Here are three of the main questions on people’s minds – along with some informative answers – to help clear up confusion about cash advance payday loans and what they are all about in today’s financial marketplace.
1.How Do Cash Advance Payday Loans Work?
A cash advance payday loan is a loan made to you before your actual payday. The reason that people like these kinds of loans is that it is easy to run out of cash before that next payday rolls around, and once you get tapped out the bills and other expenses pile up and create headaches, stressful decisions regarding household finances, and other kinds of problems. But if you can borrow some money with a promise to pay it back on payday then that can bridge the gap and put money in your pocket when you need it the most.
The way lenders benefit from these kinds of loans is that they charge you a fee or interest for the loan. You get money sooner than you normally would and the lender gets paid for making that happen. That’s the general mechanics of how a cash advance payday loan works.
2.Are Cash Advance Payday Loans a Good Deal or Not?
The answer to that question is that it all depends on your financial situation. Let’s say that you have some emergency money stashed away in the bank, in your cookie jar, or in the form of a line of credit you can access when needed. In that case you probably have no reason to use a cash advance payday loan because you already have yourself covered when you run out of money ahead of payday. These cash advance loans charge high interest rates, and if you have other cheaper ways to get cash then you’ll be smart to use those more affordable methods instead.
But what if you don’t have any other way to get the funds you need to tide you over until your paycheck comes? In that case you might be a prime candidate for one of these loans, because they are tailor made to help people in your situation – who just need that paycheck a week or two ahead of time in order to make it through from one payday to the next without bigger problems. If getting the money this way – even though you have to pay a hefty rate to do it – saves you more money or aggravation in the long run, then it might be a good thing for you. Consider it an emergency source of urgent cash that might not be a great deal in terms of what it costs, but it could pay for itself anyway in terms of lowering your stress levels or preventing you from incurring even greater financial troubles.
3.When Should I Consider Using a Cash Advance Payday Loan?
You should consider using a cash advance payday loan in situations where you have no other options and it will save you more money that what the payday loan costs you.
Here’s a classic example: Let’s say you run out of money in your checking account. You have three checks about to hit the account, and all of them will bounce unless you put $300 into the bank account fast. Payday is two weeks ago, and you have no other way to come up with the cash. You have a choice. You can bounce those checks – and get charged about $25 dollars each plus get a bad report on your credit history file. Maybe one of the checks is for your utility bill and another is for your phone, so you also risk getting your electricity and phone cut off. If that happens you’ll have to pay even more money in the form of penalties and deposits to get those things turned back on.
Or you can go to a lender and borrow $300 with a cash advance payday loan to put in the bank account and cover those checks. When payday comes you pay back the loan and that’s the end of that. No cut-off utilities, no bad checks, and no other penalties or bad repercussions happen. You might pay $50-$75 for your cash advance loan in that $300 example we used. But when you add up all the problems you avoided it makes sense to use that resource to avoid the even bigger and more expensive problems.
That’s the nuts and bolts of cash advance payday loans and how and when to use them to your benefit at times when you’re stretched for cash.
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Here is a list of three of the most often asked pre-owned loan questions, along with some answers intended to help make the pre-owned car buying and loan application process go easier and smoother.
1.How Does a Pre-Owned Car or Truck Loan Differ from a New Vehicle Loan?
The biggest difference between a pre-owned loan and one for a new vehicle that just rolled off the manufacturer’s truck is that lenders have an easier time with new auto loans, whereas a vehicle in pre-owned condition is not as easy to evaluate and appraise. They would usually rather lend on a new car loan because they can make more money on those since new cars need more cash to pay for them than do used cars and bigger loans mean bigger profits for lenders. They also trust new cars to have value that used cars may not, and if you are lending somebody money and keeping the title to the car for collateral in case they stop paying you back, the value of that car and car title becomes a really important deal.
Think about it from a car buyer’s point of view, since that is what you are and what you understand. If you are buying a brand new car you probably don’t have to worry as much about the mechanical condition of the car, its paint job, the tires, and the condition of the upholstery and interior gadgets like the radio, CD player, or GPS system. That pretty much goes without saying because you trust the dealership to sell a quality car, and even if you don’t trust the dealer or car maker you most likely have a warranty to back you up in case something goes wrong within the first few thousand miles.
But if you are in the market for a used or pre-owned car the situation changes dramatically because now you have to really study what you’re buying to make sure it works properly, hasn’t been in a flood or accident or other calamity, and that the owner before you took good care of the vehicle and didn’t run up the mileage on the odometer.
2.What Challenges Will I Face While Seeking Out a Pre-Owned Car Loan?
Keeping what we just discussed in mind, it is easy to appreciate the point of view of lenders and why they are little more skeptical regarding pre-owned versus brand spanking new car loans. So as you probably guessed, many conventional kinds of lenders – like banks that tend to be more conservative and traditional in their lending practices – are going to be hesitant to lend you much money if you are buying a vehicle that is already used and might even be well on its way to getting old.
One reason why they prefer to lend on new cars, for example, is because with a brand new vehicle it is easier to do an appraisal and set a realistic value on the car or truck – which helps a lender know how much it is really worth in the current buyer and seller market. High miles and lots of years or potential for abuse on a car translate into less value in the resale market. For any lender who has to repossess the car and sell it to the highest bidder to recoup their lost money, that becomes a major consideration.
3.How Long are Repayment Periods on Most Pre-Owned Car Loans?
Because of the types of issues covered above, most loans for used cars are not as long as the ones offered with new cars. While 36 or 48 month pre-owned loans are not uncommon, longer loans may not be readily available to you if you are buying a used vehicle. That’s simply because by the time you pay off a loan with an extended payback period the car or truck – which is the lender’s collateral in case you default on the loan – is too old to be of much value at a lender auction sale. The same goes for buying a used vehicle that is already several years old when you purchase it.
Going in search of a pre-owned vehicle loan always means that you will eventually wind up looking for reliable answers to perplexing questions about those loans and how they work. Consult the experts, read as much as you can about pre-owned loans, and take advantage of advice and resources like those found on consumer information sites on the Internet to get educated and then get a good deal on a pre-owned car loan.
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If you have a few dings (or more than a few) on your credit report, it can be difficult to obtain any type of credit. Even if you do find someone willing to lend to you, the types of credit cards and loans that are available to you may have such high interest rates that they are unaffordable. Like many with less than perfect credit, you may be looking into credit repair to see if it can help your situation. Below are three of the most commonly asked questions about credit repair.
Can a Company REALLY Remove Negative Information from my Credit Report?
Despite the many companies that promise to do so, the fact is that negative information that is correct cannot be removed from your credit report.
Typically, items remain on a credit report for a period of seven years. In some cases, as with bankruptcies, it may remain for as long as ten years.
Unless an item is on your credit report by mistake, there is no way to have it removed. Unfortunately, many “credit repair” companies make claims that they simply cannot keep. They charge upfront fees and then do very little – if anything – to actually change your credit score or report.
A Credit Repair Company is Asking Me to Do Something Unethical. Might I Be Breaking the Law if I Go Along With It?
This question can be a bit tricky to answer. It depends on exactly what you are being asked to do. Some of the methods used by these companies are unethical, and some could be illegal. Obviously, doing something that is unethical, such as lying about whether an item on your credit report is correct, is not the way to go about raising your credit score. That being said, not all such methods would constitute breaking the law.
The best way to avoid crossing the line is to avoid taking any steps that involve having to lie about what should or should not be on your credit report.
Sure, it will take longer to bring your score up, but at least you will be going about it the right way.
Is There Any Way to Raise My Score?
Because many of the promises made by those who claim they can raise your credit score turn out to be lies, you need to figure out how you CAN raise your score. You may be disappointed to learn that there is no way to quickly cause your credit score to jump up. There are, however, steps that you can take to ensure that you get back on the right track to having healthy credit.
The first is to pull your report from all three of the major credit bureaus to make sure that there are no mistakes. Errors on credit reports are a lot more common than many people think. If there is a legitimate error on yours, simply file a grievance and the credit bureau will do an investigation. If it turns out that the item was there by mistake, it will be removed.
Another way to raise your score is to try and keep your credit card balances at no more than 30% of the available limit. For example, if your credit limit is $9,000, work to keep your balance below $3,000. The less of your available credit that you use, the higher your score will be.
Another way that you may be able to raise your score is to appeal directly to the creditor who has placed a negative item on your report. In some cases, you may be able to convince them to remove the negative item in return for paying your balance off in full. Creditors are under no obligation to do this, and the truth is that most will not. Still, it never hurts to ask, especially if you are willing and able to pay your balance off in full.
While it would be great if there were some quick and easy fix to a low credit score, the fact is that the only path to credit repair is a slow and steady one. Be diligent to make all payments on time and to avoid using all of your available credit.
It isn’t always easy, but those steps truly are the path to a good credit score that can save you thousands of dollars in interest on your future purchases.
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Store credit cards and gift cards can be convenient and tempting. They can also be trouble if not used properly and managed well. Below are three of the most commonly asked questions and answers about store credit cards and gift cards.
Isn’t It Worth Signing up for a Store Credit Card in Order to Get the Ten Percent Discount?
Unless you are making a huge purchase, the answer is no. Even if you ARE making a huge purchase, the answer is still usually no because there is often a limit about how much you can save with the ten percent discount.
While it may seem tempting to get a small discount for signing up for a store credit card, the bottom line is that it is just not worth it. Even if you really never use it, you will have to go to the trouble of canceling it.
Also, your credit score may take a small hit just from the store doing the inquiry on your credit report while processing your application.
The biggest reason it is not worth it is because, even if you have the best intentions, many who say that they are signing up just to get the discount, do go on to use the card. Store credit cards are just not a good thing to have. The interest rates are usually much higher than those for the major credit cards and the late and over the limit fees are typically the highest amount allowed by law.
Do Gift Cards Have Any Hidden Negative Features?
Gift cards can be a convenient way to get all of your gift shopping done, but it is important to know which gift cards have features that may make them not such a great deal.
One such feature, that will typically not be made known to you when you are purchasing the card, is an expiration date. Because a certain percentage of consumers will never use their gift card, the stores can count on a good profit from their sale. To ensure these profits, many stores place expiration dates on their gift cards. Some are only good for six months from the time of purchase.
Service and non-use fees are another unsavory aspect of some gift cards. A non-use fee is charged for every month that the card is not used after a specified period of time. A service fee is a monthly fee that is charged as long as there is a balance on the card, whether it is used or not.
Many feel that both fees and expiration dates are unfair, and have fought successfully to have limits placed on the issuers of gift cards.
While new federal laws have put limits on these types of features, they have not eliminated them completely. There are many gift cards that have no expiration date and do not charge any non-use or service fees. Be sure that the gift cards that you give are one of those.
As Long as I Pay Them Off Each Month, Are Store Credit Cards a Good Deal?
If you pay them off during the grace period then store credit cards are just as good of a deal as any other credit card. If you pay the balance in full during the grace period then you will not have to pay any interest so it is the same as if you paid cash.
The problem comes in that one month when you do not get your payment in before the grace period ends. When that happens, you will have to pay an extremely high interest rate. Even people with good credit often pay an interest rate up to 29 percent.
It is a good idea to avoid credit cards with high interest rates. Instead, choose a major credit card with a reasonable interest rate that can be used at most any retailer.
While you might intend to pay the balances in full each month, the truth is that you can’t really predict what circumstance could come along that may prevent you from doing so, and 29 percent interest is just too high of a price to pay.
Store credit cards and gift cards are not all the same. Be sure you know exactly what you are getting before buying or applying for either type of card.
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Prepaid credit cards are a convenient option for many people. Still, there is sometimes a lot of confusion about what these cards are and what they are not. Below are three of the most commonly asked questions about prepaid credits cards.
Can They Be Used Everywhere a Traditional Credit Card Can Be Used?
One of the best features of prepaid credit cards is that they can be used in most of the places that you can use a traditional credit card. One of the ways these cards come in so handy is for those who want to be able to shop online yet are unable to obtain a credit card.
While prepaid credit cards can be used in most places, there are a few exceptions. For example, some car rental companies and some hotels will not accept the cards. This is a decision made by certain hotels and car rental agencies and is not due a difference in the features of the card.
Will These Cards Help to Improve My Credit Score?
Many people mistakenly think that a prepaid credit card can help to boost their credit score. Unfortunately, this is not true. While a traditional card is based on an amount of credit that has been extended to you and that you promise to repay, no such credit is extended for a prepaid credit card.
While there are some important differences, prepaid credit cards work more like a gift card. You pay cash to put a set amount of money on the card. You can then use the card until all of that money has been spent.
Because no credit is extended, there is nothing to report to the credit bureau and, therefore, there is no impact on your credit rating.
Do I Have to Pay Interest on Purchases?
Purchases made with a prepaid credit are not subject to interest. The reason is the same for why the cards do not help your credit score: no credit is extended. Instead, you are simply spending money that you have loaded onto the card.
While you do not have to pay interest, there are often fees in place for prepaid credit cards. These could include a flat monthly fee as well as a per transaction charge. The amount of these fees vary greatly, so be sure to shop around for the best deal if you are looking for a prepaid credit card.
Is a Prepaid Card the Same as a Secured Card?
While the cards are similar in some ways, a secured card is not the same as a prepaid card. One of the important differences is that with a prepaid card you load money onto a card and that money is what you spend. No credit is extended. With a secured card, you place a set amount of money into an account to which you have no access. The credit card company then extends you a line of credit based on the amount in the account.
Because a secured card does involve an extension of credit, the issuer of a secured credit card will usually report the activity to the credit bureau, which can help your credit score if you use the card wisely. As discussed above, a prepaid credit card will have no impact on your credit score.
Another very important difference is that purchases made with a secured card will accrue interest. Often, because these cards are issued to those with less than perfect credit, the interest rates can be quite high. A prepaid card does not charge interest on purchases.
After reading the answers to some of the most common questions about prepaid credit cards, you should be better equipped to decide if the cards are the right choice for you. For many, they provide convenience and the ability to shop online safely. For those wishing to rebuild or establish credit, they are not the right choice.
If you do decide to obtain a prepaid credit card, remember that not all cards are the same. You must be sure to shop around so that you can find a card with low fees and key features that are important to you.
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