Business Credit Card Debt Consolidation Loans

Starting and running a business of any size is a tough thing to do, and the toughest part of it can be figuring how to make the money last from month to month. Long sales cycles, clients who take their sweet time paying outstanding invoices, and vendors who hound you to pay your outstanding bills can all add up to a pretty serious cash crunch. When that happens you have to float the business somehow, and many business owners end up turning to credit cards. This is true in the manufacturing, the retail, and even the construction world.

I recently heard a story of a construction company owner who put about $200,000 on his credit card to float the bills associated with a hotel construction project his company was working on. The hotel developers’ other financing fell through, leaving him with $200,000 to pay off at a very high interest rate.

I happen to know that he’ll be fine, but most small business owners in that situation would be hurting badly, and their only recourse to recover from that kind of business credit card debt would be some form of consolidation loan. The question is do those loans even exist?

Yes, they do, and they operate in a similar way to traditional consolidation loans obtained by individuals, with the same goals. Basically anyone going through this process is hoping to have one lender take all their outstanding debts at various interest rates and combine them into a single loan with one lower interest rate.

Obviously that results in one payment, which is small and more palatable compared to the sum of the payments of the loans and credit cards the business owner was dealing with before the consolidation. The whole process is designed to make it possible for business owners to satisfy the requirements of all their outstanding debt, but do so in a way that keeps them from going out of business or worse, filing for bankruptcy.

Credit card debt consolidation for small businesses is not going to be an easy thing for anybody – you’ll have to qualify for the loan, and the lender will have to believe that your cash flow situation isn’t so bad that you won’t be able to make your consolidation loan payments, the same way you’re struggling with your current payments. If you can show a long track record of sales in your business which gives some proof to the lender that things will get back on track for you, the loan will be much easier to qualify for.

Debt Negotiation Options You Can Live With

Anyone planning to go through the debt reduction negotiation process can hope to accomplish a few things:

• eliminating all debt over a three to four year period, in spite of being months behind on payments with large balances
• getting the ball rolling by negotiating a 40%+ reduction in principle balances with debtors
• avoiding bankruptcy as well as expensive debt consolidation loans

All of these objectives are possible, but they’ll come at a price. You’ll have both the hard dollar cost of the debt settlement negotiation as well as the resulting damage to your credit score (which may not be much of a concern for anyone who’s in deep enough that they’ve reached this point).

So what do debt negotiation companies actually do for you?

This process is geared toward all of your unsecured debts – everything from credit cards to personal loans to medical bills. Think of it this way – the debt settlement and negotiation process is designed to relieve you of debts that don’t involve a purchase or product that can be repossessed by the lender. A credit card company obviously can’t take back the vacation you bought with your Visa, nor can the hospital repossess the care you received when you had your gall bladder removed. Since there’s nothing to sell to repay your loan, and the lender has nothing they can take back from you, there are only a couple of options left:

• the borrower files for bankruptcy and walks away from most or all of the loan balances
• the borrower and the lender – with the help of an intermediary – settle on a reduced principle balance and interest rate that restructures the debt, allowing the borrower to make payments and complete the loan

Neither case is idea for lender or borrower, but one scenario is better for both. Settling on a reduced loan amount and interest rate allows the lender to recover at least some of its money, while the borrower gets to see a light at the end of the debt tunnel as well as avoid bankruptcy.

Do-it-yourself negotiation of debt reduction?

Absolutely. You don’t have to go through this process with the aid of a company. I have a good acquaintance – a woman whose ex-husband had buried her in debt – who worked with every one of the creditors on an individual basis to get her payments and balances to a level she could pay off in a reasonable period of time. When all was said and done she had gotten an average of 50% of her principle balances reduced, and although she’d still have to pay for a few years, she would eventually be free.

The diy method of reducing debt has two benefits: it saves you the fees a company would charge you, and it gives you the added sense of accomplishment that comes from fighting your way out of a totally unmanageable debt situation. Being extremely deep in debt crushes your self esteem, and negotiating your way out of it can be a real boon to your self image.

However you approach the process, negotiating your way out of seemingly insurmountable debt is absolutely a smart thing to do. This country has far too many people willing to walk away from their obligations. Asking your creditors to take huge losses on your debt isn’t an idea scenario, but it’s better than bailing out on your commitments entirely.

Types of Loans with No Credit Check

There are actually quite a few different options for loans that aren’t going to require a credit check. Here are just a few:

Personal Loans with No Credit Check

The ‘tongue in cheek’ variety of these kinds of loans – you know, the ones where they don’t check your credit before they give you the money, are those issued by your brother, mother, co-worker, bowling buddy, etc. You get the point. These are lenders who might give you that ‘personal’ loan and not check your credit. I say that half-joking, but the reality is friends and family might be the best option for you to borrow some fast, relatively low interest cash from.

If you can’t borrow funds from those closest to you, you’ll be able to check a variety of offline and online sources, including websites, and corner cash stores who will be wiling to lend you the money whether your credit score is good or terrible. All they’ll want to see is proof of a bank account and some check stubs to show you have some income that will let you repay the debt.

Payday Loans with No Credit Check

Payday loans might be the most famous – or notorious – loans that exist in the world today. They’re fast and easy to get, but slow and difficult to repay. And it’s true – they’re most likely won’t bother looking at your credit history before they give you the loan. The amounts they’re going to lend will be smaller; you’re not likely to ever see a no credit check payday loan that gives you more than $1,000. But that may be all you’re looking to borrow.

Cash Loans with No Credit Check

If you want to walk in with nothing but your ID and walk back out with cash in hand, you’re going to need to use one of your local check cashing or payday loan store type operations. Cash loans are very possible and very common, but for obvious reasons you can’t really get them online. The only thing an online lender can do is deposit the money in your checking account, but that might not serve your purposes, especially if you don’t have a checking account but you still need to borrow some money.

Whatever type of short-term financing you need, you don’t want to use it very often. The best types of loans do require verification of a decent credit score, and as a reward for showing them your credit score you’ll be able to get much more reasonable terms and interest rates. Work every day to improve your financial situation and get interest working for  you instead of against you.

Guaranteed Payday Loans for Bad Credit – Key Facts

Those of you looking for payday loans with bad credit and guaranteed approval are definitely going to have a lot of questions as you start to work through the qualification process. Let me give you the best answers I can when it comes to getting the cash you need in your bank account as fast as possible. Some common questions I’ve seen are:

1. How long will the application process take?

You can usually complete most payday loan applications in just a few minutes, with some lenders bragging that their application will only take about 60 seconds. That should be a relief to those of you who need the money as soon as possible.

2. What information are they going to need from me in order to qualify me for the loan I need?

Before you can land your payday loan for people with bad credit, you’ll have to tell them:

• your first and last name
• your address
• whether you are renting or buying your home
• phone number and email address
• your driver’s license number
• your date of birth
• your social security number (not so they can check your credit, just so they can verify your identity and the other information you’ve provided)
• how often you get paid
• your take home income (ie, what you earn after taxes)
• whether you’re a member of the armed forces (you could get special treatment if you’re a member of the military!)
• banking information (so they can deposit money in your account and make future withdrawals for your payments)
• the name and contact information of someone trustworthy you can use as a reference

This may seem like some very personal information, but you have to remember you’re asking for fast cash to be put into your account. The least you can do is provide them with the information that will help them know how much they can safely lend you, and how they’ll expect to be repaid. Not too much to ask, right?

3. Are instant payday loans for bad credit intended to be long term or short term loans?

These loans are absolutely intended to repaid quickly – usually within a matter of days or at the longest a matter of weeks. With the fees and interest rates you’ll be charged, you won’t want to keep these loans for more than a week or two. Frankly, renewing your loan after the initially scheduled repayment period would be financially disastrous for you.

The bottom line with any kind of quick cash loan is you don’t want to treat them lightly. They’re like a sharp sword that can save you or kill you (financially speaking). So be careful when you use them. Pay them back quickly and do everything in your power to never use them again.

Getting a Guaranteed $5,000 Loan with no Credit Check

Trying to get $5000 dollar loans with no credit check is, to say the least, ambitious. I guess I’d have to add ‘optimistic.’ But, we shouldn’t say it’s impossible, because of course nothing is impossible in this great nation.  I guess the first thing to discuss is why you might be looking for such a loan at all.

Since we’re actually talking about several thousand dollars here, you’re not the typical internet searcher hoping to find some small personal loan to make it to your next paycheck. If a person actually needs to borrow $5,000 on the quick it’s more likely to cover a mortgage payment, an unexpected medical emergency, or possibly a huge car repair, although that may not make sense – after all if the repair is going to be that much money it probably makes more sense to just buy a new car. So we know you need a healthy chunk of change here, the next question is who’s going to give it to you.

Your first option for borrowing up to $5,000 dollar loan with no credit check at all would be your friends and your family. Seriously. I know you’re trying to avoid having anyone look at your fico score, which probably means it’s terrible right? Well, if your credit score is really bad you might have to rely on those people who know you best to lend you the money. Of course, the fact that they know you best could be a pretty big obstacle couldn’t it? I hope you’ve shown your family and friends that under that 500 fico score is a person ready to repay every penny of the money they lend.

But let’s be real. Even if you have a cousin, buddy, or co-worker who HAS $5,000 liquid for lending, what are the chances they’ll give it to you? Unless you have a serious hard luck story about why you need the money, I’m guessing the chances are slim to none.  So the harsh reality is you’re going to have to turn to either the internet or your local bank if you want to get that money. And neither of those fine institutions is going to cough up one cent without checking your credit. Sorry to have to break it to you.

My advice would be to talk to your local credit union first, especially if you have a checking account there. You can explain your situation to them, ask them to look at your history of deposits, and maybe you’ve even borrowed there before. All these things could contribute to their willingness to give you the loan.  Not to say they’re going to be handing out check $5,000 personal loans with no credit check – I highly doubt they will. But if you can tell your story the right way, you just might get them to lend you the money you need to resolve your cash emergency.

Are there car dealerships that finance people who have had a previous repossession?

Yes, there absolutely are. And that should be a relief to anyone who’s gone through the stress, frustration, and discouragement of an auto repossession. Here are a few things to understand about financing a car after you’ve been through a repossession.

First of all, your credit will have be negatively affected by the repo, which means most credit unions and banks aren’t going to want much to do with you. So not only are there dealerships who will lend to you – they’re likely your only option. Before you visit or even contact any dealers, do some homework on the internet to make some decisions about which car is right for you. It’s a mistake to start shopping for cars before you know what you want, what you actually need, and most importantly – what you can afford.

What a tragedy it would be for you to go to some used car lot and have the salesman tell you to buy a huge, gas-guzzling SUV, and then finance you at 25% interest so you can leave with it that day. That would probably leave you just as badly off as you were before, and you’d probably be on the fast track to another repossession. Here are three ideas for making sure you never have to go through the stress of a repossession again:

1. Make a BIG down payment – as much as 50% of the purchase price of the car. There are several benefits to forcing yourself to come up with a big down payment. First of all, your payments will be small and more manageable. Second, saving the money for the down payment will force you to exercise personal financial discipline.

2. Buy something SMALLER. Even if you have three kids, you don’t need an SUV! Even if you have to cart around three or four kids at a time, get a nice used minivan. Guess what? They’re cheaper to drive, cheaper to insure, and cheaper to maintain than a big SUV.

3. Buy from a reputable dealership. Many smaller car lots advertise that they’ll finance anyone, and they will, but it’s not going to be in your best interest to borrow from them. They’re going to require a huge down payment AND charge you 22% to 26% interest on the loan. When your payment becomes unmanageable, they’ll repo the car again and then try to sell it back to you. It’s a vicious cycle.

Your best bet is to work with a dealership attached to a major auto manufacturer. Their goal is to get you into a car that’s reliable and affordable, not put you on the repo merry go round.

Low Interest Auto Loans

If you’re planning to buy a car, you’ll want to carefully consider your options to get the lowest interest rate possible.

Before you start car shopping, check your credit history. Make sure your credit reports are accurate, and correct any mistakes before you seek financing. This can improve your credit score and help you secure a lower interest rate. If you have enough time before you need to buy a car, you can improve your score by repaying any unpaid bills.

One possible option is to use a home equity line of credit or a home equity loan. These loans offer a lower interest rate than a car loan because they are secured against the value of your house. For these two options, a home equity line of credit typically offers a lower initial interest rate, but they can fluctuate with interest rate changes. If you are considering a shorter term, such as 3 years, this might be your better choice, but if you are seeking a longer loan, a fixed interest rate loan through a home equity loan might better. They both offer the added bonus of deducting the interest on your income tax, which a car loan doesn’t. Of course, there are risks; you are using your house as collateral, and if you default on the loan, you may be forced to sell your home. Also, consult a tax advisor about your individual tax situation.

If a home equity loan isn’t for you, try to get pre-approved through a bank before car shopping. Depending on your credit history, banks usually will offer a more attractive interest rate than a car dealer, and this way, you’ll know how much you can afford before you get on the car lot.

Also, car dealers often try to explain a loan in terms of your monthly payment, rather than the interest rate. This gives them the room to increase the interest rate to match the amount of payment you can afford.

Finally, leasing can sometimes provide a good alternative to purchasing because lease payments are often lower than loan payments. Be sure you understand the terms of the lease, such as mileage allowances and purchase price at the end of the term, should you choose to buy the car then. The downside is that you have no equity at lease end.

Personal Loans for Poor Credit

There are millions of people today who have poor credit and more fall into this group every day. Most of you know someone who is has lower score and you may be one of those millions with the poor credit. A personal loan can be a lifesaver for many people with poor credit. There are situations that arise unexpectedly, like a car repair or medical bill. Creditors and lenders are showing that they are still willing to provide personal loans to consumers with poor credit.

Getting a personal loan for poor credit from a bank or lender is harder now than ever. There are many financial establishments today that do approve personal loans for consumers with poor credit. Just because your credit is considered poor that does not automatically stop you from some type of personal loan.

For anyone who is looking for a loan, it is important to understand exactly what a personal loan is. Much different than a car or home loan, a personal loan is unsecured, which means there is no collateral provided to secure the loan. This does make providing this loan a little risky for the bank or lender.

To qualify for a poor credit personal loan, an application will have to be filled out first. The typical information needed is your full name, income, Social Security number, and other necessary information. The one providing the loan will decide your credit worthiness, even when looking at a poor credit history. With a personal loan, a credit check may also be necessary. The amount that is borrowed may be limited to $1,500.

The loan provider may help you in making an application look more pleasing by recommending that you borrow a smaller amount or extending the length of the loan period. This way, the monthly payments may be lowered and even increase the chances of you being approved for the loan.

It will also be decided whether or not you have a steady income. You are more than likely to be approved for the loan if you have been at the same job for many years. However, if you have been changing jobs quite often, it may be less likely to be approved.

The application process of a personal loan is typically quickly and does not require a formal closing. The process includes a written application, payment schedule and promissory note.

Auto Loans for People with Poor Credit – Do You Need One?

There is no denying that transportation is an absolute necessity in most circumstances, but securing an auto loan can be very tough for an individual plagued with credit problems and a poor beacon score. Many people find themselves in an incredibly difficult situation when shopping for a vehicle and there is no immediate fix to a negative credit rating. Although there are many lenders that have designed auto loans for people with poor credit, there are some important things to realize about these offers.

The down payment required with a poor credit auto loan may be significantly higher, so shoppers should be prepared to raise more money if needed. A larger down payment not only decreases the lender’s risk, but it also lowers the amount financed which results in lower and more manageable payments. A large down payment may be the only way that an individual can qualify for an auto loan.

There are typically higher interest rates associated with an auto loan designed for people with poor credit. As a result, a higher percentage of the payment will actually go towards the interest rather than the principal of the loan. It is often recommended that a borrower pay a little extra each month if at all possible to decrease the total finance charges over the life of the loan. Higher interest rates are largely dependent upon the amount of increased risk that a lender may face due to a poor credit borrower.

It is also important to note that almost all poor credit auto loans will require a consumer to maintain both comprehensive and collision coverage on the vehicle financed. Auto loans for people with poor credit also typically mandate that the deductible on the auto insurance is no higher than $500, so this can raise premiums as well. A lender simply wants to ensure that they will receive their money if the car is involved in any accident or loss.

Many individuals find that there is no viable alternative to owning a vehicle, but luckily there are options available for financing a car with poor credit. The ability to drive to and from work may be taken for granted by many consumers, but it is a privilege that should not be taken lightly. Responsible payment activity on an auto loan for people with poor credit will actually increase a borrower’s beacon score, and perhaps the next loan will have even more favorable terms.

Different Types of Poor Credit Student Loans

We’ve all heard the statistics about the effect more education will have on your income, but we’ve also heard the statistics about the rising cost of a college education. People with great credit dive right into school because they feel like borrowing money to pay for it won’t be a problem. But what about prospective students with bad credit? Not to worry – you can count on poor credit student loans to get you through your education. But first you need to educate yourself on what types of student loans are available to poor credit borrowers.

The first kind, and best kind, of student loans, are those backed by the federal government. Stafford loans and Perkins loans are not granted based on your credit score or history as a borrower. The government backs these loans so lenders will give you money you need for school without taking a good look – at all – at your ability to repay it. The understand the statistics and recognize that on average people will repay those loans once they graduate. So not only are the Stafford and Perkins programs great student loans for poor credit borrowers, they’re also very low interest.

There are two different kinds of Stafford loans: you have the unsubsidized version and the subsidized version.

Subsidized Stafford loans are given to students who meet the government’s qualifications to declared ‘needy.’  These loans are great because the government pays all the interest on the loans, for the entire time you’re in school. Once you graduate you’ll still have a six month grace period before your payments on the loans become due and you become responsible for the interest as well.

Unsubsidized Stafford loans have only one difference – the government doesn’t pay the interest on the loans while you’re a full-time student. But that doesn’t mean you have to pay it. It just means that while you’re in school the interest accrues and once you reach the end of your grace period you’ll be responsible to pay back the principle on the loan as well as the interest that accrued before you graduated.

Perkins loans are less common, mostly because most people aren’t in enough financial hardship to qualify.

Stafford loans and Perkins loans are obviously the best choice, but if you have to rely 100% on loans to get yourself through school, these loans aren’t likely to be enough. You’ll have to look to alternative borrowing sources, and that may mean seeking out private poor credit student loans.

This can be risky though. Private student loans with bad credit have none of the same perks as the government supported loan programs. The interest rates can be brutal, and you aren’t likely to find consolidation programs that compare in any way to those that go with the government loans. Many students take on private loans not realizing that they’re locking themselves into payments and interest rates that could either make their credit worse or push them into careers that don’t interest them at all because they need the higher salary.

If after evaluating your financial needs to get through school you realize that government subsidized loans won’t be enough, I’d strongly encourage you to delay the education for a short time and work toward saving enough money to get through school without private student loans with poor credit.

Low Interest Debt Consolidation Loans – Educate Yourself Thoroughly

Human beings gravitate toward anything we perceive to be faster and easier. We like to simplify, streamline, and automate. It’s true of every aspect of our lives, and it’s especially true with how many of us want to deal with our outstanding debt. Many people who have multiple credit card balances, car payments, student loans, etc find it extremely appealing to have somebody else do the dirty work of dealing with our debt – so we go hunting for low interest debt consolidation loans.

On the surface, a low interest debt consolidation seems like it would be an absolute heaven-send. We get our ugly, disorganized high interest loans and their inconvenient payments turned into one smooth-sailing payment that we’re told is extremely low interest relative to what we’re paying now.

Here’s the problem – if you’re hunting for a debt consolidation with a low interest rate, it probably means you’re dealing with high interest rates – and several of them. You know what that means? It means you’re a credit risk. Somebody has to pay the piper, and your creditors aren’t just going to take massive losses just because your debt consolidation company asks them to. So while all the advertising may say that you’re going to be getting a killer low rate, read the fine print. You might be getting some kind of introductory rate and soon after it will be bumped up – sometimes as high as credit card rates.

Another thing I recently learned about these supposed debt consolidation loans with low interest is they often carry fees; fees that can run as high as 10% of the monthly payment on the consolidation loan. So if they get you to a $500 payment, you’re looking at $50 per month just for the privilege of having them receive a payment from you and then send it on to your creditors. By the way, they’re getting it on the other side as well. Your creditors, so excited to be receiving payments consistently, will often pay the consolidation provider an additional 10% to 15% fee. Suddenly it seems like this would be a good business to be in, but I’m not so sure it’s something where you want to be the client.

What you might not realize is that there are plenty of ways for you to take yourself through the exact same process that any company could as far as making your payments and paying your highest interest balances first. You’re very likely paying for something you could do yourself, and by doing it yourself you’d probably learn valuable lessons about how to avoid ever being in this kind of debt situation again.

Poor Credit Personal Loans

With poor credit personal loans your challenge is not going to be qualifying for them; getting the money deposited into your account is going to be relatively easy because the application process is ridiculously simple. No, your challenge won’t be getting the money. It will be paying it back. So let’s talk about how that’s going to happen.

Let’s say you borrow a personal loan with poor credit, and the term is 14 days. You borrow $300. There are a couple of serious issues to address here. The first big one is that the lender is probably charging you between $15 and $25 per hundred dollars you borrow, which means you start out with loan (effectively) of say $345, being somewhat conservative. You just borrowed $345, and the money is due two weeks from today.

A couple questions:

1. How many paychecks will you be receiving between now and two weeks from now?

2. What percentage of one of your normal paychecks is $345? If you normally earn $500 per week, $345 represents about 35% of your gross pay (before taxes) for the next two weeks. Keep that in mind.

3. Of the next two paychecks you receive, will $345 of what’s left over after taxes be available to pay off this debt? What bills are due over the course of the next two weeks?

4. Finally, and most crucial of all, will you actually be able to have the balance paid in full by the due date? If not, do you realize you’ll be paying extension and renewal fees? I read a statistic on a consumer defense website that said personal loan borrowers with poor credit can average around 10 renewals per loan. Ten!? By the time you pay all the renewal fees on that personal loan you will probably have paid back more than double what you borrowed, and all within a few months. This is why you hear that the ‘real’ interest rate on these loans is often over 500%.

So I would ask you to read through the set of questions I asked above. If those questions make you realize that instant unsecured personal loans can going to hurt you much more than they will help, find another way to make it through your week till your next paycheck! You’ll save yourself tons of money, stress, and lost sleep.

Getting a No Credit Credit Card

Even in what is becoming a very tight lending market, it’s still not that hard to get a no credit credit card. Mastercard and Visa, through all their licensed lenders, offer a variety of unsecured, prepaid, and secured credit cards with no credit for people who are either working to establish or repair their credit.

There are even times when one licensee will offer basically identical cards, but one happens to be Visa and the other Mastercard. For example, First Premier Bank offers the Centennial Visa or Mastercard designed specifically for people with no credit. They’re offering benefits such as:

• 24 hour account access via telephone (but no mention of internet account access until I dug deeper into the terms; then I found out you could pay $3.95 one time fee to have online account access)
• Low APR on purchases (further investigation revealed that it’s 9.9% – not great, but I’ve seen much worse)
• Monthly reporting to four major credit agencies (this is the big one – you need them to talk to the credit bureaus if you want to see your credit score steadily climb)
• A response to your application within 60 seconds (actually this is very fast, so at least you’ll no right away if you’re approved or not)

I had to dig a little deeper to find the fees associated with the card, and I found them to be fairly standard compared to what you’d see with most credit cards with no credit. Right up front you’re going to pay an account setup fee of $29.00, a “program fee” of $95, and an annual fee of $48. They put all those charges on your card immediately, and you’ll begin making payments and accruing interest on that balance from day one.

That can be pretty annoying, but it’s not uncommon in the lending world. It’s almost like this card provider is charging closing costs like you’d have on a home loan, and rolling the closing costs right onto the balance. Maybe the way to go with a card like this is to save up a couple hundred bucks and think of it as ‘buying’ the credit card, so you can pay off that initial balance immediately.

A couple of fees you might not think of beforehand (since you might be new to the credit world, looking for a credit card with no credit check and all that), are the over-limit fee and the late fee. They’re each $29, so you want to avoid those at all cost.

This card offer is pretty typical. It’s expensive, but if you use it right it gets the job done and helps you improve your credit score.

Are No Credit Check Student Loans Real? Yes and No.

It’s basically common knowledge that you have two types of student loans: federal and private. What’s less commonly known is that the only student loans with no credit check are the federal variety. Every private student loan provider is going to check your credit, every time.

A no credit check student loan starts with the FAFSA, which stands for Free Application for Federal Student Aid.  FAFSA is also the doorway to many other financial aid programs, but those are topics for another article. The most common next step after you’ve filled out your FAFSA is to get some kind of Stafford loan, the most common subsidized federal student loan. Because you’re dealing with the government’s program here, there will be no credit check. They use other criteria to decide whether you qualify, including factors such as your own income and the income of your parents or other sources of financial support. The government feels strongly enough about education that they’re willing to back loans made to students who have essentially no business borrowing the money.

On the other hand you have private student loans, where there will be a credit check, and if you should happen to qualify you’re likely to borrow much more money than you really need, at higher rates than you would ever want to pay, with no real opportunity for a loan consolidation after you graduate – at least not one that compares to student loan consolidation programs for federal loans.

So, not only is it more appealing to go with no credit check student loans – it’s also the right move financially in the short term and the long term.

Low Interest Student Loan Consolidation – Fact and Fiction

As the cost of a university education climbs relative to the amount students can borrow through federally subsidized programs, it’s becoming more and more common for students to use a mix of federal and private student loans to finance their education. The availability of private student loans can be viewed as a positive in that it allows more people to complete their education, but there are some real negatives to private education financing as well.

My biggest concern, as one who got out of school relatively recently, is that student loans are universally thought to carry low interest rates, but that’s not necessarily true with private student loans, whose interest rates are determined by the lenders. The idea that all student loans are low interest comes from the fact the government controls the amount of interest charged on federal student loans. We need to make sure that distinction is clear in the mind of the average student, because I’m afraid many students take on private financing they might not need based on the idea that they’ll be able to go through a low interest student loan consolidation with all their loans. That’s obviously not the case, and if these kids aren’t careful they’ll end up with payments that cripple them financially just as they’re trying to establish themselves in the professional world.

If you’re a student, or if you’re researching the subject on your child’s behalf, you really need to understand why a student loan consolidation with low interest is rarely possible with private loans.

With a private student loan consolidation, all that’s really taking place is that you’re combining your private loans into a single balance with one payment, one interest rate, and one repayment period. The interest rate on that single loan may or may not be lower than the rates you were all ready paying with your unconsolidated loans. It will completely depend on your credit score and the offer the lender makes you. The only way you’ll see your payment go down after the consolidation is complete is if the lender does happen to offer a lower rate or if you restructure the repayment period so the loan will be repaid over a longer period of time. That kind of restructuring obviously won’t mean you’re paying less interest – you’ll actually be paying more because you’re dragging the loan out over more years.

Here are some general ideas as far as the terms of the loans you’ll get through a private consolidation:

• 15 to 30 year maximum repayment terms.
• interest rates between Prime+1% and Prime+6% (not so low really).
• minimum balances of $5,000 to $10,000 to qualify for consolidation.
• maximum balances of $100,000 to $300,000.

It really pays to manage your money well while in school; the payments on these kinds of loans will be relatively steep. If you’re the kind of person that wants to follow your passion in your career, instead of having to chase a big paycheck, I’d really encourage you to absolutely minimize the amount you borrow.

Low Interest Personal Loans – Possible?

Personal loans are nearly universally expected to carry terrible interest rates and ludicrous fees because people almost always think of them as payday loans. But that’s not completely accurate. You can also think about personal loans as signature loans, and those can very often be had at low interest rates.

So let’s talk about what it would take to lock up low interest personal loans. What’s the most predictable qualification for a low interest rate on any loan, personal or otherwise? That’s right, it’s a good credit score. If you want a bank to hand over a chunk of money with based on nothing but a signature and a handshake, it will only be because they can look at your credit history and see that it’s basically immaculate. I’m talking about a 700+ fico score. If you don’t have that taken care of, don’t expect to qualify for a personal loan with low interest.

But it doesn’t end there. The bank wants you to have a good credit score, but there’s something else they want you not to have, which is too much debt. Part of their analysis of you as a borrower is going to be to look at all the monthly payments you’re responsible for and then add the minimum payment that will come with the loan they’re about to give you. If that minimum payment will push you past a certain monthly payment load, no loan for you. I’m actually very glad that lenders have this practice. I know they only do it to protect their bottom line, but it also protects your bottom…line.  Working hard for your money and then watching it all flow right back out due to your high monthly debt service is a recipe for burnout and stress. You don’t need that headache.

So I guess part of the low rate personal loan equation is either not having much other debt, or having an income so high that your monthly debt isn’t a big factor. But I’m guessing that’s not the case with most people looking for some short term financing.

In any case, take good care of your finances. If you can’t get low rate short term loans now, work at it and the day will come. Of course, when that day comes you may not (hopefully) need them anymore.

Credit Cards for Bad Credit to Help you Get Started or Rebuild

Let’s take a close look at credit cards for bad credit, because if you sign up for the very first one offered to you I think you’ll probably end up regretting your decision (because you’re going to be paying fees and interest rates that might not have been there with another card). Of course when it comes to choosing a credit card you’re always looking at a few standard criteria, such as annual fee, credit limit, deposit required (if it’s a secured or prepaid card), APR on purchases, cash advance APR, balance transfer offers, and of course the all-important rewards programs.

Not all of those factors are going to come into play with credit cards for people with bad credit. For example, these kinds of cards aren’t typically going to have rewards programs or special offers on balance transfers. These cards are geared more toward people who’ve either really messed up their credit or are just trying to get their foot in the door of the credit world.

The big distinguishing characteristics of this type of card are the fees, the deposit required, and the purchase APR.

You’re likely to see many of these cards start with a 9.9% APR on purchases, which isn’t terrible. If you have some kind of credit, albeit damaged, you can probably get a minimum credit limit of around $250 without a deposit, but the fees are where they’ll get you.

I checked out three different Mastercards for bad credit, and the fee structure just blows my mind. Let me summarize their fee disclosure paragraph from the offer (small amount of sarcasm included):

“If we happen to qualify y0u for a credit card, we’re going to take all our fees for the first year up front. This includes an account set-up fee of $29, a program fee (huh?) of $95, and on top of that we’re sticking you with an annual additional fee of $48. But wait…there’s more! We’re also going to charge you $7 per month for ‘participation.’ All of these charges will be on your first statement, and your available credit will be whatever happens to be left over when we’re done with you. If your credit limit is $250, you’ll be left with the grand sum of $71 available on your card.”

Kind of hilarious right? But let’s keep this in perspective. Credit card providers have to make money, and as a no credit or bad credit applicant you pose a big risk. They’re giving you credit and immediately getting monthly payments from as a way of protecting their bottom line. This is the cost of establishing, or rebuilding, your credit score. If you’re smart you only have to ‘pay to play’ once. After this initiation into the world of credit you’ll have your shiny new fico score to get you low fees and interest rates on anything you borrow.

Finding a No Credit Check Credit Card

Part of becoming an adult is establishing your credit. As much as we’d all love never having to borrow money for anything we need, that’s just not realistic. If you want to own a home or a car, you probably have to have credit (well, I supposed you don’t have to borrow for cars, but most people aren’t willing to save enough to buy the car they want, and they’re not willing to drive the car they could actually pay cash for). So you’re going to need some credit, which means you need to use the right tools to help you start building your credibility as a borrower. A no credit check credit card is going to be one of those tools.

Let’s be clear about what credit cards with no credit check are. They’re not high limit cards; they’re very low limit. They’re not fee free cards, they almost always come with fees. And they’re usually not unsecured cards; they’re usually prepaid or secured. So, you’re going to be paying for this credit building tool, and it’s not going to be glamorous. We’re not talking about an Amex Black card you see the rich folks and the celebrities walking around with.

Essentially what’s happening here is the credit card provider is saying “you have no experience with credit, and there’s no proof or even evidence that lending to you is a good idea. We’ll give you a card that allows you to borrow up to the amount you keep on deposit with us, and then we’ll watch how you use it. If you’re smart about it we’ll start to bump up your privileges with the card and eventually allow you to use the card beyond the amount of your security deposit.”

This is one of the real ironies of building up your credit with a no credit credit card. The more effectively you do it, the more easy it becomes to bury yourself in credit card debt. Don’t make that mistake. I personally don’t think it’s a bad idea to have a couple of credit cards with high limits, but you want them there strictly for emergencies. There’s no reason at all to get in the habit of actually using these cards or carrying a balance.

So yes, you need credit, and getting credit cards with no credit can help you make your name with the credit agencies. You really just need to be so careful about how you do it because credit can either be your best friend or your absolute worst enemy, and you get to decide which.

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.

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.