What you choose to use as collateral for a secured loan is entirely up to you and the banker that is handling your case. Its important that you choose the right collateral for the type of options that you want for your loan.

The good thing about personal secured loans, is that they do not have an upper limit. You can get a secured loan for whatever your collateral is worth or valued at by a representative. Lower limits are usually set at $500. It is usually a waste of time to get a loan for anything less than that.

Interest rates for secured loans are much lower. Since you will be using a prized possession as collateral, then companies feel safer offering you low interest rates on high loans. In most cases you have 120 months to repay a secured personal loan.

You can also have more than one secured personal loan through a bank, but only if you qualify. Secured personal loans are great, because they are so customizable. Collateral plays an important role in the outcome of your loan, as well as the repayment period. You should always make sure you fully understand the requirements for borrowing prior to finalizing anything.

Closing Comments

Personal secured loans are usually given to those with good credit scores, so if your credit is less than you will have to use other options that are available through the bank you are borrowing from.

Don’t Charge It – Use Cash

admin — Fri, 24 Jul 2009 16:05:30 +0000

The society of today is built on plastic – the “charge and go” kind. It makes you wonder what people did before credit cards were invented! With those plastic wonders has come a mountain of debt. If this applies to you, to keep that debt from growing any larger consider giving your plastic the boot and use cash instead.

When you apply for a credit card be sure you read carefully the terms and conditions. You might start out with an amazing rate. But don’t miss or payment or make a late payment. You might find that they double or even triple that rate of interest. Purchases made on a credit card that has interest rates nearing 30% are going to cost you a small fortune down the road.

Credit cards are a way of establishing credit. Purchasing items and making payments on time lets potential credit lenders know that you are an acceptable risk for them. Good credit helps people to qualify for low interest loans on houses, cars, and furniture.

But that good credit standing can quickly change if you begin to charge more on those credit cards than you can possibly pay back. Interest is tacked on each month that the credit card carries a balance. It may be only a few dollars now, but let the balance linger for a few months and you will see the difference.

It may seem easy to buy everything on credit. But if you are buying things that will no longer have when it comes time to pay for the purchase what sense does that make. How ridiculous if you charged a meal on your credit card three months ago and you are still paying on it, plus interest. That food has been long gone and you are still in debt because of it.

An emergency card is good to have. It is very useful when the unexpected happens and there is no disposable cash to take care of it. So it is not necessary to ban all credit card use.

So pick the one with the lowest interest rate, pay the others off and cut them up. Close your accounts and don’t let the credit card companies talk you out of it. They are the only ones that stand to gain from you having multiple credit cards and mountains of credit card debt.

Before there was plastic, people used to pay with cash. Remember cash? If people didn’t have enough money, they waited until they did. We all could take a page from their book. People are too comfortable carrying around a boatload of debt.

The Essentials of a Good Debt Repayment Program

admin — Wed, 15 Jul 2009 22:23:44 +0000

Aside from the obvious reasons why one should self-enroll into a debt repayment program, there are some secondary reasons why leading a debt-free lifestyle is vitally important to long-term wealth. We will explore one here, but first, let’s clarify the primary reason why debt is bad — it restricts your ability to save.

With building wealth as our central theme, let’s assume we are like the average, every day American with $22,000 in credit card debt. Some of these cards have better rates than others, so we will also assume we pay only 14% per year on average for the $22,000 that we owe. This means that we pay our creditors $3,080 every year in interest costs. By sticking to a debt repayment program, we will turn this around and start paying ourselves, right? Not quite…

At first, it might sound like $3,080 is not all that much money to pay over the course of a year. But if you compound that same amount over five years and at that conservative 14%, that works out to $26,250 for the creditors. That’s the price of a new car. As consumers, it is unlikely that we could put $3,080 to work at 14%, but even if we could see a compounded rate of 10% over the same period, that same $3,080 works out to only 23,764 for us! In other words, a debt repayment program does not “level the field” as it were.

With the odds in the favor of large creditors as far as rates of return are concerned, we need to take a greater interest in our debt repayment program. The reason is simple: even though we walk away with less, our $3,080 in annual interest costs is better off in our pockets than the large creditors’!

To put this matter in greater perspective, let’s assume the average American earns $30,000 in annual after-tax income. By giving $3,080 to creditors, we are essentially giving away another 10% after we have already given away so much to taxes, medicare, insurance and everything else. Knowing what little benefit we get from our creditors, why would we voluntarily give them so much in return? It doesn’t make sense. A good debt repayment program will not only show us how to repay debt, but it will show us our individual cash-dilution rate and help figure out ways to reverse the trend.

With the above in mind, if our average debtor satisfies a debt repayment program and starts saving that $3,080 instead of giving it away, after a five-year period the after-tax income (within a Roth IRA in particular) will translate into a cash-APPRECIATION rate of roughly 8%. Again, not as nice as when the money was being paid out, but remember the odds are stacked against the average consumer. Since most people do not see salary increases to the same tune every year, 8% is not only decent, but it amplifies the reasons for adopting a successful debt repayment program.

In summary, once we understand our cash dilution rate and how our true debt translates into actual dollars and cents, we can adopt a successful debt repayment program that will not only help us repay debt, but start to build wealth.