Poor Credit Business Loans

It takes money to get a business off the ground. How much money? Well, usually more than you think…and more than most banks are willing to lend you. It sounds a little harsh, but if you’re looking for startup capital, bank loans can be a very tough route to financing. Some would say impossible. If you’ve damaged your credit at some point, it’s going to be very very hard to get poor credit business loans.

So, the first thing I’d say about this subject is that if you’re looking for business loans for poor credit, open your wallet and look at Mr. Visa, Mr. Mastercard, and Mr. American Express. Credit cards are really the only poor credit business loan I know of.

Now, if you already have a business up and running – and it has consistent sales – you might have a slightly better shot. Banks are much more amenable to the idea of lending money to a business to help it grow (as opposed to lending for the purpose of getting it started). So, if you have a year or more of sales data, and you can show other factors that will give your business a further sales boost (like a new website or a recently launched direct marketing campaign), it’s possible you’ll get a loan in spite of your credit.

I recently learned about another alternative to business loans for poor credit; they’re called cash advances for business and you qualify for them strictly on the basis of your sales credit card receipts. In other words, when you go to apply for this cash advance, all the lender will want to see is several months’ worth of credit card receipts from your business, and then they’ll basically lend you money against your future sales.

The rates and terms on these cash advances can be a little steep, so you have to ask yourself how bad you need the cash, and how much it will really help your business grow. If this small cash infusion is the last obstacle between you and a growth spurt, I say go for it.

Home Equity Loans for People with Bad Credit

It’s often said that your home is your biggest investment and that it represents the largest part of your wealth. If that’s true, why is it so hard to get to the money? In fact the only way to access the ‘wealth’ in your home is to borrow it out through some kind of refinance. If you happen not to have the best credit, the only way you’re getting to that money is through a home equity loan for people with bad credit.

The question is going to be whether you qualify for such a loan. In other words, just how bad is your credit? The nice thing about bad credit home equity loans is your low FICO is less likely to affect you on this application than it would on something like a credit card. At least in this case your home collateralizes the debt, protecting the lender to an extent.

Still, your credit can only be so bad before lenders aren’t going to want to take the chance on you. I’d say if your credit score is below around 600 you’re going to find it very tough to find anyone willing to give one of these lines of credit.

But if you’re not in that situation you have a chance, and there will be two major factors in getting the HELOC you want. Number 1, they’re going to see if you have enough equity to keep your loan to value ratio (LTV) at acceptable levels. These days hardly any bank is going to want to lend past 80% LTV (which means if my home is worth $250,000 I can’t have a total loan balance of more than $200,000 – including my new equity line). And what your home is ‘worth’ can be very fuzzy. I don’t know about most homeowners, but I got a letter from the tax assessor this year saying that my home value has taken a big dive. You’ll have to go through a standard appraisal process, and if the equity line amount you want doesn’t fit inside your appraised value, too bad.

If you do happen to have enough equity in the house, the only other obstacle between you and a home equity loan for bad credit will be your income and your other debts. Stricter lending standards aren’t going to let you go past about 28% on your monthly payments to income ratio. So, take out a calculator and add it all up: your current mortgage payment, your credit card payments, car payment, student loan payments, and any other monthly debt service you might have. Then add the amount of the payment you’ll have if you add a bad credit home equity loan to the mix. If it gets past 28% I’m afraid you’re out of luck.

Home equity lines of credit aren’t something to be taken lightly. You have to ask yourself what you’re going to use the money for. Even if it’s a somewhat worth use, such as updating the house so it will sell more easily, I would advise caution. The home may still not sell, but that monthly payment will come due regardless.

Payday Loans for Bad Credit: Do they help you or hurt you?

When I think about any bad credit loan, it only makes sense to me that it should serve some purpose beyond just adding to your monthly payments. In my mind, a loan should pass this test before you ever sign your name and spend the money:

Is the loan absolutely necessary? What are you going to use the money for? I’d say there are good reasons to borrow money and a lot more bad reasons.

Good reasons: finance a new vehicle (when your old one is no longer worth repairing), finance a home (that fits in your budget), finance your education (because this increases your earning power).

Bad reasons: finance a new car that you don’t need, finance a home you can’t afford, finance auto repairs that should have been covered by an emergency fund you keep in your savings account, finance lunch, finance home electronics, etc etc.

So when it comes to payday loans for bad credit, I’m wondering which of the good reasons for debt would be satisfied? After all, with a payday loan you’re really only getting a few hundred bucks, so what good use can it possibly be put to?

Yes, I realize that most people are using a bad credit payday loan for things like the above-mentioned emergency auto repairs, maybe emergency dental work, school supplies for the kids, etc. But I still say that’s extremely dangerous, no matter how necessary the expense seems to be in the moment. The real danger of using this type of financing in your life is that it it sets a very dangerous precedent. Once you’ve used a payday loan, your brain tells you “that wasn’t so bad” and three weeks later you find yourself in the same corner loan store borrowing another $250 or whatever.

I’ve often wished I could be a fly on the wall in one of these shops just to see how many of the customers are repeat offenders. My instinct and my concern is that it would be a majority.

So if you have no other recourse, and the lights are going to be turned off, or you’re going to lose your job, or some other legitimate emergency comes up that requires you to use a payday loan with bad credit, then I suppose you’ll have to. But promise yourself it’s a one-time occurrence. Take better care of your money, set a little aside for emergencies, and you won’t have to borrow this way anymore.

Low Interest Unsecured Loans

The definition of an unsecured loan is a loan where no collateral is required as security for the lender. There are kinds of unsecured loans out there, including credit cards, signature loans, and even certain kids of personal loans. The trick is that low interest unsecured loans are hard to come by unless you meet a pretty specific set of criteria.

The first criteria you’ll have to meet if you want to get an unsecured loan with low interest is a good credit score. I know you’re used to seeing a thousand marketing messages a day that say you’re credit doesn’t matter and ‘everyone qualifies!’ but that’s just not reality.

If you walk into the average bank or credit union and ask for a loan or a line of credit that doesn’t require any collateral, their first move will be to look at your credit report. If they’re going to hand over hundreds or thousands of dollars with nothing guaranteeing their money except your signature, they’re going to want to see that you have a basically spotless credit history.

And not only that, they’re going to look at your total indebtedness. Lenders have statistical tables that tell them what happens to the default rate when a borrower’s monthly payment to monthly income ratio passes a certain percentage. If you’re anywhere close to that percentage you don’t have much chance of getting an unsecured with a low interest rate, or any interest rate.

There’s a reason banks tend to be so profitable – they’re very cold and calculated about how they handle their loanable funds. If you don’t meet the profile they want, no loan for you. And that’s regardless of a pretty face, or a charming smile, or a promise of “I swear I’ll make my payments on time.”

The fact that they act this way is probably in everyone’s best interest. After all, they’re using years and years of statistical data to decide what a borrower can handle. You’re using nothing but your skewed view of yourself and your emotional attachment to whatever you’re hoping to buy. It’s a case of the bank knowing what’s better for you than you do, and you should just trust the system.

At the same time, if you do happen to qualify for that unsecured loan, use it wisely and make your payments on time! The more consistently and intelligently you use credit, the easier it will be to get the bankers to trust you. Comes in real handy when you want to do fun things like buy a new car or your very first home.

Consolidating Private Student Loans

Every graduating college senior with any educational debt should know that consolidating their student loans is going to be one of the most important things they do after they leave school. No matter how small your student loans are you’ll find a major difference in your total repayment amount if you use a consolidation program to lower your long term interest rate even a couple of percentage points.

What many college seniors may not know is that there’s a big difference between consolidating private student loans and consolidating federal student loans. With federal student loans you’re guaranteed certain benefits by law – things like a fixed and unchanging interest rate, no fees, and an automatic rate reduction if you complete your consolidation during the six month grace period that starts when your full-time student status ends. Private student loans don’t carry any of these guarantees, and that makes them less appealing, which means they’ll have to work harder to convince you to give them your business.

Unfortunately, some private student loan consolidation companies resort to less than ethical marketing practices to get you to hurry up and complete their process. Here are some things to watch out for:

• direct mail pieces and/or websites that use very official looking seals and logos in an attempt to look like an official branch of the government
• gift cards or other bonus incentives designed to entice you to work with a company without having first checked out their credentials and without fully assessing the quality of their consolidation loans
• telemarketers or direct mail pieces that ask for personal information such as your student ID, your social security number, etc in order to ‘pre-qualify’ you. Never give out any such information without knowing very well the trustworthiness of the company you’re communicating with.

There are plenty of legitimate and credible business out there who can help you consolidate private student loans, but you need to be willing to go through a couple of months of due diligence to make sure you’re working with the best one for you. Investigate them thoroughly, and don’t forget to use resources like the Better Business Bureau, and the Consumer Protection Agency in your research.

Debt Consolidation Loans for Bad Credit

“Consolidation” is term you hear all the time in the world of loans and financing, but you may not be aware of exactly what goes into debt consolidation loans for bad credit. Although I’ve never had the need to go through the process myself, I wanted to be able to put together a good article to let you know what you’ll be facing if your unsecured debts and credit cards become too much for you to handle.

In order to research this article I took the time to work through an application on one of the more popular debt consolidation sites, and here’s what I found:

First, they asked me a series of questions about my current financial situation and my debt. For example:

• They wanted to know where I am with my monthly payments and other bills (can I keep everything current easily, are things getting tight, or are the creditors starting to ring my phone off the hook).
• They wanted to know the main reason I’m looking for a debt consolidation loan with bad credit in the first place (unemployment or reduced employment, death or divorce of a spouse, unexpected increase in expenses…things like that).
• Finally, they wanted to pull my credit report to see exactly where I am in terms of my debt and interest rates. I’m sure they take that information and plug it into a formula to determine whether I’m a good candidate for their program.

I’ll tell you that my general sense of this company, and of the debt consolidation industry in general, is that they really want to help people. They’re not the ones burying you in debt; they’re the ones trying to help you get out from under the debts you have. It’s nice to see that there’s a company in the financing industry that actually has people’s best interests in mind instead of trying to make them even worse off.

When you go through a debt consolidation program I would also strongly suggest that you take advantage of their credit counseling program. You got into a situation where you need a debt consolidation loan with bad credit due to lack of discipline, lack of education, bad circumstances, or probably a combination of all three. A good credit counseling and personal financial management course will protect you from ever having to go through something like this again.

Bad Credit Car Loans

The worst case credit scenario for all of us is bankruptcy. I read an article by a bankruptcy attorney once that people’s biggest fear when they’re deciding whether to go through bankruptcy is that they’ll never be able to own a home again and they’ll never be able to buy another car. Those fears aren’t really justified, but it’s true that borrowing for cars and houses is going to get much tougher after you’ve gone through the big BK. Elsewhere on this site we’ve talked about getting a mortgage when your credit is bad, but let’s talk about bad credit car loans.

Surprisingly, working with an actual new car dealership might be the way to go when you’re trying to get a car loan with bad credit. You’d think the opposite right? Especially when you drive by those little used car lots and they have the big banners (next to the giant inflatable gorilla) that say “No one will be denied! Everyone approved!” But new car dealerships know that a very high percentage of the people who walk onto their showroom floor have messed up their credit in some way and will need some creative financing.

If you want to save yourself having to drive to the dealership only to find out they don’t want to play ball, call ahead. Ask to talk to the financing department, and if you can get the finance manager on the line ask him or her what kind of bad credit financing options could be available to you. If they say they don’t have anything to offer, move on to the next.

I’d be surprised if that’s the case, though. I’ve heard of plenty of places that are willing to set up some kind of short term lease that they’ll convert to a permanent loan at a lower rate after you’ve made payments for a couple of years. It’s going to be more expensive that way, but you ought to expect that, given your credit status.

You also might be surprised to hear that credit unions very often have great bad credit new car loans. Call around to the credit unions in your area, explaining your situation. If they’re smart, they’ll walk you through kind of a verbal prequalification process on the phone (what’s wrong with your credit, how much do you make, how much are your other monthly debt payments, etc) and then they’ll let you know what programs are available to you.

Yes, the interest rate is going to be pretty ugly compared to what a good credit borrower would get, but who cares? This loan gets you the car you need and it helps you rebuild your credit. If you have to pay 8% to 10% interest so be it. Learn the lesson, make your payments, and enjoy your new car.

Unsecured Loans with No Credit Check

I think there are times when a person gets a little stressed due to a personal cash shortage, and due to that stress starts to lose a little of their ability to reason. Such is the case with folks who are looking for unsecured loans with no credit check. Yes, I realize that between 2002 and 2007 (give or take) the entire lending world seems to have lost its mind and started throwing mortgage-sized amounts of money at anyone with a pulse. I think an unfortunate side effect has been that people who have absolutely no business borrowing money have gotten the idea that not only can they borrow money, they can do so without having the lender investigate their ability to repay and without providing the lender with a shred of security.

Folks, this just isn’t very reasonable. From the time you borrowed five bucks from your big brother to go to McDonald’s as kids you learned that a lender wants to have a reasonable expectation that he or she is going to be paid back. In your big brother’s case he happened to live with you and if you didn’t pay up he could thump you (or maybe just have your parents pay him back out of your allowance). In any case, lenders have to check your credit or have some form of security so they know that they’re probably going to be repaid. It’s common sense.

Now, just because I think it’s going to be very hard for you to get no credit check instant unsecured personal loans, doesn’t mean you can’t get any loan at all. You could very well get a secured loan with no credit check, where you actually give the lender some form of collateral they’d be able to sell if you happened to disappear forever with their money. You might also be able to find an unsecured loan with a credit check. After all, they don’t mind lending money without collateral as long as they can get a good look at your credit history and see that you have a track record of making your payments.

So, be reasonable. If you need to borrow some money, do so with the lender in mind as well. If they want to stay in business they need to be careful with their money, and that means either checking your credit or securing some collateral before giving you a loan.

Bad Credit Business Loans

I’ve heard plenty of people say the biggest mistake you could make in starting a business is to go in under funded, and I’d have to say I agree with the sentiment. Most new entrepreneurs’ biggest fear is to start a business and have it go poorly. What they don’t realize is that in many businesses, success (in the form of sales) can be just as dangerous to the business as failure if there isn’t enough cash in the bank. Loans are a great way to get that cash in the bank, but if your credit is no good your only option may be bad credit business loans.

Take for example a manufacturing business. Let’s say the business produces some kind of trailers, and it’s just gotten off the ground. Suddenly, orders start poring in. Great, right? Not necessarily. If the business doesn’t have enough cash to keep up with demand, you’ll quickly upset the customers, harpoon your momentum, and then you’re left standing with what could have been a great business. Your only chance would be to get a business loan with bad credit to float you until your sales receipts put enough money in the bank to keep up with demand.

Now, the good news is you’ll find it easier to get a loan from a bank, independent of your credit status, if you already have a functioning business with some history of sales. Bankers’ wallets start to loosen up drastically once they can see an income statement that has any ink on it at all (turns out bankers are rarely interest in pretending to be venture capitalists).

If yo haven’t started making sales yet, getting a bad credit business loan will be just this side of impossible. I hate to say it so bluntly, but banks don’t like risk, and there aren’t many things more risky than a new business being run by an entrepreneur who doesn’t have a clear sense of what his costs are, or what his cash flow is likely to look like on a consistent basis.

So, if you have bad credit, but a good business idea, I’d start talking to every friend and family with some liquidity and an entrepreneurial spirit. I know no one wants to be ‘that guy,’ but if you really believe in your business you have to be ready to go through some awkward social moments to get the thing off the ground and steaming toward its potential.

Hang in there – if your idea is truly sound the money you need will find it’s way to you!

How to Get a Home Loan with Bad Credit

Here’s the scenario: you’ve messed up your credit. A couple years back, after an on the job injury, you couldn’t work for six months and things piled up on you fast. Before you knew it you’d had a car repossessed, you missed three mortgage payments, and just like that your credit was basically trashed. In a stroke of luck, you were able to sell the house to avoid further missed payments, but you were stuck with the bad credit score. Now that some time has passed and you’re working steadily again, you’re ready to buy a new home.

The question is how to get a home loan with bad credit. Well, I have some good news and I have some bad news. The good news is that home loans with bad credit absolutely do exist. The bad news is that you, as a ‘credit-challenged’ borrower are going to have an entirely different application and qualification process than people with unblemished credit. You are likely to be able to buy a house again, but it’s going to take some patience and work.

As usual, you need to go through your own preparation process before ever going to talk to a mortgage broker or bank representative. Before you walk through their office door you need to already be clear on a) your credit grade (A through D), your FICO score, the LTV (loan to value ratio) of the home you’re trying to buy, and your real affordability range. As a person with credit that’s already somewhat damaged you really have no business pushing the envelope at all when it comes to your ability to stay way ahead of your payments.

Once you’re clear on the fact that you have everything in place that you possibly can in terms of your own self prequalification process, it’s time to go to the lender and see what your options are.

The biggest way you’re going to feel your bad credit score is in the fees and the interest rates you’ll be charged on your mortgage. Usually, the loan origination fees paid during the mortgage application process are called ‘points,’ and a prospective borrower can pay anywhere from one to five points as an origination fee. People with great credit very often pay zero points, while those that are trying to get a home loan with bad credit often pay up to four or five. That can get very expensive if you think about the fact that a single point on a $200,000 mortgage is $2,000.

I realize you’ll be very frustrated having to pay such steep fees thanks to your poor credit score, but there’s a certain courtesy you should extend to the loan originator working on your mortgage. It won’t do you any good to make ridiculous demands as far as lowering fees or interest rates. You have to keep in mind that anyone working on your loan will be paid completely on commission, and if you turn into a big headache they’re going to cut you loose and go work with a client that is a lot less hassle for the money. Get the best terms you can, but don’t alienate the people working to help you out.

If you’re persistent and you do your homework, you’ll able to land the home loan you want. After a few years of on-time payments you’re likely to see your credit score jump way up, and you’ll be able to investigate a refinance that will make your interest rate much more attractive.

Getting the Best Student Loan Consolidation

More than likely you’re going to be dealing with your student loans for the next 10 to 20 years, so you want to make sure you get absolutely the best student loan consolidation plan possible. Unlike other types of debt, almost everyone consolidates their student loans, and it’s really profitable for lenders. Those factors add up to the reality that you’re going to get a good deal if you just know what you want and what to look for.

Step A1 before you even talk to any consolidation companies is to decide what your priorities are when it comes to consolidating and paying off your student loans. You might not have realized this before, but depending on your priorities you can either go for a really low interest rate via your consolidation, or you can go for an actual reduction in the principle you owe.

So how does that work? If your goal is to pay your loans off over a longer period (like 15 to 20 years) then it’s probably wiser to go the traditional route and just go for the lowest possible interest rate.

On the other hand, you might be one of those high achieving people who landed a sweet six-figure salary out of school and you’re looking to pay off your loan as fast as possible. If that’s the case you can actually ask for a reduction in balance as part of the consolidation process. The lender will be willing to lower your principle amount because a) they’re going to keep you at a higher rate, and b) they’re going to get their money from you more quickly because your repayment period will be shorter.

Either situation can be a win-win for you and the lender, you just need to go in with a good understanding of your priorities.

One note of caution: whether you take the lower interest rate or the lower principle amount you want to make sure those benefits are completely permanent! You don’t want to get five years into your repayment plan and then have them stick you with an inflated rate!

Here are a few of the benefits that will come with any student loan consolidation program (because they’re guaranteed by law):

• No penalties at all if you’re wise enough to pay your loans off early.
• No credit check whatsoever (talk about a bonus!).
• No upfront fees (good luck finding that with any other kind of loan consolidation – yeah right).
• Unchanging interest rates. Once you’re locked in, you’re locked in.
• An automatic reduction in your interest rate of .6% if you consolidate within your six month grace period after leaving school.

One benefit you should really look for with your student loan consolidation plan is a discount given when you set your monthly payments up on automatic withdrawal. It’s good for the bank because they don’t have to chase you for payments. And it’s good for you because you make your payment on time, every time, without having to think about it!

Poor Credit Credit Cards

At a certain point a person who has damaged his or her credit has to decide when to say enough is enough. Now, I’m not saying that the person should avoid all credit completely, but I do think they should seriously evaluate the ways they’ve used credit in the past and make some observations about what circumstances ruined their credit to begin with. Only after they’ve made the effort to figure out where they’ve gone wrong in the past, as well as a commitment to improving in the future, should they start thinking about rebuilding their credit and using it again. And when they’re ready for that, poor credit credit cards are probably not a bad way to go.

In the spirit of full disclosure the first thing we should say is that credit cards for poor credit are not free…they’re not even cheap. The price of a ticket to this game usually starts off with annual fees (charged by the card provider just to keep the account open), ‘program fees’ (usually between $50 and $80, charged by the card provider. These fees basically mean “you might flake out, and we’re going to get some money to hedge our risk”), and additional card fees (only charged if you and your spouse/significant other are both trying to rebuild your credit and each want to have your own card).

If you’re okay paying all those fees, getting a credit card with poor credit is probably not a bad idea. Not only will it get your foot back in the world of consumer finance, it will also keep you from getting into trouble again.

What do I mean by that? Well, these kinds of cards are almost always secured or prepaid, and as such the issuing bank is keeping you from running up a balance you can’t pay. They’ll require you to make a deposit, which you can’t touch while your card is open, and basically let you borrow up to the amount that you deposited. Seems silly right?

It’s not. You’re going through the motions here to show the credit agencies that you’re ready to behave yourself with credit. Play the game for a couple of years and you’ll clear yourself of the bad name of “credit-challenged.”

Unsecured Loans for Bad Credit

I’ve been hanging around the world of finance and loans now for a while – everything from mortgages to car loans to credit cards. Then in the last ten years or so I see this explosion of personal loans with all their names and variations – unsecured loans for bad credit, payday loans, etc etc. Because of the jobs I’ve had I’m definitely not opposed to the different financing tools; I’m not some anti-debt zealot kook if you know what I mean (not to say that I think people should be in debt – I just recognize that the instruments of finance are fairly important to our economy).

But I just can’t seem to stomach these bad credit unsecured loans – or payday loans, or whatever they’re called. I can’t imagine a single circumstance where it’s a good idea for a person to borrow money this way, although I know what the owners of these corner payday loan stores would say:

1. Payday loans save people who are in truly tight spots, whether they’re facing unexpected car repairs, a medical emergency, a travel emergency (ie a family member out of state being injured, etc), home repairs and whatnot.

2. Payday loans are not meant to be long term financing tools, and they’re not meant to be used by the same people over an over.

3. Unsecured bad credit loans simply fill a hole in the market, allowing consumers to borrow money much the same way banks borrow from each other when they run short of cash.

Each of these rationalizations should be demolished individually:

1. First of all, every one of those circumstances should be taken care of by having even a modest emergency fund on hand. If a person can operate their personal finances so close to the edge of being broke all the time – that’s still proof they manage their finances! In other words – if you can be just this side of broke all the time, you can change your habits slightly to keep an extra $500 in a savings account to take care of the emergencies mentioned above.

2. Everyone who has spent even ten minutes in the marketing world knows that your biggest source of business is almost always your repeat customers. Consumers are very habitual by nature. The single act of using one of these unsecured loans with bad credit guarantees that a certain percentage of people will use them again. You will not find a single payday loan provider who doesn’t make some effort to keep in touch with his customers so he can lend to them again in the future.

3. This is just ridiculous. Huge financial institutions do many things that individuals shouldn’t be doing. I’ll refer back to #1 and say that all you need to do in life to reduce your financial stress by an order of magnitude is scrape together and maintain a small emergency fund.

And the end of the day, it’s almost criminal that we allow people to borrow money at rates that would end up being 300% to 500% if we let people carry them out for longer terms. I’d strongly encourage all of you reading this to be a much more careful steward over your money – however little you have – so you can sleep better at night and enjoy more peace of mind.

Low Interest Rate Loans

Every tenth of a percentage point on a loan makes a big difference on the amount of interest you pay over the life of the loan. It’s worth the extra time and effort to dig until you can push that rate down as low as possible. Finding low interest rate loans can be hard work, but it’s work that pays pretty darn well. You have to stop thinking about just the avoidance of interest payments, and start thinking about the purchasing power and investing power of the money that stays in your pocket when you manage to find that lower rate. Here’s an illustration:

Let’s say I’m looking for a low interest rate mortgage loan. I need to borrow $250,000 on a 30 year fixed rate loan. My first opportunity is to get the loan at 6.5%. Those terms give me a mortgage payment of $1,580.17. By the time I pay the house off I will have sent the lender right around $319,000 in interest payments. We’ve all seen those numbers a hundred times, but it never ceases to amaze me.

Anyway, let’s say that instead of a 6.5% interest rate I manage to get a 6.25% rate. Now my payment is $1,529.39. So it saves me about $40 per month (lets my husband and I go out to dinner one extra time per month – not bad), but the big payoff is in the interest saved over the life of the loan. By the end of the term I will have paid around $304,000 in interest. $15,000 is a healthy chunk of money, and that’s why it always pays to look for a lower interest rate.

Okay, since we’re on the subject, we might as well talk about how to save even more money on interest on your home loan or any other loan you borrow. Add $100 per month to your payment. You’ll save $70,000 in interest and pay the house off in 25 years instead of 30. I know that’s not completely related to this article, but it’s always worth mentioning that a true ‘low interest loan’ is one that gets paid off early by a disciplined borrower.

Low Interest Car Loans

In a perfect world we would all pay cash for every car we bought. No financing, no payment, no interest, no additional debt. It’s not a perfect world though, is it? No, almost no one has $5,000 to $25,000 to buy a car they can count on, so they have to finance. The best advice I can offer (as obvious as it seems) is to look for low interest car loans.

First of all, there’s something you need to acknowledge before you ever go car shopping, test drive one you like, and fill out a loan application – car loans with low interest are reserved for people with good credit. I know that’s not what you want to hear, and it really can complicate (or severely delay) the purchase of your next ‘ride,’ but it’s a fact you can’t get around. If you want to get a really good rate on your car loan you’ll need to have a credit score in the neighborhood of 700 to 750.

And not only that. All types of lenders are tightening their qualification processes, which means your good credit alone won’t be enough. They’re also going to look carefully at your overall debt profile and decide whether another payment will be too much for your given level of income. If you can’t pass their ratios, it’s going to be no loan for you. And what are those ratios? Any conservative lender will not want your new payment to put your monthly payment to monthly income ratio higher than about 25%. Really aggressive lenders will still only be comfortable with about 33% payments to income ratio.

So here’s a plan for you to be ready to buy the car you want, and still get a good low rate car loan.

1. Get a free copy of your credit report and examine it carefully for two things: blemishes and mistakes. You need to do everything you can to clean up that report if you want a lender to give you a good interest rate. If there are mistakes on your credit report, write a letter to the credit agencies explaining the error.

2. Elimiate other debt. Set up a more strict montly budget for yourself, and make an aggressive plan to pay off credit cards, store credit, and other outstanding balances. Paying off debt will free up money for your new car payment (so your income to payment ratios look better), and it will also improve your credit score. Oh yeah, not to mention that it just feels great to have less debt!

3. Look for ways to increase your income. Ask for a raise, apply for a promotion, or think about starting a small side business. If you could add just an additional $500 per month to your income you’ll have more than enough to make the payment on your new car, and you’ll have the satisfaction of earning more money.

I really hope you’ll follow these steps for the next few months. They’ll make your overall financial situation much stronger, and they’ll make it ten times easier to get a low interest car loan.

Bad Credit Mobile Home Loans

You know, some people would say that you’re just about as low as you can get if you’re looking for bad credit mobile home loans – but they’d be wrong. My husband and I went through a period early in our marriage where we were both unemployed, and we got a couple of payments behind on our single family home. Soon we realized that we were in over our heads with that house, so we sold it (luckily real estate was still in good shape at the time).

Unfortunately, our credit was now fairly severely damaged, so renting was our only option for the time being. For the next two years we went to work on two things: saving money for a down payment on another home, and repairing our credit as best we could. We were a little discouraged, but we knew if we persevered we’d be able to get back into our own place at some time in the future.

After two years we had done a pretty good job improving our credit (both of us were around 600 Fico scores), and we’d saved about $20,000 for a down payment on a new home). Only one problem – $20,000 wasn’t going to be a big enough down payment on most homes, and 600 Fico scores still made most lenders wary of us. We soon realized that looking for a mobile home might be the answer, and we hoped to find a mobile home loan for bad credit that would let us get back into the world of home ownership.

As a sidenote, you should realize that mobile home doesn’t always mean ‘trailer.’ There really are some beautiful mobile homes out there – I should know…I live in one – and it’s just a question of finding the right community to put your home in.

So my husband and I started to shop for the right mobile home and the right place to put it, and we found one that was just $74,000, in a brand new mobile home community in a nice part of our town. We were thrilled.

As we began the loan application process, we got even more excited. We found out that the combination of our moderately improved credit scores along with our down payment was going to make it fairly simple to get the loan we needed. The interest rate would end up being around 10%, which is pretty high, but we didn’t mind because we knew that we were going to be buying our own place.

We also knew that the credit agencies really love to see regular payments made on a mortgage of any sort – nothing will boost your credit faster.

So for us, a mobile home was the solution to some real challenges in our financial life, and we couldn’t have bought it without a mobile home loan for bad credit.

Car Loans for Bad Credit

Car loans for bad credit are actually a lot more prevalent than you might think. After all, in the neighborhood of one in every four Americans has had some kind of problem with their credit that would put them in the class of bad credit borrowers. Your ability to buy the car you want may not necessarily be impeded by your sketchy credit past, but you should go into the loan application process  well prepared. A few tips:

1. First, and most importantly, decide beforehand how much you need to spend on your new car. Notice I said decide how much you need to spend, not how much you want to spend. Putting your wants ahead of your needs might have been a big factor in why you’re a bad credit borrower in the first place, is that fair to say?

2. Take advantage of your free annual credit report, and make sure there aren’t any unfair or inaccurate blemishes on it. Again, note that I said your free credit report – provided through the US government – as opposed to one of the free reports that costs you a monthly fee or a one time fee.

You’re already a credit-challenged applicant. You really want to go over your credit report with a fine tooth comb to make sure there’s nothing you could reasonably do to get your credit score just a little higher. Bad credit car loans exist, but you’re always better off going into the application process looking as good as you possibly can.

3. Learn about, and sign up for, your bank’s billpay program. A prospective lender will be encouraged to see that in spite of past bad behavior, you’re now in a position to make your payments on time every month without even having to remember. I personally set as many of my bills up as possible with billpay just to avoid having to keep track of them month to month. It’s extremely convenient.

If you’ll follow through with these three relatively simple steps, you’re going to find it much easier to qualify for the car loan with bad credit you need to get that new car. Now make sure you use this new loan as an opportunity to rebuild your credit and improve your standing with the credit agencies. Nearly every aspect of your financial life will be simplified by an improved credit score.

Low Interest Student Loans

A college education is already expensive, and it’s getting more costly every day. You could easily spend $10,000 per year for a bachellor’s degree at a school in your home state. I don’t know what the exact statistics are, but I’d be shocked if less than 50% of college grads make it out of school with no education related debt. Low interest student loans are a crucial part of most people’s college experience.

Do you know how to qualify for a low interest rate student loan? Would it surprise you to hear that most education loans come with low rates? I guess that requires a little more explanation.

With student loans you’re first discussion is always going to be about ‘subsidized’ versus ‘unsubsidized.’ A subsidized loan involves the government’s stafford loan program. What happens is you borrow the money you need, and the government takes care of the interest that would normall accrue on that loan. The idea is they don’t want you to be burdened with growing interest balancese while you’re in school and your ability to earn is limited by the fact that you’re in class all day and studying at night. With subsidized loans you’re not going to see any interest accrue until six months after you end your status as a full time student.

On the other hand you have unsubsidized student loans. These do start accruing interest from the day they’re disbursed, which makes them a little more costly. Although they interest does start to accumulate, you still won’t be required to make any payments until you’re six months removed from your ful time student status.

You also have private student loans. Once you’ve borrowed the maximum authorized by your school, you might need to apply with private lenders if your education costs still aren’t covered. These are going to be the highest interest loans you’ll get during school.

Now, what you need to understand as you approach the financing of your education is that the ‘low interest’ doesn’t really come into effect until you go through the loan consolidation process after graduation. Once you leave school, and as the time that your payments will begin nears, you’re going to get massive amounts of mail from consolidation companies who want to combine all your loans into one balance with one payment, at one low interest rate. This is the smartest move you can make.

Going through the consolidation process is going to secure a very low rate for you, making your payments as manageable as possible as you begin your professional life.

No Credit Credit Cards

Like it or not, it’s hard for an adult to function easily in our society without access to some credit. Unless you can pay cash for absolutely everything (and who can?), you’re going to need the credit agencies to crank out reports every month that say you’ve been a good boy or girl when it comes to your use of debt tools.

This reality can be tough for young people trying to get the right start to building their credit. It’s the classic no job, no experience scenario right? You can’t get anyone to extend you credit unless you have some credit history, and you can’t build up your credit history unless someone will agree to give you some credit, any credit. No credit credit cards are probably the easiest door for a young person with no credit to walk through.

Credit card companies are some of the smartest, most patient, and most savvy marketers in the world. Yeah, people think they’re evil, but that’s a debate for a personal finance blog. Credit card providers have the good sense to form a relationship with a young person when they have no experience in the credit world, and kind of nurse them along as they develop themselves as earners and borrowers. My first credit card was given to me by Chase almost ten years ago with a limit of maybe $500. Now the limit on that card is over $8,000 and I have another Chase card with an equally big limit. And all because Chase was willing to give me a credit card with no credit at all.

How can they afford to do it? It’s pretty simple – they’re going to give you one of two kinds of credit cards. They’ll either offer you a secured credit card or a prepaid credit card. Different terms but they mean basically the same thing. In both cases you have to make a deposit equal to the amount of the credit line you’d like to be extended. If you can put in $300 that’s exactly how much credit you’ll have. You might be thinking “that makes no sense at all – why would I want a credit card if I have cash?” Because you need credit history, bucko. That’s why. After you form a relationship with the credit provider they’ll eventually be willing to give you unsecured credit cards, but you have to show them you’re not going to do anything stupid first.

Establishing your credit by using credit cards with no credit can be costly, though. Not only do you have to keep a deposit with the credit provider, they’re going to stick you with some fees to the tune of $50 to $100 per year. As you pay these fees just keep in mind that you’re opening the door to future important purchases – such as cars and homes – that will require you to have a solid credit rating.

Consolidate Private Student Loans

The time just before and just after college graduation is chaotic to say the least. You’re making plans for graduation, double-checking your transcripts, polishing your resume, interviewing for jobs (hopefully), and looking forward to starting your life as a full-fledged grownup. But along the way, don’t forget to consolidate your private student loans. It’s one of the most important financial moves you’ll make as you start your professional life.

I remember when I went through this process – without the consolidation my interest rate was going to be something like 6%. After consolidating my private student loans was around 2%. Let’s do the math. If  you graduate with $20,000 in loans, your situation could look like this without consolidating:

$20,000 to be repaid over 10 years with 6% interest creates a monthly payment of around $222. By the time you pay off the loan you’ll end up having paid over $6,600 in interest on your education.

The same loan balance and repayment period with a 2% yields a payment of around $184 and costs you only just over $2,000 in interest over the life of the loan.

Now, if you took the extra $38 per month and saved it at 5% interest during that same ten years, you’d end up with over $5,700 in savings. So you save $4,600 in interest and you get to have an extra $5,700 in a savings account. That’s a swing in your favor of over $10,000. Are you starting to understand why it’s so important to consolidate your private student loans?

Here’s how it will work. Your loan payments aren’t going to be due until six months after you’re no longer a full time student (hopefully that means six months after graduation, right?). During those six months you’re going to get plenty of offers in the mail offering you great deals on student loan consolidation loans. Do not accept the first one. In the age of the internet, take the time to research the companies that are contacting you. Check them out with the Better Business Bureau, and see if you can find any reviews on third party sites written by their current customers. You’re going to be married to these people for a long time, you want to make sure they’re above board and they’ll take care of you.

Also look for a consolidation company who will give you a further interest break if you set up your payments on your bank’s bill payer. Not only will that save you some interest, it will protect you from messing up your interest rate and your credit by making payments late or not at all.

Now, go enjoy adulthood! You’ve worked hard to graduate and get where you are, now keep progressing and enjoy your life.